As more consumers make ecommerce purchases outside their home country, brands are expected to deliver transparent and efficient experiences. Global supply chain bottlenecks and customs clearance be damned, consumers want their orders as soon as possible, with no unpleasant surprises.
Tackling cross-border logistics is no small feat, but with the right technology and third-party logistics (3PL) partners in place, brands can rise to the occasion and avoid crucial mistakes. In this blog, we will cover the top cross-border logistics and shipping challenges, plus what brands can do to deliver exceptional international customer experiences.
What is Cross-Border Logistics?
Before we jump into the cross-border logistics strategies, let’s get on the same about what we mean when we say “cross-border logistics.”
Cross-border logistics refers to the processes, methodologies, and services required to move products across international borders. It encompasses a vast array of activities from coordinating multiple transportation modes, understanding and complying with diverse international regulations, to ensuring the seamless delivery of goods to the end customer.
Why Cross-Border Logistics Matters
As international ecommerce continues to boom, businesses are not just competing on a local or regional level but are reaching customers globally. In this increasingly interconnected global marketplace, cross-border logistics has become critical.
Cross-border logistics is about bridging the gap between sellers in one country and consumers in another. A reliable logistics system and strategy ensures that businesses can cater to growing global demand and deliver experiences that look and feel local even when they span international borders and cover great distances. Meanwhile, efficiency in logistics is key to streamlining operations and reducing costs in the face of added complexity.
Top 5 Challenges of Cross-Border Logistics & Shipping—and How Your Business Can Respond Strategically
As businesses look to expand to new markets and geographies, they inevitably confront a new array of challenges. How they respond to these challenges with their cross-border logistics and shipping strategies will make or break their success.
Below, we dig into some of the top challenges facing organizations today—and offer our insights on how to develop a strategic response.
1. Meeting Ever-Changing Customer Expectations
Online shopping has become the norm for most shoppers, and now consumers are getting even more comfortable with buying products from international brands. Regardless of where they are buying from, shoppers expect a familiar and seamless experience from browsing, to checkout, to delivery. What’s more, expectations of delivery times for cross-border purchases can vary based on the purchased items, geographical location, and even brand reputation.
Your cross-border shipping strategy:
Whether it’s fast shipping, cheap freight rates, or an easy return process, brands that have a more extensive global supply chain can outperform their competition. Of course, one doesn’t simply gain this competitive advantage overnight – at least not on their own. While a long-term focus on expanding your reach can help you find new customers, the right cross-border logistics partner can help you cover gaps in your international go-to-market strategy and uncover new efficiencies.
2. Customs Delays at the Border
With any product that crosses international borders, customs delays can be one of the most frustrating parts of cross-border selling. To avoid these delays, brands are expected to:
- Provide accurate item classification codes and correct customs documentation
- Give clear product descriptions
- Ensure taxes and fees are paid appropriately, and on time
- Note the correct value and quantity of goods being shipped
- Ensure shipments are packed correctly
- Ensure that country restrictions and regulatory requirements are met
Complying with international trade laws and customs requirements can be daunting and can have a big impact on the customer experience.
56% of cross-border shipments are delayed due to product misclassification.
Don’t go it alone in cross-border logistics:
The complexities of getting your goods across international borders make it crucial to have the right global logistics partner on your side. Leverage the experience of a partner that can simplify taxes and landed cost calculation, clear compliance hurdles, and ultimately help you avoid the kinds of customs delays that can cost you customers.
3. Accurate and Transparent Landed Cost Calculation
When shipping products internationally, it’s crucial for brands to provide customers with transparent delivery costs at checkout. Brands that don’t offer this put their customers at risk of paying additional costs when their order is delivered. Unless it’s a smaller market where consumers expect such an experience, brands risk losing repeat buyers when consumers have to pay more than they expected.
Your cross-border logistics response:
Delivered Duty Paid (DDP) is the industry term for when the total landed cost — including the value of goods, import duties, import taxes, shipping, and any fees — is prepaid by the shopper at checkout. DDP is best practice for delivering better customer experiences. DDP is not always an option in smaller markets due to logistical challenges, but your logistics partner should be able to offer a DDP checkout experience in the markets that matter most.
The other option is Delivered at Place (DAP), where the shopper does not pay any import duty, tax or fees up front during checkout. Rather, the shopper pays the landed cost upon the shipment’s arrival in the destination country. This often results in the shopper being surprised by the unexpected costs, which can result in refusals. However, in smaller markets, DAP might be the only option due to logistical challenges. That’s why it’s important to look for a partner that offers guaranteed landed cost at checkout to remove the risk of any surprises.
You can learn more about DDP vs. DAP in this infographic from Avalara.
4. Global Supply Chain
Businesses of all kinds faced no shortage of challenges in the global supply chain when demand skyrocketed during the COVID-19 pandemic. Clogged ports, a lack of raw materials, limited shipping containers, and even a shortage of workers all led to delayed shipments, canceled orders, and mounting issues for many ecommerce sellers. The supply chain crisis was a wakeup call for brands to think outside the box and find ways to keep their customers happy.
And even as the worst effects of the crisis begin to wane, a number of issues are continuing to disrupt the ways businesses are able to deliver goods. If before, businesses faced a wakeup call, they now need to come to terms with the “great supply chain reset.”
Updating your cross-border shipping strategy:
Some factors in the global supply chain — like geopolitical concerns and inflationary pressures – are out of a brand’s control. Still, there are always ways to be more efficient and transparent throughout the entire shipping process. In many ways, that’s what the supply chain reset is all about. Rather than rigid, linear approaches, today’s world needs multi-dimensional solutions that help improve transparency and agility. That’s why technology systems such as Warehouse Management Systems (WMS) and Order Management Systems (OMS) are important.
Meanwhile, transparent communication with customers is crucial as ever. Track and trace technology can enable customers to follow the progress of their shipment, but not all platforms are created equal. Some track and trace technologies lack transparency, often informing customers that their shipment is in transit when in actuality the package is sitting in a warehouse.
Another way to combat global supply chain issues is adding additional international warehouses. This can be done by working with a logistics aggregator who has established warehouses around the world. If you’re happy with your existing logistics partners, find an aggregator who can complement your existing supply chain rather than replace it. Offering pre-orders is another way to help with inventory planning so you can deliver by a specific date. And finally, provide discounts and cheaper shipping rates to gain returning customers.
5. Return Processes
Let’s face it: returns can be a long and tedious process for any purchase. For most online shoppers, the customer experience doesn’t stop when their package is delivered to their doorstep; it ends when they receive a refund from a returned purchase. Returns make up a large portion of the ecommerce experience.
In 2022 alone, retailers lost $212 billion to ecommerce returns, which means if brands aren’t delivering a streamlined, convenient process, they can lose customers for good.
You need cross-border shipping and logistics in reverse:
To ensure the returns process is fast, easy, and painless for the shopper, brands need to have the right technology in place to support reverse logistics. Here, again, having the right track and trace solutions in place can be a huge difference-maker in providing a transparent, seamless experience. And that goes for both businesses and their customers. By ensuring that you — or your logistics partner of choice — have an effective RMA process in place, you can keep track of all returns, inventory, and finances to process your returns (and the refunds customers desire) efficiently.
The Bottom Line
As international shopping continues to gain popularity, brands need to ensure they have the right cross-border logistics systems, processes and technology in place to be successful. But taking on all these complex challenges can be daunting.
Digital River has more than 25 years of experience helping brands sell internationally and offers an extensive logistics network that easily flexes to fit your unique needs — and complement your existing suppliers. In a single back-end solution that integrates with your chosen commerce platform, we simplify global payments, taxes, fraud, compliance, and logistics. Our integration localizes your checkout experience for optimal conversions, provides a guaranteed landed cost calculation through our global tax solution, mitigates fraud and automates regulatory compliance.
Interested in learning how Digital River can help your brand remove the complexities of cross-border logistics? Connect with us today