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 logistics challenges and what brands can do to deliver exceptional cross-border customer experiences.
Top 5 Challenges of Cross-Border Logistics
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. And not to mention, expectations of delivery times for cross-border purchases can vary based on the purchased items, geographical location, and even brand reputation. So, 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.
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. So, it’s crucial to have the right global logistics partner that can help you avoid delays.
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 what they expected.
Delivered Duty Paid (DDP) is the industry term for when the total landed cost¾including the value of goods, import duties, import taxes, shipping, and any fees¾is 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 in the checkout. Rather the shopper pays the landed cost upon the shipment arriving at the destination country. This often results in the shopper being surprised by the unexpected costs, which can result in refusals. And in smaller markets, DAP might be the only option due to logistical challenges. So 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
There’s been no shortage of challenges in the global supply chain as demand skyrocketed during the COVID-19 pandemic. Clogged ports, lack of raw materials, limited shipping containers, and even a shortage of workers all led to delayed shipments and even canceled orders. It was a wakeup call for brands to think outside the box to keep their customers happy.
Some factors are out of a brand’s control, but there are ways to be more efficient and transparent throughout the entire shipping process. Technology systems such as a Warehouse Management System (WMS) and Order Management System (OMS) are important, but transparent communication with customers is also crucial. Track and trace technology enables 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 2021 alone, retailers lost $218 billion to ecommerce returns, which means if brands aren’t delivering a streamlined, convenient process, they can lose customers for good.
To ensure the returns process is fast, easy, and painless for the shopper, brands need to have the right technology in place that can support reverse logistics.
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 multiple logistics models that complement your existing supply chain. 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 powered by Avalara, mitigates fraud, automates regulatory compliance, and offers freight rates that are 80% lower than most carriers.
Interested in learning how Digital River can help your brand remove the complexities of cross-border logistics? Connect with us today