This article originally appeared in the 2018 September/October issue of PARCEL.
As most of you know, 95% of the global population lives outside the US. If you have had success in the US, great! But don’t get too complacent — you are just beginning the journey to a highly successful e-commerce business. Global consumers are very similar to domestic consumers but present some additional challenges, such as distance, customs, language, cultural differences, product quality, and the lack of personal touch. Global consumers are looking for products from other parts of the world based on quality, lack of availability in their own country, and price. Most notably, global consumers are looking for:
1. High quality products that are unique
2. Ease of use of website
3. Fast, reliable, consistent delivery… and did we mention it needs to be cheap?
In regards to the delivery aspect of global e-commerce, let’s face it: Two-day delivery at a low cost is a very difficult task. It is essential to develop a delivery strategy based on your customers’ expectations. It is critical to understand what your customer is willing to pay for delivery. However, if you are selling a higher-value item that will net a bigger profit, you may be able to offer free shipping or a flat rate. This formula can only be determined based on the price elasticity of your product, and it may vary by country. The closer you can get to offering a low-cost (or free!) shipping option, the more likely that is to drive future sales. Your customers are coming to your site because your product is unique and competitively priced. For lower valued products, you may want to look at package consolidators such as DHL eCommerce, UPS Mail Innovations, Globegistics, IMEX, IBC, Aprisa Express, Zenda, etc. The package consolidators offer a competitively priced service but at a slower delivery time compared to the Express providers (DHL Express, FedEx, and UPS).
In addition to the cost and speed of delivery, the global consumer wants to have complete visibility of the tracking of the shipment. This is an area that the lower cost service options struggle with in providing. Customers are also looking for consistency in delivery. If your global consumer makes multiple orders on your website, they will establish a delivery expectation from just the first couple of orders. They know that if they order from XYZ.com, they will get their package in seven days, which becomes an established expectation. Most research indicates that global consumers want it fast but don’t want to pay a lot for that service; this is where merchants need to figure out what works best for their customers in each country. As you grow your global business, you may want to look at partnering with a local/regional 3PL. This will get you closer to your customers and will allow you to be more competitive in service and cost.
Recently, there have been a lot of developments regarding trade barriers in the news, but this does not seem to be impacting the global e-commerce business. Stay the course and seek that massive opportunity outside the US! Global consumers are just like domestic consumers… they want their shipments fast and cheap!
Michael J. Ryan is the Executive Vice President at Preferred Parcel Solutions and has over 25 years of experience in the parcel industry. He can be reached at 708.224.1498 or.