Most non-European brands, retailers looking to grow their e-commerce business, cross border e-commerce into Europe holds a big draw but very often it is also a natural next step given the 300+ million e-shopper market opportunity. As you might have guessed, it’s more complicated than putting something in Google translate and getting international shipping packaging. Is your company up to the daunting task of expanding to a whole new market?
There are countless “bad” examples we could site when it comes to the current ‘global’ solutions in the space and specifically the solutions into Europe. Of course, you can take the easy way and start selling globally with just one ‘partner’ increasing your daily number of shipments from 2 to 20, offering a ‘OK’ solution but always providing you with estimates in the checkout and connected to an expensive integrator service. Or, even worse – eating YOUR margins charging a revenue share on YOUR sold products, taking over YOUR checkout with bad payment conditions on YOUR sold products.
Global expansion is a critical strategy for retail businesses in a fast-moving market where retailers are constantly being asked to do more for less. So, the next valid question to be asked is why not grow your business with experts on each continent increasing your daily conversion from 2 to 200, using a direct B-C infeed connected to domestic networks, European customs and tax authorities? Russia is not Europe, Europe is not China and China is not the US.
Looking for opportunities and making calculated risks is traditionally key to making it in the retail space. If you’re not thinking about Europe as an expansion opportunity connected to a European partner, it’s likely that you’re missing out.
In our blog http://bit.ly/Get2EU ‘Expanding your retail presence into Europe’ we spoke about the fact that you can’t rely on Amazon, social media creating a global marketplace, knowing the market, to partner wisely and don’t mistake today for yesterday. Understanding the challenges, you’ll face of shifting from domestic to European markets, how to beat these challenges and to really understand European markets.
TOP 5 things to take into consideration as you craft your next move:
European e-commerce rules and legislations
The constantly changing rules and legislations, the recently-introduced GDPR, the new Union Customs Code (UCC), the Universal Postal Union (UPU), and taxation of cross-border delivery of commercial items by the end of 2020 — just to name a few.
Not only will your international shipping rates and shipping solutions need to change dramatically, but also your sales into Europe will drop-off your European sales. The lesson here is clear: retailers who continue to operate as if it’s “business as usual” with the new UCC and GDPR in place will miss out on their share of the huge European market and its associated turnover and margin.
Shipping solutions into Europe
Even for non-European brands and retailers with experience managing multiple domestic distribution centers, European distribution centers and legacy solution ‘partners’, adding Europe into their sales channels creates new challenges which require advanced optimization processes. Non-European brands and retailers must evaluate their order fulfillment processes and ensure they not only ship into Europe but are also efficient and cost-effective. They should not try to increase their sales from 2-20 order per day globally but from 2-200 just into Europe by shipping in bulk, connected to European domestic networks who accommodate local delivery solutions for each specific European country. Shipping cost doesn’t have to be disruptive — the right solution will help you to optimize transit times, clearances, final delivery and calculation of real-time shipping cost in the checkout.
Real time Duties, Taxes and Fees
Due to the constantly changing rules and legislations, European consumers may or may not expect to pay taxes and duties depending on the continent they shop cross border. The European consumer will always check this before a purchase to avoid the high (€ 13 / € 18) clearance cost from the postal services and integrators like DHL/UPS/FedEx and unexpected duties and taxes not shown in the checkout. Non-European brands and retailers often have no clue where to retrieve the correct amounts and how to deal with these challenges in their checkout. That’s why they only sell and ship DAP (Delivery At Place), collecting the product value and shipping cost and actually telling their customers they don’t care. If you sell and ship DDP (Delivery Duty Paid) you still need to classify your products upfront and absorb these costs in your sales price. Only this way you will avoid a huge lose on your margins and always connected to one of the integrators deferring the high clearance cost back to you instead of your European customer.
Classifying all your products upfront can be complicated but is critical to setting up European customers for a compliant and accurate checkout with no risk for you or your European customers.
Ship DAP (Delivery At Place): This option may look cheaper at checkout connected to a slow, cheaper and incompliant mail service to your European customer since no duties and taxes are shown. This way of shipping will create a bad customer experience at the time of delivery having your European customers to do a second payment at the time of delivery which can also cause additional delays.
Ship DDP (Delivery Duty Paid): This option may look a little more expensive up front to your European customer, but from experience your European customer knows he will save on the total cost for your sold product. An all-inclusive solution in the checkout connected to a cost competitive bulk shipping and compliant clearance solution, offers many different ways to show your European customers you really care about them. Depending on the connected shipping solution(s) the checkout price may even be cheaper for your European customers, since all duties, taxes and fees are fixed and therefore, significantly cheaper than a DAP brokerage fee connected to one of the integrators or mail services.
Most cross-border e-commerce solution providers only offer a (software) platform with no cost competitive shipping solution or clearance solution available all depending on the services of the integrators or mail services. AI (artificial intelligence) solutions only calculate estimates (duties taxes, fees and shipping cost) in the checkout with you taking all the risk at a final clearance in Europe absorbing their failures. At first these solution look like a good fit but when you really want to scale, these platforms don’t offer the capabilities necessary to really grow your European cross-border business at scale in a cost competitive way. As non-European brands and retailers continue expanding to different European countries, they often have to customize the solution of their current partner, stretching internal/external resources and cost. Why not use one solution for all European countries and open up all 26-member states in one go without any extra investment?
Localization and registration
Depending on what European countries you think you need to tackle first it’s most important the previous 4 bullets are in place, so you don’t make the same mistake as your competitors. In one of our previous blogs http://bit.ly/GoEUwarehouse we spoke about
Why you should spend a ton of money, time and resources managing two operations, double stock and additional European partners? Registrations, thresholds, clearances, customs and tax authorities can hold a big draw when you want to grow in a European market. Why would you need a European warehouse for your e-commerce shipments into Europe?
As you might have guessed, it’s more complicated than putting something in Google translate and getting international shipping packaging. Amazon may look like a good, simple and easy start when you are not familiar how Europe works. If that’s your strategy, it’s nearly impossible to really build your brand in Europe or stop with Amazon in Europe and finally trying to localize your European sales channels. After starting with Amazon, it is even harder to get European visitors to your .com website and start building a customer relationship. Eventually, your European customers only know you and your products from Amazon (also known as the world’s biggest product search engine), only looking for the best prices.
So, if you are already selling over 50 orders per day into Europe via your own e-commerce platform, shipping via a mail service and /r integrator service, you need to act now to stay head of the curve in Europe and the upcoming Brexit. Now it’s time get back in control of your ‘last mile’ delivery and customer journey? Do you still want to be flexible, cost competitive, complaint and would like to get a more in-depth insight for your current and future European sales strategy?
Contact us via our website or send an email to email@example.com and we are more than happy to schedule a call how we can help you doing more business in Europe and how to increase your European sales in a much more cost-effective and compliant way.