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What are the challenges and opportunities for cross-border shipping in 2020?

June 2020

British retailers are having to weather many storms at present; earlier this year on January 31st the UK left the EU and is now within an 11-month transition period. This has increased uncertainty and anxiety with many businesses. A study by Parcelhub of 100 mid-market retailers found only 47% deliver internationally, yet an earlier study found online retailers who sell cross-border expect international sales to represent 30% of their turnover. 

There is, therefore, a significant opportunity cost to not selling internationally. Many merchants have held back on key investments such as increasing warehouse space, cross border expansion, and diversifying their product sourcing efforts due to recent adverse events.

While Covid-19 has accelerated consumers’ shift to e-commerce, cross-border sales took an initial hit. Take Italy, for example, who suffered an initial dip in cross-border sales but has since recovered.

Italy Cross-Border e-Commerce Trend 

(Percentages indexed to October)

Italy cross-border e-commerce trend.PNG

Source: Global-e

Despite these unpredictable times, delivery management firms such as Whistl have managed to drive continuity of service with minimal service degradation throughout the Covid-19 peak. Sales were slowed due to the uncertainty of the movement of goods with most countries placing restrictions on non-essential items. 

Following the initial decline, most economies have since rebounded. At Whistl, our international services have been relatively unaffected, operating at business as usual for all key countries in Europe and around the world for untracked postal and tracked services.

With global e-commerce sales projected to reach £1.8 trillion in 2020, the UK e-commerce market is expected to represent £200 billion in 2020. That's a predicted 11% of global trade this year. It would be short-sighted for any ambitious online retailer to ignore the revenue opportunities that cross-border selling has to offer.

What is the negative impact of shifts in cross-border buying habits for British online retailers?

Some of Covid-19’s impact will only be realised once the pandemic has passed, predicts Global-e. The same study found that once Covid-19 had its initial impact on a country, there was a sharp increase in non-discretionary buying such as food and a short term drop in demand for discretionary products such as luxury homewares.

Many parcel carriers have restricted their cross-border operations and marketplaces such as Amazon made the bold decision to, for a period of time, only fulfill products deemed essential, and even suspended small businesses from selling on FBA.

Factors affecting the cross-border customer experience

A Whistl study found there is a broad range of factors detracting from consumers’ cross-border buying experiences:

  • On average, international items take 13 days to arrive across all 6 surveyed countries.
  • 13% had additional customs/import costs to pay, over half of which paid these additional costs at the point of purchase. However, only two-thirds of consumers were aware of these additional costs at the point of purchase.
  • Across all 6 countries surveyed, one third checked the returns procedure with slight variations by country; less than 25% in France and 45% in Ireland checking it. Among those who did check the returns procedure, most did so when selecting the product.

Disadvantages of buying online from abroad - graph.PNG

What opportunities are there for British online retailers who want to ship internationally?

Despite shifts in consumer habits and operational capabilities, e-commerce has experienced an 11% average increase in cross-border sales across all markets worldwide. However, some countries have been affected more than others, much of which depends on their reliance upon cross-border prior to the pandemic. 

While the UK was hit harder than most other countries by the pandemic, other economies have recovered more quickly, such as New Zealand. Having a cross-border sales initiative in place means UK online sellers can capitalise on sales opportunities in recovering economies.

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What are consumers’ attitudes towards buying from abroad?

A study conducted by Whistl found that 1 in 5 consumers anticipate they will stop purchasing from abroad due to Coronavirus. In sharp contrast, the same study found just 3% of consumers experienced difficulties when purchasing cross-border. The most-mentioned difficulty was that of delivery not arriving as quickly as desired. 

Other difficulties related to payment and custom issues, and products not matching their description on the website. The same study found that making cost savings was the biggest driver for consumers to purchase online abroad, followed by having access to products not available locally.
The top 5 reasons for cross-border purchasing graph.PNG

Whistl also found consumer perceptions differ depending on which marketplace a retailer sells on; for example, in the UK and Ireland shoppers using Amazon care less which country the product is coming from when compared to countries such as France. When it comes to eBay, online shoppers in the US and UK are significantly more wary about buying from abroad using this platform in contrast to shoppers in Australia and Ireland who are more relaxed.

Identify your key target market and go for it

Each online business is unique. Therefore it makes sense that you map your product range against international markets to identify countries that are likely to love your products.

Top 5 most popular international purchases.PNG

By analysing consumer preferences and market size, you will be able to find the key markets to target. Through understanding the preferences of different countries as well as your domestic competition, you will be able to optimise your offering to exceed that of your international competitors.

Diversify your sales channels and delivery options

A study by Whistl subsidiary Parcelhub found that companies who diversify their product sourcing, delivery providers, and sales channels stand the best chance of surviving unexpected events. By ‘not putting all your eggs in one basket’, you are mitigating risk. 

Working with a delivery management company that is experienced with international parcel delivery will help you mirror competitors who are based in your key overseas markets. 

Equally by expanding into new overseas marketplaces, such as with Allegro, can help you maximise discoverability of your products and build trust within foreign markets.

Be clear and concise with your cross border customers

As highlighted earlier in this article, many consumers are unaware of customs charges and don’t discover these hidden fees until after the purchase is made. When you add the potential of another cost to the purchase, it may negatively impact your conversion rate. 

Price transparency has been found to increase international e-commerce conversion rates. To stand the best chance of mirroring, if not exceeding, the customer experience offered by international competitors, aligning your online offering with your actual physical product will help maximise your positive customer feedback.

Work with a customs clearance specialist

By working with an international delivery and customs clearance specialist, you can address consumers’ desire for faster delivery and a seamless returns process. 

A customs support company will grant you access to international delivery partners that will ensure rapid cross-border delivery, along with a seamless returns process. 

Thanks to economies of scale and buying power of a third party delivery management company (3PL), mid-market retailers can enjoy shipping rates that are normally only the reserve of global brands.

Whistl are the leading experts in customs clearance and international business parcel delivery.

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How Whistl has helped its customers expand internationally

Skinny Coffee Club
Whistl has helped Skinny Coffee Club increase their cross-border sales. 
Skinny Coffee Club was having problems with its previous international delivery management provider, with parcels not arriving and prices rocketing for a seemingly worse service. 

Whistl provided this health drinks retailer an international e-commerce exporting solution tailored to their needs. Comprising of international parcel and mail delivery; they enjoyed a 40% reduction in international complaints.

Another online business that’s reaped the rewards of working with Whistl is Sony DADC, a leading end-to-end entertainment services provider. 
Whistl has helped this global brand access pooled volume discounted delivery rates on their international parcel delivery for more than five years. We have helped SONY DADC better deal with and capitalise on spikes in demand and give them an increased capacity for growth by developing their collection capabilities.

What is the future of e-commerce exporting?

When exploring whether you should expand your business internationally, you need to consider where your products are most likely to succeed and consider this alongside the buying habits and trade restrictions in those economies.

There is a broad range of reasons that deter consumers from buying abroad, however, these can be easily remedied. Despite some reluctance to shop online internationally, this has not stopped cross-border trade building a greater share of all commerce. 
Furthermore, consumers have increased their overall adoption of online commerce, particularly in older age segments. With the decline of brick and mortar retail, this is unlikely to change for the foreseeable future.

As international trade and the shift to e-commerce increase, so too will the size of the opportunity. With the right international delivery partner that specialises in border clearance, parcel delivery, and contact centre services you will be able to maximise your cross-border sales. 

Finally, a robust returns process is clearly of paramount importance. Having a delivery partner who can also make this process seamless will ensure your customers are more likely to give positive feedback, make that repeat purchase, and recommend your offering to their peers.
At Whistl we help mid-market retailers with their direct and indirect e-commerce exporting. All of our services are tailored to your needs and with a wide range of solutions, we are well suited to maximise your delivery performance and enhance your customer experience.

Get in touch with Whistl to discuss how we can help you accelerate your cross-border expansion.

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