So many parts of your business require the right partners to get your products to your customers. Whether website and app managers, retail staff, the factory workers and makers of your product, or the folks on the ground selling it, partners are essential to making your business run smoothly and efficiently.
This is especially true when it comes to shipping partners in the quest to go global.
Global ecommerce has evolved in the past five years, and it’s not going to stop. In 2022, the global ecommerce market was worth close to $98 billion. By 2030, it’s expected to reach $230 billion. If your buyers are global, you’ll need fulfillment partners to ensure orders arrive on time and intact.
The wrong partner can strain your global fulfillment orders. It may be an issue of compatibility, but it’s possible they simply can’t fulfill your orders. There have been examples of orders that once took operators 15 hours to fulfill—from completed checkout to pick-up by a carrier for delivery—now taking up to 21 hours. Every second counts when it comes to getting orders to your international customers and, more importantly, meeting their expectations.
The obstacles to fulfilling international orders changes by the day, whether through labor crises, suspended services, added surcharges, conflict between regions, a lack of warehouse space, or general delays from increased ordering and lack of supply.
Keeping the fulfillment promises you make to international customers requires a close working relationship with your international fulfillment partners. Regular and transparent communications with fulfillment partners provides the insight necessary to adjust shipping options and appropriately set customer expectations.
Here are some crucial questions and considerations for finding and retaining a global fulfillment partner—like whether you need this kind of partner at all, or how buyer behavior will shape your fulfillment efforts. Consider these questions to understand what this path to global commerce may cost you.
Table of Contents
- Do you need a global fulfillment partner?
- How changing consumer behavior impacts global fulfillment
- International fulfillment partner considerations
- The cost of international fulfillment
- How Shopify Markets Pro can help your global commerce efforts
Do you need a global fulfillment partner?
Navigating your global business needs hinges, in part, on identifying whether you need international fulfillment partners. The temptation is to assume an international fulfillment partner is a necessity after rapid growth, or that all 3PL providers are the same.
The vast majority of ecommerce businesses already rely on an international manufacturer. The irony is very few of these businesses take advantage of their ability to source globally when it comes to sales, storage, and shipping.
One of the rarely discussed pain points of growth is an organizational infrastructure that can’t keep up with demand. You’re not alone if you’re unsure of how to scale your current fulfillment setup. That’s when you turn to a fulfillment partner.
Don’t overlook the opportunities in your manufacturer’s backyard. Not only are countries like China, India, Germany, and South Korea some of the most popular manufacturing locations, they’re also home to some of the fastest growing ecommerce markets.
On the flip side, if you’re already hosting your own international warehouse, your company may be 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 shipping may not be the most effective use of your team’s time. By outsourcing fulfillment, your team can focus on growth and other key drivers of the business.
How changing consumer behavior impacts global fulfillment
Customer buying behavior evolves, of course, as our buying habits, product trends, technology, and culture change over time. The COVID-19 pandemic was one recent driver of change. Buying on social media is another massive driver of change in consumer behavior. The idea that buying online—and from anywhere in the world with a few clicks—keeps businesses on their figurative toes.
Keeping up with the habits of your consumers will set you apart from competitors, especially for your international buyers—because customers today expect their products to get to them as fast as possible. This is only possible through the right combination of technology and partners working with a business.
With global fulfillment, there are added obstacles of transporting from one region to another (say North America to Europe) via plane or boat, which can take time. Be sure you understand customer behavior in international regions to ensure you have the right strategy and fulfillment in place. Building that into the promise you make your customers sets their expectations that they’ll get their order as soon as possible.
You can ask yourself the following questions about your international customer base, or if you’re in the planning stages of going global:
- 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 an international customer?
- In the next five years, do I see my business continuing to grow abroad?
If these questions spark something, that means it’s time to consider an international fulfillment partner.
How can a fulfillment center help global ecommerce fulfillment
Fulfillment centers might be able to help you meet your business’s goals. Figure out what your company will need to make international customers happy in the coming months and years. From there, figure out which international fulfillment center can grow with you. That last part is important if you’re setting goals for years from now and will need partners who are able to adjust as your brand grows.
The first aspect of a fulfillment center to consider is capacity. A fulfillment center starts with a warehouse, and if there’s no warehousing space to expand to, you may soon find yourself in trouble. Instead, international fulfillment partner Sourcify recommends finding a fulfillment partner who can scale with your business.
Another aspect to consider is your fulfillment partner’s integration ability. You don’t want to change your tech stack just to fit with a partner’s. The international fulfillment partner you work with should be able to integrate with your Shopify store and any other omnichannel 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, but working with a fulfillment partner who can handle both is a plus.
Likewise, ask about a 3PL’s ability to bundle items. This type of capability can help you quickly adapt to business crises, or other surprising shipping events, when people are more likely to buy in bulk, stock up on inventory, or order a lot, to name a few.
Zion Market Research global ecommerce fulfillment market size Source: Zion Market Research
International fulfillment partner considerations
Resilient supply chains often spread manufacturing, fulfillment, and shipping risk across multiple vendors and locations. This strengthens brands ability to continue operating during a strained period in time, or situations involving a lack of warehouse space, or any other obstacle that may impact a portion of the supply chain. However, building diversification and resilience into the supply chain can also add costs that may seem unnecessary in times of economic prosperity.
Consider the impact international fulfillment operations will have on your company’s cost structure in both good times and bad, and weigh that against the risk of not diversifying and being unable to optimally fulfill international orders during the next crisis.
With that cost-benefit analysis in mind, here are the main benefits of working with an international fulfillment partner.
Optimized international shipping
Many brands currently produce the bulk of their products in Asia, or in the Asia-Pacific region. If you have to import your products from there to North 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 European customers.
Avoid owning a lease on a warehouse
While owning your own warehouse gives you full control over your inventory and customer experience, it often isn’t worth the cost. 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. A fair fulfillment partner can reverse that equation as you scale. Pick-and-pack fees help lower costs as you increase volume.
No in-house management
If you handle your fulfillment in-house, you need your own team to manage that. Working with a fulfillment partner avoids all that. Internationally, this can be a huge win, as dealing with employees in a foreign country is complex.
Minimized 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 an increase to the magnitude of 10 in order volume, imagine what would happen at a magnitude of 100. If you choose the right fulfillment partner to work with, they’ll be able to grow with you.
Cost decreases over time
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 return on investment (ROI) on this kind of partnership, and the cumulative effect of the above-stated benefits, leads to major cost reductions.
Worker safety priority
Ensure any 3PL you partner with prioritizes warehouse worker safety. When interviewing potential partners, ask to see their business continuity plan (BCP). This will help you determine how thoughtful the partner may be, what they prioritize (people versus profits), and how they might behave during future crises.
The cost of international fulfillment
Compared to an in-house setup, where you’re balancing out a warehouse employee’s salary, the cost basis of a fulfillment center is relatively clear cut. But 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 more than 125 countries, prepared by trade and industry experts at US embassies around the world.
Once again, however, if you’re shipping domestically within another country—i.e., from manufacturer to warehouse to customer—your end customer 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.
In regions where fulfillment is experiencing delays, it’s crucial to understand the likelihood the goods you sell might be deprioritized in favor of items deemed essential. On-demand warehousing allows you to scale up and down based on demand and is an alternative to consider when planning your global fulfillment footprint.
If you’re preparing to negotiate with a global fulfillment partner or have already established global fulfillment capabilities and sales have declined materially, fulfillment time has increased significantly, or fulfillment of your goods is being deprioritized, then negotiate with your fulfillment partner. Inquire about discounts on pick fees, or zero-cost receiving, in which your 3PL receives inventory directly from your manufacturer at no cost. If you have direct relationships with carriers, talk to them about discounts or arrange new mutually beneficial pickup methods or frequencies.
Supply chain diversification efforts impact globalization in ways that may change how and where we operate our businesses. As long as consumers demand goods from brands outside of their region, you’ll likely need to consider establishing global fulfillment operations.
This rise in global commerce is going to expand the horizons of your ecommerce store. Don’t limit yourself to one location; it’s time to think about international growth if you haven’t already. In 2021, the global cross-border online shopping sector was valued at roughly $785 billion. The same report estimates the global B2C cross-border ecommerce market will reach a value of $7.9 trillion by the year 2030.
That moment when an international customer has the same experience as a domestic one is when your business will truly have crossed borders. Then, you’ll really be able to spark an international brand and create seamless customer relationships across the world.
How Shopify Markets Pro can help your global commerce efforts
Cross-border management doesn’t need to be complicated. With Shopify Markets Pro, you can set up and manage selling your products in international regions directly from your Shopify admin. Shopify Markets Pro powers your selling with the Global-e, which helps you to scale and optimize global ecommerce.
Access global markets overnight
Global Fulfillment FAQ
What are global fulfillment services?
Global fulfillment services are a type of logistics solution that allows companies to quickly and efficiently ship products to customers around the world. These services provide companies with access to a global network of warehouses and distribution centers, allowing them to ship products to customers regardless of their location. They also provide customs and import/export services, tracking and reporting, and other logistics services.
What are the types of fulfillment?
- Drop Shipping: This is a type of fulfillment that involves a third-party supplier shipping directly to the customer.
- In-house Fulfillment: This type of fulfillment involves a company managing the entire process of fulfilling orders from the point of sale to the customer’s door.
- Third-Party Logistics (3PL): This type of fulfillment is used by businesses that outsource their shipping and logistics needs to a third party.
- Inventory Management: This type of fulfillment is used to help manage inventory levels and maximize stock efficiency.
- Automated Fulfillment: This type of fulfillment utilizes technology to automate the fulfillment process, making it faster and more efficient.
What does a fulfillment company do?
A fulfillment company is a third-party provider that provides services to manage inventory, store products, pick and pack orders, and ship products to customers. They handle the entire order fulfillment process, from the time an order is placed until it is delivered to the customer. Fulfillment companies can also provide value-added services such as returns management, customer service, and customer analytics. If you’re a US-based merchant, the Shopify Fulfillment Network can help you handle your order fulfillment, freight, storage, and returns, and gain access to Shop Promise, which can boost your sales by up to 25%.
Is fulfillment the same as logistics?
Yes, fulfillment is a type of logistics. It is the process of organizing and managing the tasks involved in the delivery of goods or services to customers. This includes everything from order management to packaging, shipping, and returns.