Speed Vs. Cost: What's The Right Shipping Proposition When Selling To Europe?
By Doug Longobardi, Asendia USA
The cross-border e-commerce market is growing at double the rate of domestic e-commerce, according to Accenture, driven by consumers seeking brands or products unavailable in their home country, and more competitive pricing.
Behind the leaders Amazon and eBay, Europe has dozens of thriving online marketplaces including Germany-based Zalando, Poland-based Allegro, and France-based Fnac – ideal platforms for U.S. brands to test exciting new international markets and grow their revenue.
Once a marketplace foothold is achieved, it’s recommended for brands to also launch a full webstore of their own, so that they can build a robust, profitable, and independent presence in a new territory. One mistake that is often made, however, is failing to get the shipping proposition right from the get-go. As I’ve witnessed countless times, the trick for U.S. brands hoping to win the hearts of shoppers in countries like the UK, Germany, France, Spain, Israel, and the Netherlands, is to crack the delivery ‘cost vs speed’ formula, as part of their expansion strategy.
Shipping Should Be Front Of Mind
While fulfillment might feel like the last hurdle to get your products into the hands of overseas customers, for shoppers in all corners of the world, slick shipping is a vital element of the online shopping experience. In fact, it’s often what dictates whether they’ll make a purchase or opt to abandon their cart.
For over a decade, research has demonstrated that the cost of shipping remains one of the top factors influencing online purchasing decisions, followed by return policies and shipping speed. It’s estimated that over 40% of consumers research delivery costs when shopping online, and of course, the vast majority want to see a range of options. While there’s an acceptance that overseas shipping can rarely be free, shoppers will look elsewhere if express delivery is prohibitively expensive.
For fast-growing brands, offering a sliding scale of shipping options presents an opportunity to both reduce cart abandonment and improve conversion rates. Large post and parcel operators like Asendia can offer retail clients shipping through international fulfillment hubs – for instance in France – to make this possible.
Nearshoring With Localized Fulfillment Gateways
From local fulfillment hubs, it’s possible to tailor localized shipping, dependent on the speed of delivery the customer requires. Slower delivery options are predicted to grow in popularity in the coming years, as they are often less expensive and more energy efficient. But sometimes shoppers want their parcels quickly.
Take A Data-Driven Approach
When selling into a new European country, U.S. retailers need to analyze their data to measure success, and if necessary, adapt services like shipping to make the formula work. Analytics will soon reveal whether your customers in each country tend to prefer to pay less for slower delivery or are happy to pay a slightly higher rate for guaranteed two or three-day delivery. As mentioned earlier, offering choice ensures you cover all bases and decrease the risk of cart abandonment.
It’s recommended to calculate net profits taking into account the true cost of each country – that means cost of marketing, language and payment arrangements, customer service provision, VAT management, broker costs, shipping, and returns. Naturally, having the latest IT systems in place to track data will help manage the process. Equally, working in partnership with well-established supply chain partners will protect your service levels and help you grow customer loyalty.
My final piece of advice is that one size does not fit all. For instance, in Germany, returns rates are particularly high; in Russia, online shoppers prefer to pay cash on delivery; in Sweden, mobile shopping is very popular, meaning mobile solutions for webshops are essential. Factoring in local differences may sound like hard work, but as many U.S. brands are finding, getting everything right for your new European customers will pay big dividends down the line.
About The Author
Doug Longobardi is Asendia USA’s Executive Vice President Sales and e-commerce expert.
Doug has over 25 years of postal, courier, and global distribution experience, with a unique perspective on what e-commerce sellers need to grow their businesses globally and offer a better customer experience. Over his long career, he has directed several teams and individuals to true success, both personally and professionally.