Cross-border delivery still presents significant challenges for many online retailers, despitethe success of front-runners such as ASOS and retail giants such as Amazon, with customers and
retailers currently using a mixture of delivery models and improvised solutions to makecross-border work, according to UK retail group Shop Direct.Chris Haighton, Shop Direct’s head of retail logistics, told this week’s ‘The Future ofE-Commerce Delivery’ conference in London that e-retailers were seeing a breakdown of nationalborders that promised huge growth potential, but appealed to carriers to come up with packages of “market-appropriate” services that helped to improve efficiency and the customer experience forcross-border delivery and retail services.
He said Shop Direct used to have an international brand, which traded for about 18 months, butthe company had recently “pulled back” its cross-border activities. “We learned an awful lotthrough that, and recognised the number of challenges,” Haighton said. “We are not ASOS; we are notgoing to sell to 190 different countries. And where we go into a country, we want to go in there involume and in a considered way, and deliver the right customer experience for every customerthere.”
To move into new international markets in a major way, he said retailers needed to know beforethey enter the marketplace how they were going to compete on cost and services against the nativeretailers. This was difficult “because you’re trading from a distance, and in theory your costs aregoing to be higher and your service is going to be slower”, Haighton explained.
He said his organisation did not want to invest in building a local infrastructure in thecountry without having a solid market presence there, and therefore needed support from carriers.But one of the challenges for carriers wanting to provide cross-border services to e-retailers wasthat the retailer and carrier experience of cross-border follow a different growth curve.
“If I look at the traditional offshore delivery model, followed by ASOS and other retailers verysuccessfully, you go into a country and you start by sending single parcels out and there is a lownumber of sales. At that point the cost of service is very high, but hopefully we build that marketquickly and get to direct inject, and then you start to bring your cost to serve right down. Yourambition, long-term, is to have a footprint on the ground so that you are delivering local saleswith a low cost to serve, and along your journey you will probably set up a local website, localreturns address, local office, and maybe even a limited local DC.
“The problem for the international carriers at this point is that they don’t follow that samegrowth curve. It is a hard path to follow for the carriers, who are so involved at the start of theprocess, but gradually get edged out as dispatches become local. So, global parcel delivery isthere as a model and really works for a company like ASOS. It is a good way to get in there and getyour feet on the ground in the marketplace. But ultimately, local stockholding when you get tovolume, is likely to be cheaper at scale.”
Other models included having a brand that appeared to be served locally, for example using localmarketing and PR agencies.“For example, in Ireland, Shop Direct has a local brand, although it isserved entirely from the UK. We dispatch 1.2 million parcels a year and get a couple of hundredthousand returns back,” said Haighton.
The company has just launched an initiative for the Irish market offering customers freedelivery and returns, performed via local partners – Fastway for delivery, Parcel Connect stores,and Parcel Hotel lockers for returns. This was achieved in collaboration with its UK partners,Yodel and Collect Plus. “So we have an Irish business that is served entirely from the UK, and we’re not the only ones,” said Haighton. Other retailers had similar cross-border models in placebetween various other EU countries, he observed.
Haighton said that for both domestic and cross-border services, delivery “basics” includedtracking; email and SMS contact, in the customer’s local language; “and of course they expect agreat customer experience”.
For cross-border, he said carrier partners were also expected to provide local expertise,including advice on competitors in the local marketplace. He added: “We want your local-languagecustomer services to talk to our customer; we want fast, cost-efficient cross-border services fromyou; and a set of services that are market-appropriate.
“And in that way, you can add value: you can give us a local returns address, so the customergets free or subsidised return services; you can give us access to click and collect networks andother market-appropriate offerings; and you can give us access to premium services – but only ifyou have strong international networks, through your own networks or through your partners.”
And for cross-border delivery partners within EU, particularly for European road freight, hesaid retailers “need you to leverage your good local or international partners to deliver servicesthat we are looking for, and to drive delivery standards and delivery expectations in theless-developed markets in Europe and across the world”.
Haighton said that despite a perception that cross-border e-retail and its associated deliveryservices were expanding rapidly, official figures suggest that only a small proportion of EUcustomers regularly engaged in cross-border e-retail and the official growth levels were modest.However, he said this disguised a much higher level of cross-border e-retail activity, eitherbecause customers were unaware that some of their transactions are with an overseas retailer orbecause the retailer had not registered that some of its transactions arecross-border.
“For example, I was alerted by our fraud team that an address in Belfast was receiving a hugenumber of parcels. Upon further investigation, it turned out to be the Nightline depot in NorthernIreland, because Irish customers are ordering from UK phones, through Nightline, for delivery into ‘ Parcel Hotel’ lockers in Ireland,” said Haighton.
“But it is not only Irish customers. I suspect that retailers, if they look closely, would seethat they are getting parcels delivered into the Jersey Post depot on the south coast; they aregetting parcels delivered into concierge services in London that are popping up for delivery to theFar East or even to Australia. So, customers are driving the breakdown of borders, even if you don’t think you retail to other countries.”
