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International eCommerce Logistics

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Logistics Behind International eCommerce Platforms

International eCommerce typically requires an incremental or phased starting approach, in order to optimally launch the international presence from a cash flow and general logistical execution perspective. A key component for international eCommerce is the core logistics of fulfillment; being able to actually deliver the physical goods within a particular region or country. And ultimately doing so in a profitable manner that promotes customer satisfaction.

Our standard recommendation involves a concept of planning out the different international regions or countries and identifying what the expected or desired areas of expansion would be. Essentially building out a roadmap that includes a relatively low-cost timeline and starting place, but then moves into more investment based on real or expected results, depending on your industry and overall strategy.

To start with, we would typically recommend focusing on getting the correct information on the respective customs and duties. This is a required step when setting up direct shipment from your home base in your existing country of origin. Therefore, if your headquarters are in the USA, Canada, the United Kingdom or Europe, then you would potentially ship from there at the beginning. Even though it's a relatively expensive practice, this prevents the need of a distribution center establishment, or any kind of warehouse that's physically located in a different continent or region.

The downside of direct shipping is how it involves a higher incremental cost per completed transaction and fulfillment, while shipping and lead times are undeniably longer. However, direct shipments allow you to effectively test and validate areas from a marketing perspective. Direct shipping comes with the benefit of generally letting you understand which markets are going to respond best to your executed marketing campaigns, and which areas show the most total interest in your offerings. Based on this first phase for certain regions, you can then iteratively invest more in the high potential or high performing locations.

Expanding into New Locations

Alternative New Market Entry Approach

Apart from gradually entering new locations one at a time, it's also possible to take a salvo approach and begin with sets of countries. For example, you may start with three different regions and then pick the top performer. At the next quarter, or other structured time period that you select, another set of three areas will be tested. Thus, at each trial you choose a number of countries to test and only keep the ones that perform best.

That process enables you to continuously build on this rollout model until the desired outcome is reached. Let’s contemplate a scenario where your end goal is expansion to 18 different countries and your team has determined the most likely high-payoff candidates. The ideal strategy would probably be to focus on a small higher payoff group first and then validate which areas within those groups are going to be the highest actual payoff, based on real data. Once the top performing locations are uncovered, you may continue to evaluate potential for further investment in those areas. Based on the completed transaction count, maybe it will make sense to establish a regional distribution center or develop some kind of concept around an actual dedicated warehouse.

You can commonly work with partners to set up a distribution center in your targeted location. The partners might simply house many different sets of products for a number of distinct sellers. You would just rent space within that distribution network and effectively get logistics in place to physically move your items in a relatively just-in-time nature, from your actual manufacturing facility, or facilities, into those distribution warehouses.

This is something that typically requires or benefits from an integration into back office software, to properly manage the inventory and order fulfillment or transfers into those distribution centers. We absolutely encourage you to evaluate this capability within your international eCommerce platform of choice.

Incorporating Industry Best Practices

Taking the Next Logistics Management Step

Once you've gotten distribution centers in place, possibly in one or multiple regions, we suggest you analyze the marketing performance and success of those particular implementations. We strongly recommend their continuous monitoring, which may lead to considerations of opening up a physical warehouse -or even a manufacturing facility- in a particular region(s). Whenever you bring in a dedicated warehouse or manufacturing facility, you can further reduce the required operational overhead, by not having to pay for fees and related costs of transferring items from the original manufacturing warehouse. The original sites might be in a different continent altogether, or perhaps it's plainly expensive to ship items through internal shipping instead of a distribution network. In this case, you may opt to develop a new distribution model for your international eCommerce products.

This alternative option may equally grant you the capability of reducing the overall overhead, if you make the decision to configure the resources internally. From a cash flow perspective, these ideally constitute validated investments based on hard supporting data. To rephrase, as you're continuing to grow and build your logistics, it should be happening because of a tangible increase in demand by a particular region or country.

The core concept revolves around your selected international eCommerce platform and its advanced capabilities to handle your desired functionalities. Can your application grow into this realm of incremental steps? Is your system able to support the offering of an integrated shipping provider per region or location-specific shipping providers? Can your eCommerce also enable international shipments with all of the associated applicable customs and duties? Finally, can it simultaneously wear both of those hats, adjusting on the fly based on the particular region and configured scenario for that location? Be prepared to have thorough answers to those questions to ensure a successful international eCommerce implementation.

Furthermore, as you're continuing to build and validate your international eCommerce application within these different regions, we urge you to evaluate things like how the inventory management and lead times would be presented to the end user. We additionally raise the question of how your expectations will be managed through the user interface, along with how that data is going to reach the end user.

If you need to complete transfers from one continent to another to resolve issues of low inventory in a distribution center, it's really important to have that information well in advance. In other words, be aware beforehand about when that inventory is expected to diminish to the point where you must initiate a transfer. It's naturally very challenging to maintain any kind of business momentum and customer loyalty for purchasing products, if the orders are not going to be fulfilled in the expected way from a timeline and cost perspective.

How can Clarity Help

Clarity International eCommerce Experts

Our opinion is that you should always think ahead with international eCommerce and try to understand where you're going to be in three to five years with your expansion rollout. If you already have an established international eCommerce presence, what kind of requirements do you have to be able to compete at the next level? No matter where you stand at the moment, it's unquestionably a good idea to contemplate where you're going to be positioned in the future with your ideal international eCommerce rollout.

The Clarity team certainly welcomes the opportunity to collaborate with you on the logistics and fulfillment side of your international eCommerce platform. In addition to welcoming a phone call or email, we’d also be happy to provide a complementary needs analysis review with our very friendly and knowledgeable staff. Our expert team members are available for any clarifications you may require in respect to this topic.

We also invite you to explore some of the supplementary content below. Feel free to navigate through the following information which may prove useful for your business. Don’t hesitate to reach out to us if you identify a topic that would be beneficial for your organization’s stakeholders. We’d be glad to cover any additional information and elaborate accordingly so that you have all the necessary resources to make the best decision for your international eCommerce.

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