By Paul Galpin, Managing Director, P2P Mailing
The internet economy continues to grow apace, with analysts predicting that, by 2016 the online market will be worth $4.2 trillion dollars in the G20 economies(1). The internet and the growth of ecommerce are giving online retailers a unique opportunity to expand their customer base across the world.
The importance of adapting the fulfilment and delivery processes for successful international expansion should not be underestimated. There are a multitude of factors to be contemplated before embarking on such growth, and failure to plan accordingly can have disastrous consequences. Our research shows that experiencing delays or delivery problems just twice or more would convince 87% of people to switch to another supplier(2). If deliveries are mis-handled, your new found customers can find an alternative supplier at the click of a button. And these problems are exacerbated when it comes to distribution across borders, indeed, 61% of consumers surveyed expressed reluctance to buy from overseas online shopping websites(3). Clearly, more mistakes are expected when it comes to international deliveries.
So how can e-tailers avoid these pitfalls? What are the key steps to success?
Manage your costs
While engaging with overseas customers gives online retailers an opportunity for growth, some tricky decisions will need to be made before the rewards can be reaped.
Identifying the most cost effective distributor for each territory can be exasperating, especially when it comes to long distance deliveries where many operators will be involved. For many online businesses, engaging with a third party provider which offers the expertise and the relationships with postal operators, not only in the UK but in the destination territories, will be the most fail-safe and cost-effective way of managing distribution. An expert consultant should not only be able to negotiate competitive prices on your behalf, but will also be able to advise you on how to ensure that your fulfilment and distribution infrastructure can keep pace with the expansion of your business.
There’s also the question of whether to offer trackable delivery. Many consumers like to be able to keep an eye on when their goods are expected, but naturally offering this facility is more expensive. Research of online consumers purchasing from UK sites found that the desirability of track and trace was very much linked to product type and value. For example, 15% of buyers of electrical goods said that they would use track and trace delivery compared to between 1% and 3% for other products(4). Bearing in mind that in the UK, 12% of deliveries fail first time costing the online retail industry an estimated £1bn in redeliveries(5)— and that once delivery to other countries is added into the mix, the potential for mistakes is far greater — you can see why some consumers would like to keep tabs on the progress of their purchase.
For many retailers selling lower value items via a standard delivery service, their trackable options have been limited, with a choice between relying on international packet post with little or no tracking, or premium express parcel services which offer tracking but add significantly to delivery costs. However, this situation is changing and there are now a few solutions that offer trackable, cross-border delivery for smaller parcels at lower rates, enabling online retailers to offer their customers real-time delivery information without the inflated distribution prices.
Facilitate cross border returns
In addition to working out how items will be delivered, it’s also vital to consider how you might get them back, should the need arise. Online shopping by its very nature requires a high level of trust between the consumer and the vendor. Money is exchanged before the goods are received and shoppers don’t have the opportunity to try on or examine their purchases before the transaction is completed. Vendors need to make their returns policy clear to customers from the outset and carefully ensure that they are compliant with the regulations, which will differ across countries.
Ultimately, the current ecommerce boom that is defying the persistently volatile economic climate gives internet retailers access to a potential customer base of 37 million(6). However, international expansion should not be rushed into, and ensuring that the processes are in place to distribute goods promptly and cost effectively across the globe is a key consideration. Customers don’t like delayed or unsuccessful deliveries, and will soon defect if they are unimpressed with the service they receive. Similarly, if businesses don’t have an early appreciation for the costs of such expansion, they could easily find the expense higher than anticipated. While the opportunity is an exciting one, retailers must ensure they are fully prepared before they attempt to seize it.
(1) BCG Perspectives by the Boston Consulting Group, The Internet Economy in the G20, 19 March 2012
(2) P2P Mailing, Are You Delivering? May 2012
(4) P2P Mailing, Setting the Standard, 2011
(5) BBC News Magazine, The parcel conundrum, 6 July 2012
(6) The Interactive Media in Retail Group (IMRG), July 2011