By Simon Batt, CEO at Asendia UK
Retail has been enjoying massive growth in cross-border e-commerce, with western retailers seeing increased demand from the Asian, Oceania, Americas and Middle East regions. While Brexit has disrupted trade between the UK and EU, even with December’s last-minute trade agreement, it is hoped the healthy rise in cross-border European e-commerce will continue once new processes have bedded in.
The latest IMRG/Global-e Cross Border Index[1], suggests that UK retailers’ cross-border e-commerce sales grew by 57% in 2020, compared to the previous year, for the 270 retailers that trade on the Global-e cross-border platform. Hence it shows that cross-border is still an important opportunity and one that most e-commerce retailers are pursuing actively.
Here are three areas of progress that I believe will allow international e-commerce sales to forge ahead in the coming years:
Shippers and logisticians using agile technology and innovative operations to offer flexibility to cope with unpredictability
E-commerce supply chain specialists have mastered adaptability during the COVID crisis. They’ve become expert at finding and utilising alternative shipping routes to beat capacity shortages and blockages and reach customers on behalf of their retail clients. For instance, in China, demand for road and rail freight is exploding, as a means of bypassing hold-ups in sea and air routes.
To make agile planning possible, investment in technology and collaborative work with supply chain partners are essential. A positive element to the disruption that COVID and Brexit has caused, is that postal operators and couriers are increasingly able to adapt and help clients find new routes.
Within Asendia, finding alternatives to maintain service for customers during COVID disruptions has been critical. During 2020 planes were chartered for various intercontinental destinations, new and additional entry points into destination countries were used to increase options, and European trucking plans were altered to improve capacity.
Strong and agile technology has been paramount to achieving this – including the ability to change linehaul routing, switch final mile distribution partners rapidly, or move volumes between postal and commercial channels to deal with the ever-changing circumstances.
As we move into a post-Brexit world, data has become increasingly critical. Of course, it has been the job of logisticians to plan and implement the new operating models needed as the UK leaves the European Union, and to digest the trade deal that has been agreed. But as Customs borders are now the norm, accurate data from retailers to support speedy Customs clearance is critical to minimise delays and ensure the correct calculation of VAT and Duty. It’s also an important foundation; further developments to the EU Customs regime are coming in 2021 with changes in the low value threshold and the way in which operational and financial flows are managed. Retailers should be thinking about data accuracy with logistics partners also providing tools and technologies to support this.
Greener shipping to overcome consumer concerns on climate
Shoppers are becoming more aware of their purchasing habits, where the products they buy come from, and how they are transported. A global survey by management consultancy firm Accenture [2]found that consumers “have dramatically evolved”, and that 60% were reporting making more environmentally friendly, sustainable, or ethical purchases since the start of the pandemic. Accenture added that nine out of 10 of that percentage said were likely to continue doing so.
From ethically sourced cotton to biodegradable packaging, sustainability targets have become ubiquitous across retail and the global pandemic has only accelerated consumer expectations. November’s planned COP 26[3] UN conference on climate change will amplify consumer understanding of the need to act responsibly, and it will nudge global administrations to take legislative action.
E-commerce brands must therefore commit to sustainability in their supply chains, without compromising the convenience that customers have come to expect. Logistics partners are ideally positioned to advise their clients, and this collaboration should be at the heart of building sustainable e-commerce businesses going forward.
Perhaps not surprisingly, a Collaborate UK survey[4] of 1,000 UK business owners last year revealed that 28% plan to improve their supply chain efficiency, with 27% looking to switch to greener logistics suppliers.
For maximum flexibility in the e-commerce supply chain, Asendia has just developed a new range of international parcel services, the e-PAQ range. Retailers can meet customers’ exact needs regarding convenience and choice while cutting their carbon footprint, because we now offset all CO2 emissions for transport within Europe. We also offset the carbon footprint of shipments from Europe to other continents, excluding the first-mile and the last mile.
Proliferation of local e-commerce hubs
In some cases, as well as exporting from a global centralised fulfilment hub, it can make sense to have additional local hubs to reduce the distribution time from ‘order to delivery’. This could be in countries where the order volume and diversity warrant a local hub to serve that specific market or region, or even for certain products where the delivery time is paramount.
E-commerce fulfilment hubs are already dotted around the world and in the next decade I believe we will see a proliferation of these. Just look at Alibaba and its planned 5 strategic hubs – positioned to help its merchants go global with the least friction possible. Sportswear giant Adidas is also investing in localised forward fulfilment hubs to reach its worldwide customer base.
Fulfilment networks are expensive to build, so some ambitious brands are partnering with 3PLs to tap into their far-flung fulfilment capabilities through a partner model, rather than investing themselves. If fulfilment centres can be strategically located for proximity to shoppers in target regions to get the inventory in the right place, brands can have a competitive edge; orders can be transported faster and routed more efficiently, all of which will lower costs and carbon footprint.
Asendia’s work with Chilly’s Bottles is a case in point. From our fulfilment centre in Bedford in the UK, we are able to provide flexible storage, while pick and pack can be scaled in line with international growth plans. Fast-growing brands like this can then progress to utilise our fulfilment centres in Asia and the USA when they expand beyond Europe, tapping into our knowledge of these markets and benefiting from advice on the most cost and energy efficient ways to reach new customers.
Collaborate to grasp the growth opportunities
The e-commerce pace of change is now perhaps faster than ever before. With the well-reported ‘leap-frog’ effect COVID has had on online shopping growth, business is booming at the same time as supply chains are facing ongoing disruptions. The challenges in the regulatory environment, whether Brexit or the upcoming EU Customs changes, put further pressures on retailers and logisticians to work collaboratively to find answers, with innovation and technology being at the forefront of solution development.
What’s clear is that the winners will be those who continue to listen carefully to the needs of shoppers globally and respond to make cross-border trade smooth and simple. It’s an exciting challenge as we look into the future with hope.
Sources
Accenture report https://www.accenture.com/_acnmedia/PDF-134/Accenture-COVID-19-Pulse-Survey-Wave7.pdf
Collaborate UK research https://www.citysprint.co.uk/blog/april-2020/earth-day-2020
Cop26 https://ukcop26.org/
[1] https://www.imrg.org/media-and-comment/press-releases/uk-cross-border-ecommerce-sales-rise-by-57-in-2020-reveals-new-data-from-imrg-and-global-e/
[2] https://www.accenture.com/_acnmedia/PDF-134/Accenture-COVID-19-Pulse-Survey-Wave7.pdf
[4] https://www.citysprint.co.uk/blog/april-2020/earth-day-2020
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