Alibaba, owner of China’s largest online marketplace, caught the attention of competitors in June when it hosted an event in Detroit targeting American companies to join its marketplace and sell to Chinese consumers.
The timing of this event could not have been more appropriate as cross-border ecommerce is beginning to gain traction.
This ecommerce expansion is the result of consumers becoming curious about international product offerings and the ability to browse outside marketplaces. An annual UPS study found that almost half of all U.S. online shoppers bought items from international retailers because they’re searching for lower prices and unique items.
Cross-border ecommerce is expected to grow 25 percent year-over-year until 2020, which is about twice as much as domestic ecommerce. Online retailers can also expect to increase their sales up to 15 percent on average after expanding their business to international consumers.
Because of the explosive growth in cross-border ecommerce, companies should begin to strategize the best approach to tap into this growing market of consumers. With the U.S. being one of the largest vendors of products sold across borders, here’s what you need to know to prepare your warehouse for international orders.
Warehouse Storage & Inventory Management
Inventory management will become more complex as you transition your warehouse to accommodate international orders. Not only will the amount of inventory increase as you begin servicing more customers, but it will become more diverse.
Whereas clothing and electronics are top online sellers in America, these categories are not the most popular in other countries. Health and beauty items top the list in France; Japanese shoppers favor American toys; beauty and baby products are the most purchased cross-border items in China.
You may want to consider upgrading your warehouse management system (WMS) to accommodate these product variances. Inventory visibility is already important for a domestic operation but especially crucial for cross-border ecommerce as stock-keeping units (SKUs) will grow rapidly. With a robust WMS, you’ll also be able to view real-time inventory from multiple warehouses across the country to decide what origin location is the most cost efficient when sending an item overseas.
Ultimately, the correct WMS for your operation can boost your inventory accuracy to over 99 percent and create a more efficient workforce while orders are rising.
American businesses don’t have to fear eating into their bottom line to offer free and fast shipping. Whereas U.S. online shoppers expect to receive orders almost instantaneously without incurring additional charges, international shoppers are willing to wait longer for free shipping. A UPS study revealed that 61 percent of European online consumers will wait an additional four days or more for free shipping.
To ease the pain of shipping internationally and handling custom regulations, UPS and FedEx have launched services such as FedEx CrossBorder, which arranges the best transportation options for shipping and speeds up the process by calculating and managing shipment, regulatory compliance and customs and duties. Partnering with a carrier's service can inform you on what items are prohibited in various countries like India's restrictions on computer software and certain jewelry.
Different countries also have their own packaging regulations and, if your package doesn’t meet these regulations, you’ll likely have the order returned to you. This not only means your customer doesn’t receive their order on time, but you’ll pay extra for shipping and double the custom fees.
Check out our 4 Strategies for Driving Down Fulfillment Center Costs.
Taking on more orders means hiring more people to pick, pack and ship those orders. You may be used to preparing your workforce for a peak season that revolves around a U.S. holiday, like Christmas or Easter, but are you prepared to quickly scale your workforce at times that are unusual in the U.S.?
For example, Click Frenzy is Australia’s version of Cyber Monday, and some participating online retailers generated a 200 percent increase in revenue. Target’s Australian website experienced 160,000 extra visits compared to the Monday before the sale.
China’s Singles Day is the busiest online shopping day in the country. Tabao, a subsidiary company of Alibaba, recorded about 10 million people shopping on its site, and another online platform generated $2.1 billion in sales.
These shopping-centric holidays will greatly impact your workforce management strategy. Make sure your staffing partner has the systems in place to quickly scale while remaining efficient and compliant.
Becoming a Global Warehouse
The ease of access to global online marketplaces is opening up more entry points for businesses to gain exposure around the world. The influx of international shoppers can result in challenges with inventory management, shipping regulations and workforce management but an efficient strategy to tackle these challenges can transform your domestic warehouse into a successful global operation.