This is a special guest contributor post by Nathan Resnick, CEO of Sourcify
The money we were spending on shipping to customers in Europe started to add up … fast. Unfortunately, delivery was anything but.
Even though we usually sent packages USPS First Class International, arrival was sporadic. Sometimes, they’d show up in seven days. Sometimes, it’d take almost a month.
Then, the customer complaints started.
We knew we needed a change, especially because fulfilling products in America to be shipped to Europe didn’t make much sense when we were importing from China.
The opportunities of global ecommerce are too big to be ignored. Likewise, so are the costs, dangers, and pitfalls.
If you find yourself in a similar situation — or, if you’re about to launch a brand new global ecommerce market strategy — it’s time to consider an international fulfillment partner.
Do You Need an International Fulfillment Partner?
The temptation is to think that an international fulfillment partner is only a necessity during and after rapid growth. Such thinking, however, is a recipe for a “too little, too late” situation.
The vast majority of ecommerce business already rely on an international manufacturer. The great irony of this situation is that very few of the business I’ve advised take advantage of their global sourcing when it comes to sales, storage, and shipping.
Not only are countries like China, India, and South Korea some of the most popular manufacturing locations, they’re also home to some of the fastest growing ecommerce markets.
In other words, don’t overlook the opportunities in your manufacturer’s backyard.
Or, think of the flip side: if you’ve already launched an international strategy and are currently hosting your own warehouse, your company is like taking on unnecessary costs during slow times. A fulfillment partner enables you to mitigate that off-time risk.
And it’s not just about logistics.
Fulfilling shipments is notoriously monotonous and bearing the brunt of it yourself isn’t an effective use of your team’s time. By outsourcing fulfillment, your team can focus on growth.
Lastly, one of the rarely discussed pain points of growth is an organizational infrastructure that can’t keep up with demand. Your company could literally be pushing the screws out of your current fulfillment setup. You may not know how to scale it. That’s when you turn to a fulfillment partner.
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Ask Yourself …
If you see a rise in international customers or are in the planning stages of world domination, first ask yourself the following questions:
- What are my current customer needs abroad?
- Where are most of my international customers based?
- Are current international customers pleased with our customer experience?
- What are current average international ship times?
- What is it costing me on average to ship to a international customer?
- In the next five years, do I see my business continuing to grow abroad?
If these questions spark a realization that it’s time to consider a international fulfillment partner, your first step will be to project your needs. Figure out what your company will need to make international customers happy in the coming months and years. From there, it will be time to see which international fulfillment center you can grow with.
The first aspect of a fulfillment center to consider is their capacity. A fulfillment center starts with a warehouse and if they don’t have warehousing space to expand to, you may soon find yourself in trouble.
At Sourcify, when we help our clients deal with international fulfillment, we tend to recommend fulfillment partners who also plan to grow. Imagine moving into a new fulfillment center with your current partner. You’d be able to use new equipment, yet may also face the struggles that come with opening up a new warehouse alongside your fulfillment partner.
The second most important aspect to consider is your fulfillment partner’s integration ability. You usually don’t want to change your tech stack just to fit with this partner’s. The international fulfillment partner you work with should be able to integrate with your Shopify store and any omni-channel software you currently use.
You may also want to ask if your international fulfillment partner handles any value add services like importing your product from your factory to their location. This tends to fall under a logistics partner’s responsibility, yet working with a fulfillment partner who could handle both would be a plus.
The Benefits of an International Fulfillment Partner
The main benefits of working with a international fulfillment partner include:
Optimized international shipping
Chances are you’re producing your products in Asia. If you have to import your products from there to America and then ship them back out to Europe, you’re losing money on every single transaction.
The right way to do this would be to ship from your factory in Asia to a fulfillment partner in Europe who then handles the shipment to your local customers in that region of the world.
Avoid owning a lease on warehouse
While owning your own warehouse can enable you to have full control over your inventory and customer experience, it often isn’t worth the cost that comes with it. During slow times you may be overstaffed and it will be hard to cut this fixed cost if you need to downsize.
Priced to grow
The more you ship, the more you pay. It’s simple math. Except when it’s not. A fair fulfillment partner can reverse that equation as you scale. Pick and pack fees in particular (discussed more below) should lower as you increase volume.
If you handle your fulfillment in house, you need your own team to manage that. Working with a fulfillment partner enables you to bypass the need to hire a team to handle this part of your business. Internationally, this can be a huge win, as dealing with employees in a foreign country is complex.
Minimize shipping errors
When you start fulfilling orders in house, you often aren’t ready to scale up. If your current team won’t be able to handle a 10x increase in order volume, imagine what would happen at a 100x increase in volume. If you choose the right fulfillment partner to work with, you’ll be able to grow with them.
Decrease costs over time
I don’t want to sugarcoat this: starting out with an international fulfillment partner isn’t cheap. Not only do you need to dedicate inventory abroad, you will also have to pay for setup fees. Over time though, the cumulative effect of the above-stated benefits lead to major cost reductions.
And on that note …
Main Costs to Consider
Compared to an in-house setup, where you’re balancing out a warehouse employees salary, the cost basis of a fulfillment center is relatively clear cut.
The main costs include:
In addition, be wary of duty costs when importing products to certain countries. This is almost always paid by the receiver and can vary widely per product.
To create a smooth relationship, ensure your end customer knows the cost of receiving your product in their country.
As a jumping off point, The International Trade Administration’s (ITA) Country Commercial Guides contains the “market conditions, opportunities, regulations, and business customs for over 125 countries prepared by trade and industry experts at U.S. embassies worldwide.” They’re organized on a country-by-country basis:
Once again, however, if you’re shipping domestically within another country — i.e., from manufacturer to warehouse to customer — your end consumer won’t have to pay any import duty. This is just another reason to ship smarter and optimize your supply chain by working with an international fulfillment partner.
- The Beginner’s Guide to International Warehouses in Global Ecommerce
- Third Party Logistics (3PL): Everything You Need to Know About the One Thing that Can Devour Your Success
- Using Fulfillment Services to Enter International Markets
- Introducing Shopify Shipping Scripts: Innovative Shipping Customizations To Grow Your Business
We’re Going Overseas
With the continued trend of globalization, there’s strong reason for your company to link arms with an international fulfillment center.
In fact, cross-border online consumer purchasing is increasing 28% a year and will reach $1 trillion by 2020. On top of that, total worldwide ecommerce sales is predicted to hit $4.5 trillion in 2021.
This rise in global commerce should expand the horizons of your ecommerce store. Don’t limit yourself to one location; it’s time to focus on international growth.
That moment when you feel like an international customer has the same experience as a domestic one is when your business will have crossed borders. This is when you’ll really be able to spark an international brand and create seamless customer relationships across the world.
About the Author
He has brought dozens of products to life and continues to foster long-term relationships with overseas and domestic manufacturers after living in China.