Optimized Domestic Logistics Fuel Greater Success in Cross-Border Ecommerce

Domestic logistics and strategies to address legacy processes and technology can unlock opportunities both here and abroad, as cross-border ecommerce significantly outpaces growth in the U.S. market, said an executive with Pitney Bowes.

“Many retailers domestic are struggling to break free of the constraints in managing legacy technology built over many years, creating complex business processes and margin risks,” said Michael Griffiths, Vice President, Marketing and Communications, Retail and Commerce Services for Pitney Bowes. “Over 90% of retail CEOs we talk to say they feel paralyzed by spending IT dollars on existing challenges, leaving few resources for their growth and transformation agendas.”

Getting cross-border ecommerce right starts with extending optimized domestic operations, a prerequisite to success abroad, Griffiths said. He will address these challenges and discuss solutions in a session at Ecommerce Operations Summit (April 3-5, Columbus, OH) entitled, “Evolution at Home, Revolution Abroad: Strategies to Leverage Domestic Operations into Cross-Border Success.”

Companies spend much of their time on the front end, pre-click portion of the customer journey, Griffiths said, including engagement, pricing and merchandising. But the post-purchase experience is the new frontier for winning hearts and minds: Pitney Bowes research indicates 47% of consumers are either dissatisfied or frustrated with it.

“Clearly there’s a disconnect between where retailers have their focus and where the challenge lies,” he said. “For instance, 85% of them use carrier-provided, single-carrier shipping systems. Also, 91% of midsize merchants say they haven’t updated their parcel shipping system in more than four years, so it’s likely not optimized and effective. A lot has changed in that time, with the continued rise of Amazon and expectations of fast and free shipping creating pressure to innovate.”

Consumer expectations abroad have been catching up with those of U.S. consumers, according to Pitney Bowes research. High shipping costs were cited as a frustration factor by 59% of global consumers, compared to 55% here, while 40% of global consumers said they were unhappy with inconvenient returns, compared to 45% of U.S. consumers.

The revolution abroad, Griffiths said, is all about introducing your brand to new audiences. While cross-border ecommerce is a great opportunity, it presents particular hurdles and complexities. For instance, critical areas such as fraud, payments, compliance and returns involve government agencies, regulations and laws that vary by market.

“While everyone is rushing to take advantage of global markets, most organizations consider cross-border to be primarily a logistics challenge, but it’s so much more than that,” Griffiths said. “Even the best retailers often don’t have the expertise in government relations, a vast network of partners or the necessary data and scale to succeed. Partners can help with things like optimized promotions, local payment processing, agency relationships, landed cost calculations and reducing complexity.”

Asked how domestic optimization of logistics ultimately impacts cross-border efficiency and success, Griffiths said a common example for many retailers involves getting their products from the DC to an international hub – a process which often takes longer than the transit time from the hub to an overseas destination like China.

“The more they can optimize the domestic leg, including the use of multi-carrier options, the faster and better the performance will be on the cross-border side, and at a lower cost,” he said.

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