Today’s booming e-commerce market has presented great opportunities for DHL, FedEx and UPS as well as additional logistics solutions providers. Cross-border e-commerce shipping is one of the greatest opportunities for these organizations. Cross-border buyers are defined as shoppers who deliberately buy retail products outside their domestic market over the Internet. This opportunity is one in which the Boston Consulting Group describes as a way to make the world “flatter” in reference to Thomas Friedman’s bestselling book, The World is Flat.

The Boston Consulting group estimates the global market for cross-border e-commerce to be valued between $250 billion- $350 billion by 2025. Already we’re seeing this tremendous rise take shape in China. According to the country’s State Administration of Foreign Exchange, China’s cross-border e-commerce has reached $3.3 billion since the country began piloting cross-border foreign exchange payments in 2013. Additionally, volumes in the first five months of this year have already matched the volume of the whole of 2014. European cross-border sales are also a huge growth vehicle, with Forrester estimating this market to top $32 billion this year and grow to $45 billion by 2018. Even the United States is experiencing growth in cross-border sales with Canada, Australia and the UK the traditional destinations for US-based retailers.
As a result of this opportunity, FedEx and UPS have each made acquisitions within the past year to boost their capabilities. In late 2014, UPS acquired I-parcel, which according to the press release will “enhance UPS' ability in cross-border deliveries from the US and UK to more than 100 countries”. FedEx followed suit with the acquisition of Bongo International at the end of 2014. According to Bongo, it has a base of over 2,000 retailers across Europe, the UK and U.S. At the time of the announcement, Bongo provided cross-border enablement solutions to more than 200 countries worldwide. Likewise, Pitney Bowes entered the fray in May 2015 by announcing the acquisition of Borderfree. With this purchase, Pitney Bowes expands its portfolio of offerings and extends its global reach.

Typical services offered by these types of businesses may vary slightly, but range from duty and tax calculations; export compliance management; HS classification; currency conversions; international payment options inclusive of language translation; shopping cart management and fraud protection. One notable offering from I-Parcel enables online shoppers to access British and American websites as though they were shopping within their own country. Once items are sold to consumers overseas, retailers ship them to one of I-Parcel’s hubs in either Los Angeles, Indianapolis, New Jersey or in Surrey, UK. I-Parcel then ships the items overseas via commercial airlines, using local couriers to deliver items over the last mile.
Similar approaches are occurring with logistics providers such as SEKO Logisitics. The logistics provider teamed up with Australia Post for the launch of ShopMate, a secure delivery service for Australian online shoppers that enables them to buy from US retailers who do not ship to Australia.
United Arab Emirates-based Aramex also offers its own cross-border solution, Shop and Ship, which is an online shopping delivery service that enables customers around the world to receive purchased goods from US, UK and China online stores. The service is provided in more than 25 countries across the Middle East, Africa, Europe, and Asia. Aramex’s recent 25% stake in Ohio-based WS One Investment is expected to play a major role for US cross-border needs.

Retailers contemplating expanding e-commerce sales overseas have much to consider when compared to only selling domestically in the U.S. Should they pursue an internal solution or take advantage of the growing solutions offered by logistics providers as noted above? Retailers are cautioned to compare costs either way. Aside from an appropriate and functional website to meet local needs, logistics costs such as the service level of international air service, temporary or long-term warehousing and the selection of last mile delivery courier partner or partners should be considered in addition to the cost for customs brokerage and appropriate taxes.

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