Unleash the power of outsourced e-fulfilment to grow your ecommerce business
Is your online business rapidly out-growing existing parcel sorting and posting arrangements? With shoppers in far-flung corners of the world showing an interest in your products, is the complexity of shipping orders to them distracting you from other important aspects of the business? And are you struggling with courier negotiations, customs handling, and warehouse management? If the answer is ‘yes’ to all these questions, perhaps you are ready to outsource your overseas e-fulfilment.
Many SME ecommerce brands in the UK are seeking stress-free solutions to expand both domestically and internationally. Outsourcing fulfilment is a viable option, but it’s a big decision to make.
Beyond the sea
What’s clear is that selling to shoppers abroad is a great way to ramp up sales when your domestic market is sluggish. Our survey of 800 global ecommerce brands taken in February this year, found that 78% were seeing the number of international shoppers increasing. A similar number (73%) found that demand internationally was growing faster than domestic growth.
Despite the challenges of Brexit, UK traders are continuing to focus on markets where their products are proving popular. The decline in the British pound since the Brexit vote in 2016 has made UK goods and services more affordable to customers in other countries, particularly those in the EU.
Post-Brexit, higher shipping costs and the financial impact of extra customs paperwork cannot be ignored, as Just Entrepreneurs has flagged. But even so, with purse strings tightening in the UK, it makes sense to win new customers in France, Spain, Germany, and Holland, to name just a few target countries. Meanwhile, industry experts predict that European retailers will continue to grow ecommerce sales in China, India, Korea, the Middle East, North and South America in the coming years.
A lot of growing brands, including Bali Body and Chilly’s Bottles, enter new markets outside the UK using air freight shipping and our network of partner postal services and couriers. These companies had reached a point where it made financial sense to outsource, freeing up their management teams to focus on the what they do best internally. These brands have found that outsourcing sorting, labelling, and returns handling has ensured a streamlined process, so that new customers have a superior shopping experience, no matter where they are in the world.
Typically, with outsourcing, a specialist logistics business is given responsibility for managing order fulfilment, sourcing labour, sorting and labelling packages, transit to air terminals for air freight, organising overseas postal routes and last mile delivery, as well as managing warehouse space, customs paperwork planning, and reverse logistics. Advice on the safest and most cost-effective ways to expand internationally can also be provided by firms whose bread and butter is international parcel shipping.
The cost of fulfilment will encompass everything from labour costs, technology, and transport services needed to fulfil orders effectively.
Pinpointing the right time to outsource
Getting orders to customers quickly requires more expensive shipping methods, which in turn affects your profitability. But not making this investment in the customer experience could cause your cart abandonment rate to rise.
Moreover, many in-house fulfilment operations aren’t equipped with the technology required to streamline DIM weight (dimensional weight) and rate-shop effectively between parcel carriers. This means your business is likely to be paying far more for shipping than necessary. If you’re struggling to find a balance between offering free shipping and protecting your profit margins, a 3PL (third-party logistics partner) may be able to help lower shipping costs.
Outsourced fulfilment services carry much bigger cost savings because 3PLs are working with economies of scale, and can split the cost of infrastructure and utilities between multiple clients. This means a business is paying less per order than they would fulfilling orders on their own.
Key delivery considerations for SMEs
Don’t’ rush into ‘express’ services
A common mistake for ecommerce SMEs is to rush into sending all orders out ‘express’ to ensure customers are happy. However, there’s a risk of losing margin doing this. It’s better to begin by only offering a basic delivery for overseas shipments – receipt in five working days, for example – which is cost-effective. Then as soon as volumes are high enough, shipping partners can be negotiated with for a good rate. SMEs planning international e-commerce logistics should take returns into account too, checking that couriers have adequate systems in place to manage that vital service, factoring in international borders.
Check your logistics provider’s expertise
Make sure your logistics partner knows their stuff when it comes to customs and VAT both for outgoing items and returns. Post-Brexit, sending parcels overseas and managing returns is far more complex, but it’s a necessary evil if you’re serious about growth. Retailers need to have the right commodity codes, and understand duty and VAT rates. If the chosen logistics partner doesn’t manage this well, it can lead to parcels being stuck in customs for weeks, and facing possible customs fines because the paperwork is wrong.
Tap into their global knowledge
A good distribution partner will be able to recommend where in the world your products would sell well. For instance, at Asendia our data makes it very clear that France is a hot spot for fast fashion, while shoppers in Israel love British childrenswear brands. If you can ship to countries where there is a niche market for your product, sales can take off rapidly.
Consider sustainable fulfilment
When it comes to ecommerce fulfilment and delivery, the central finding of Asendia’s research mentioned earlier, was that consumers are conflicted between wanting fast delivery but also green delivery. A massive 88% of brands said demand for free delivery won’t go away, while 81% said they expected demand for more sustainable fulfilment to grow. Today, the best ecommerce shipping providers will be able to help their clients offer low-carbon or even carbon neutral (through off-setting) delivery services so that conscious consumers can choose the right kind of delivery for them.
Flexibility rules
Having your own warehouse space is expensive, and not the least bit flexible. When you outsource you only pay for the space and services you need, which can be handy if your business is busiest during calendar peaks like Mothers’ Day, Black Friday, and Christmas, and has slower trading periods between. You can also use that flexibility to grow internationally in a stress-free, financially prudent way.
Asendia's work with Chilly’s Bottles is a case in point. From our fulfilment centre in Bedford in the UK, we provide flexible storage, while pick and pack can be scaled in line with international growth plans. Fast-growing brands like this can then progress to utilise our fulfilment centres in Asia and the USA when they expand beyond Europe, tapping into our knowledge of these markets and benefiting from advice on the most cost and energy efficient ways to reach new customers.
Logistics specialists mean business
Ecommerce shipping and fulfilment specialists see a bright future as enablers of retailers’ cross-border plans and are investing in international fulfilment networks across the world, specifically to make entry into new countries as easy as possible, and trading resilient for the long-term.
Having a proactive partner also helps, because they can find alternative routes and new ways of reaching customers when problems arise along traditional supply chains – often at very short notice. And when it comes to the complexity of managing returns, strategically located returns hubs will ease that logistical headache too.
Go-getting ecommerce entrepreneurs tend to think globally from day one. If you’re dreaming big, outsourcing your fulfilment to the right partner could be your speedy-boarding ticket to international success. My advice is this: do your due diligence, find a 3PL with the right cultural fit for your brand, and take this powerful step forward.
