For any business, expanding their Supply Chain overseas will require strong expertise and a strategic plan. In a previous blog, with Director Tony Leach, we uncovered why more businesses should embark on an overseas expansions. In this second blog, our aim is to provide you with the knowledge on how to actually implement an expansion.
You can read the first part of the series, here.
Once a business decides to expand their Supply Chain overseas, what is the first step of implementation?
Firstly, you will need to think about how your products are going to reach the consumer. Making the first step:
Reasonable shipping. If you cannot provide cost-effective ways to drop-ship merchandise to online shoppers within 10 days, they will likely shop somewhere else. Naturally, expectations are relative to proximity — Canadian buyers will expect a much faster service than those in Russia, for example. U.S. retailers that can provide reasonably priced local market shipping options from reliable carriers that consumers know, and trust typically fare best. You also need to help ensure that you have full tracking capabilities, including proof of delivery.
How do you connect with customers on an international scale?
This will require an…
International e-commerce platform. You may have started out with a WordPress site, Global e-Magento site, Shopify or with a marketplace. But now that you must expand globally, you need more control and scalability. That is why you need to do your research about which website partner can handle the traffic load, has great customer service and has all the prerequisites before scaling up.
It is critical to select a platform that can deliver a multi-country and multi-channel e-commerce experience tailored for different languages, currencies, and seasonal trends. Location, language, and currency selectors within storefront themes gives you the capability to roll-out to new markets without significant IT expenditure.
How would you ensure each customer experience is personal and relevant?
Local customisation. Local customers may be “delighted” if the e-commerce platform is localised. With local language, local CTA and local shipping experiences, you can really convert that customer for greater LTV (Life Time Value). When a local customer engages with the local experience for the first time, they would not choose your competition who may only be competing on price.
Different countries will have different customer legislation- how do you implement this?
Compliance. Every business involved in the movement of goods between different countries is exposed to international trade regulations and to the customs duties and taxes imposed on most imports and some exports dependant on commodity and product value.
Start by learning the import requirements of your products by visiting the website of the country’s customs authorities that you wish to trade in. One key step is working with the right logistics partner and experienced customs brokers/professionals that will enable you to setup procedures for ensuring compliance with duties and taxes.
It’s important to calculate exactly if any or what duties and taxes need to be paid. Unless exempt, all imported commercial goods are subject to customs duties and taxes based on their tariff classification according to the Harmonized Commodity Description and Coding System (HS).
The good news is that majority of logistics providers have local teams of experts that take the complexity out of customs and global trade compliance by offering a one-stop solution to all compliance needs. As part of the logistics planning and shipping services, customer consulting services are part of the service to optimise customs activities, minimise duties and taxes, and maximise compliance.
How do you ensure customer engagement and an optimal e-commerce experience?
Cost certainty. Consumers do not like surprises, so you need to provide visibility into the fully landed cost at checkout, including all taxes, duties, tariffs and fees. You may also want to consider expressing the prices in local currencies, which would require you to embed exchange-rate capabilities into your site.
Clear policy on returns. Offering an easy-to-understand process for returns and after-sale service is imperative. Depending on what you sell, you may or may not want to ship goods back to the home market. Some retailers choose instead to liquidate returns in country and reimburse buyers. You'll need to think through your policies, establish a process and include returns costs into your ROI and cross-border business case.
How should you allow customers to purchase products/services?
Payment partners. Payment options are probably the most important factor to customer retention. When at the bottom of the funnel, customers are ready to click that “buy” button, and if they find out that their favourite mode of payment is unavailable, they’d never come back. Payment partners are organisations that excel in global e-commerce payment solutions. They ensure that any payment option is acceptable to the final purchaser, and drive demand further by ensuring that all forms of payment are accepted.
Having a partner that has a safe and secure payment gateway (SSL, HTTPS) is important. Customers that see that the payment gateway is secured, tend to trust the website a lot more.
How do you establish international buyer personas?
Understand global buying habits and culture. Once you have your technology, branding and payments components taken care of, the next step in the strategy revolves around understanding the customers culture and habits. When considering global e-commerce strategies, it is important to ensure that you have some amount of research and budget devoted to understanding global buying habits and cultural variances.
How do you establish a strong brand when expanding into new territory?
Local partnerships. Local partnerships are the difference maker, when it comes to choosing the right business model. You may decide to enter a new market through existing online marketplaces (quite common in China), many companies also opt to sell through programmes such as Amazon FBA in the USA and Europe, enrol in an affiliate marketing or even beef up your website to serve global customers. Unless you’re in the SAAS space, the latter option has risks involved with it. Therefore, it is advised to have some working relationships with local partners, so that they mitigate those risks.
The internet has eliminated borders and put the world's trade to act in a truly globalised way. Today, a business from almost anywhere in the world can sell products globally. Going global, means you will broaden your customer base, and that can lead to some very profitable results. Opening up new channels of income for your company will result in a growth in your business and a reduced reliance on your domestic market. That will be followed by an increase in sales and profits.
Supply chains are evolving to meet the demands of the global e-commerce market place. E-commerce represents a big driver of change in both logistics and physical distribution networks. As e-commerce continues to grow, multi-channel shippers have adjusted the demand for their distribution network infrastructures. Modern supply chains support e-commerce sellers that offer global eFulfillment and distribution to the end consumer through online sales. No longer do companies have the need for overseas investment in capital expenditure and staff to serve new markets. They can now utilise systems and outsource logistics to deliver sales without having to maintain fixed assets, thus significantly reducing risk and cost.
Now that we have covered the fundamental steps into why and how businesses should expand Supply Chains overseas- would you lead your business into new territories? Let us know in the comments below.