With the dawn of a new holiday shopping experience comes a slew of new challenges for cross-border e-commerce retailers who want to keep costs low and profits high.
Holiday shipping surcharges are coming. Cross-border e-commerce retailers should be aware that some carriers are instituting larger fees than usual, both domestically and internationally. For example, FedEx recently announced an increase in global shipping surcharges — but luckily, these surcharges won’t go into effect until January 2021.
Why is this happening? Carriers are known to institute surcharges during peak retail seasons to offset the high volume of packages. This year’s hikes are directly linked to the global pandemic and lingering capacity and distribution issues. The recent surge in e-commerce shopping because of COVID-19 has driven higher volumes for couriers like FedEx, Landmark, and DHL, and the postal systems of many countries. And with the holiday season quickly approaching, a number of couriers have already announced additional surcharges to offset demand. Retailers will have to reckon with these added costs through smart digital strategies and increased consumer outreach. Making matters more complex for international e-commerce merchants, surcharges often vary by the carrier depending on volume, country of origin, where carriers normally ship to and from, and so on.
In addition to the spike in demand and the strain on international supply chains, the pandemic has forced many freight companies to limit capacity for safety reasons. The combination of high e-commerce expectations and low air freight capacity is expected to present challenges in timely delivery this holiday season, especially in Latin America, where experts predict slower delivery times on cross-border shipments.
The good news is that brands and retailers can thrive this holiday retail season by following these key steps now:
- Encourage Your Consumers to Shop Early
Given these challenges, cross-border e-commerce merchants will need to adjust their holiday strategies. “Shop early” is the name of the game this season. Retail experts agree that brands should encourage international consumers to shop earlier than usual for holiday gifts to ensure that purchases arrive in time. As online retailers face shipping delays by a parcel industry that is already struggling, this isn’t the year for brands to count on revenue from last-minute gift purchases that likely won’t arrive before Christmas. Holding online sales ahead of the traditional peak shopping times can provide an incentive for global customers.
Practical E-commerce advises: “Entice customers with a “buy before” date to avoid a surcharge. Most large retail chains are starting sales in October and spreading them out over several weeks. Online sellers could do that, too.”
- Keep Shipping Costs Low with These Shipping Strategies
Pending surcharges, coupled with the possibility of delayed package delivery, present some tough decisions for cross-border e-commerce merchants. Generally, merchants have three choices: they can absorb the additional cost, pass it on to their customers, or find other shipping options that fit their needs and budget.
Absorbing the surcharges may be an option for digital-first, direct-to-consumer retailers. But, as George Anderson from Retail Wire points out, surcharges can tack on margin pressure for retail brands pivoting more focus on e-commerce and that are taking a hit on their profits brought on by the pandemic. He notes: “Retailers, quite frequently, have eaten shipping surcharges as a cost of doing business in the past with the rationalization that online sales quite often represented an incremental gain on top of also strong volume at physical locations. However, the current reality is that some retailers are trying to build up store sales while occupancy limits and social distancing rules remain in place.”
In many global markets, consumers are accustomed to free or low-cost shipping, and it’s doubtful that they will accept any changes to that. Our research has shown that cost and delivery speed are top barriers for consumers in making cross-border e-commerce purchases. So, passing along that added cost to customers isn’t a good option for most online retailers.
Instead, this could be an opportunity for cross-border e-commerce merchants to evaluate their current carrier relationships and decide whether it’s time to forge new partnerships with carriers who aren’t planning surcharges.
Multichannel Merchant advises that retailers should button up their shipping strategy for the holiday rush as soon as possible to allow time for any necessary adjustments. Free or cost effective shipping is a priority in many locales, so it is important to look into low-cost ground services rather than air. One way to offset the cost of free shipping is to increase thresholds for that shipping option. This will help retailers to optimize the available shipping options for customers offering them choices around speed and cost.
- Use Flow’s Logistics Model
Most international e-commerce stores have two basic ways to ship around the world: express or standard shipping. At Flow, one of our core competencies is monitoring all of the global logistics changes, including identifying new carrier surcharges and carriers that can no longer deliver to a certain region. Flow leverages tools to help us stay on top of these status changes for our cross-border e-commerce customers, while also keeping them informed and enabling them to make alternative shipping arrangements for customers by region. That’s the benefit of partnering with the experts instead of trying to manage the many moving parts on your own during this complicated time.
Flow’s experts have been closely tracking status changes by global carrier and service type throughout the pandemic. This careful monitoring allows us to integrate these changes into our customers’ localized e-commerce websites to ensure a frictionless checkout experience for global consumers. This approach means that when your consumers make a purchase, they are only seeing the shipping options that are currently available to them, based on their location and any carrier restrictions to that country. It also gives our cross-border e-commerce customers confidence that they will be able to fulfill orders in time for the holidays.
To find out more about how Flow’s cross-border e-commerce platform can help mitigate the cost and timeliness of holiday shipping this season, get in touch with one of our experts today.