The landscape for cross-border e-commerce has changed drastically over the last two years. It’s been reshaped by the global pandemic, which greatly inflated demand, while simultaneously causing logistical hurdles. Customs have become more complicated; 2021 saw the arrival of the EU’s Import Control System 2 (ICS2), and the USA’s STOP Act. Now, with conflict in Ukraine, port blockages, and steeply rising costs of raw materials, fuel and power, new challenges abound.
In this climate, SMEs, for instance, niche fashion, homeware, and health and beauty brands, may be deterred from expanding their e-commerce operations internationally. However, to achieve revenue growth, exploring new markets remains a key business objective for many. So, how easy is it to send orders internationally today, and what are the risks?

Shipping overseas as a growth strategy

When expanding e-commerce beyond the domestic market, most UK-based companies tend to focus first on neighbouring EU countries and the US, Canada, New Zealand, and Australia –proximity and English-speaking countries. These are relatively ‘easy to do’ markets, even if Brexit red tape and geographical distance, (and therefore costs) are currently posing challenges.

But it’s important not to overlook opportunities in less obvious places such as India, Israel, the Middle East, and, increasingly, Southeast Asia. These all need careful research and planning by retailers and brands, because of language, customs, cultural, and location challenges. It’s vital to find shipping or specialist partners who are well-versed in transporting packages into destinations that are quite simply ‘harder to do’, but that will deliver great yields once established. If the chosen partner operates a network model, whereby there are already commercial relationships in place with air freight operators, postal services, and last-mile couriers around the world, so much the better.

For instance, UK eco-bottle company Chilly’s began shipping to European countries first and added farther-flung destinations over time. Asendia runs their European fulfilment service via our Bedford facility, including the pick and pack operation, and distribution for overseas orders. As with all fast-growing SMEs, Chilly’s needed flexible storage, and full scalability, so that they never missed a sales opportunity as new countries came on stream. And because Asendia has a global network for shipping, and fulfilment centres in Asia and the USA, Chilly’s was able to build these markets.
Today the beautifully-designed reusable water bottles are being shipped to 32 countries outside the UK, to the delight of online shoppers in Sweden, Hungary, Portugal, Hong Kong, Qatar, and many more destinations.

Streamlining customs control

A common mistake for e-commerce SMEs is to rush into sending all orders out ‘express’ to ensure customers are happy, but there’s a risk of losing margin doing this. It’s better to only offer a basic delivery for overseas shipments – receipt in five working days, for example – which is cost-effective. Then as soon as volumes are high enough, costs can be negotiated for a good express delivery rate. SMEs planning international e-commerce logistics should take returns into account too, checking that couriers have adequate systems in place to manage that vital service, factoring in international borders.
Retailers need to have the right commodity codes and understand duty and VAT rates. An SME venturing abroad will have a choice: do they want to own customs compliance, hire a broker, or let the partner do it for them? Investing in these outsourced services should be carefully considered. What exactly are the charges? Is value being delivered? If the chosen broker or logistics partner doesn’t manage customs and VAT well, it can lead to parcels being stuck in ports for weeks, with the brand facing hefty customs fines because the paperwork is wrong.

Benefits of a specialist e-commerce partner

Typically, a freight forwarder collects and moves a company’s goods and completes the customs declarations on their behalf. E-commerce specialists may also provide optional services, including warehousing, pick and pack, storage, and returns management. Some may also facilitate cash flow and administrative benefits by simplifying and deferring customs obligations.

A good distribution partner might also take on an advisory role. For instance, they should be able to recommend where in the world a brand’s products would sell well. For instance, at Asendia our data makes it very clear that France is a hot spot for fast fashion, while shoppers in Israel love British childrenswear brands. If you can ship to countries where there is a niche market for your product, sales can fly.

Flexibility wins sales

The ongoing global shortage of shipping containers and air freight flights has led to painfully high delivery costs and long wait times. One workaround is to find warehouses nearer to your overseas customers, and stock them ahead of time, so shoppers can get their orders in just a few days.

E-commerce shipping and fulfilment specialists see a bright future as enablers of retailers’ cross-border plans and are investing in international fulfilment hubs, similar to those operated by the likes of Asos.com, Amazon, and Alibaba (the Chinese e-commerce giant). Shipping specialists understand international shipping lanes, can advise on the quickest, or safest cross-border routes, and have access to highly sought-after warehouse space and specialist fulfilment services. Proactive shipping companies will also find alternative routes and new ways of reaching customers when unexpected problems arise along traditional supply chains – often at very short notice.

For niche, independent brands with lofty ambitions, it will pay to work with experts who can fully support their plans to scale-up cross-border operations in the most cost-effective, and flexible ways. In my view, the pressure has never been greater for shipping partners to step up and help smaller customers navigate today’s endless red tape and logistical black holes.

Carl Loader, Fulfilment Director, Asendia UK