Understanding Cross-Border E-Commerce Logistics

October 17, 2017

 

Cross-border e-commerce is such a dynamic market and so are its challenges in the area of logistics. Why? Technology is moving fast. To understand these challenges, let us break them down into four categories.

 

Visibility and control. In a scene where multiple parties need to collaborate, businesses face one of their biggest hurdles in cross-border e-commerce: achieving full visibility and control over their supply chain. Full visibility means knowing what happens on the ground end to end. It means "seeing through" your ocean and air freight partners, the custom clearance, warehouse operators, local logistics partners, and all other parties that take part in your operations. Having control means being able to impose protocols and standardize your processes across the entire supply chain at a desired level. 

 

Customs and regulations. Every country has its own custom procedures and import regulations. Regulations on product liability, international payments, and exporting of certain product brands vary by country. Most of these regulations not only impact the processing time but also add to the cost. For instance, several countries require product labels to be in their local language. On top of this, these regulations tend to change periodically which makes it difficult for e-tailers to cast their processes on stone. In fact, in the U.S. and other developed countries, decisions on tax inclusions for e-commerce transactions are still unsettled. Imagine the issues and inconsistencies that less developed countries may have.

 

Consumer-driven expectations. To get a cab ride, consumers only need to tap a few buttons on their mobile devices. Then, they expect to be fed with relevant information without necessarily requesting for it:  e-receipts for that cab ride, email reminders about their flight, SMS notifications about the next big sale, and so on. Consumers want and expect this same instant experience from logistics services. However, logistics is much more complicated than most digital services we consume today. E-tailers and e-commerce businesses have to deal with scenarios that are not fully visible to them. And then there's the complexity of returns, re-delivery, and reverse logistics. Finally, cost is a tricky issue. Consumers generally want same-day delivery for the cost of five-day delivery. Although there is room for businesses to identify markets that are willing to pay the price, higher logistics cost does not necessarily assure better logistics service. Ultimately, the dilemma of businesses lies on how to comply to these consumer-driven behaviors on top of the cost demands and limitations in infrastructure and geography in each country. 

 

Returns. Delivery return and refund policies is one of the major factors that affect customers' purchase decision. There is definitely a need for strong returns management. Businesses must be crystal clear about how they handle and manage returns: Does it go back to the warehouse? Does it require additional cost? If it's a remote area, do they tap on the services of nearby convenient stores? Evidently, most players in cross-border e-commerce do not have these things figured out just yet. 

 

So how can businesses tackle these challenges? It is clear that technology is the mover of change in the e-commerce world, no less than it is in other industries. By the same token, what e-commerce businesses need is to use technology to counter these challenges. Ultimately, they need a platform that addresses all these challenges from top to bottom and therefore enables them to offer the right products, quality services, and sustainable pricing. 

 

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