Fulfilment: Cross border fulfilment
Once you have your online orders the logistics of getting the product packaged, through customs and shipped must be planned well.
The ubiquity of the web means items can be ordered from anywhere in the world, by just a click of a mouse. And this is something a growing number of consumers are embracing. According to James Roper, chief executive of global e-tailing industry body IMRG, an estimated £100 billion will be spent online this year across the globe.
But going global isn't just about installing a website and waiting for orders to flood in. The entire process – including packaging, customs clearance and charges – must be carefully planned and managed from beginning to end.
An item will pass through a number of hands, as well as various automated systems. Larger items waiting to be shipped can be left at a dockside for hours – exposed to the elements. So packs must be sturdy enough to reach their destination in pristine condition.
Choosing the right packaging options can protect goods and also minimise costs. Steve Dole, solutions development manager at Dataforce, says: "Having the least number of packaging items for their products is something clients need to get their heads around, because when you're selling a large number of items there is an infinite number of order combinations."
He adds: "Flexible packaging options will help you cope with the different types of packs. And the more items you can combine in one pack, the more you cut down on the number of packages you send, so your costs are lowered."
Packaging material
Popular mail order items such as books, CDs and DVDs are easily protected using wrap-around card with a self-seal mechanism (a popular option for online retailer Amazon), or jiffy bags – envelopes padded with bubble wrap – which are light in weight but offer a high degree of protection.
Complex items such as bottles or electronic equipment including iPods, however, often require a custom-made outer for maximum protection, although this inevitably begins to push up costs.
Clients must also keep on top of customs regulations. For instance, a customs declaration isn't necessary for goods that originate in the EU, but Peter Hewett, customs and gateways manager of UK and Ireland, at DHL Express, says: "Just because they are being sent from an EU country, it doesn't mean they originate there. If goods originate outside the EU, duty must be paid upon their entry."
With the exception of excise goods, such as cigarettes, alcohol and perfume, the value of goods generally determines whether or not a formal entry is needed. For instance, DHL is automatically required to make a formal entry for all imported goods over £18, and for all exported goods exceeding £600.
Clients also need to provide a commercial invoice for items, displaying their description, value and reason for import or export. "This allows correct declarations to be made," says Hewett, "and in many cases helps avoid the payment on any taxes."
Similarly, a CN 22 green label for letter post, or a CN 23 white label for parcel post should be displayed outside the pack, declaring its contents and country of origin.
Clients can also benefit from understanding how duty and VAT is charged.
Richard Roche, head of business development at Royal Mail explains: "Goods over a certain value may attract a duty charge. Therefore a customer who purchased from a retailer based in another country – because the item was better priced – could find out they have ended up paying more."
Problems with customs
In addition, import licences may be needed for particular items since many countries have prohibitions on goods such as dairy and meat produce.
Those without a licence are likely be returned or destroyed.
Global carrier FedEx has introduced its web-based Global Trade Manager service to help brands avoid customs problems. Clients can enter the type of goods they are sending, as well as their destination, and Global Trade Manager will inform them of the correct customs documentation needed to fulfil goods into the country.
Seeking ways to keep down costs is also key and big brands such as Tesco and Amazon have recently taken steps to do just that. They are among a number of clients now distributing products around the globe from the Channel Islands.
Judith Atkins, sales and marketing director at Offshore Distribution and Fulfilment, comments: "Jersey and Guernsey are not within the EU so there's no VAT on goods under £18 fulfilled into the UK. So even small companies can save thousands.
"In Guernsey the postage costs are 16 per cent cheaper than Jersey,"she adds, "so that's 17.5 per cent VAT taken off, plus a 16 per cent reduction."
Pre-sorting mail and accessing domestic services in other countries also has its benefits. Not only does the local look help avoid delays in foreign countries, it also induces greater cost savings.
Cost efficiencies
"We're using local services, or UK-based companies but applying the local PPIs," comments James Clifton, general manager at international mailing house Mercury. "This service is cheaper – overseas mail charges have risen in the past few years so alternatives are required."
In addition, Stewart Oxley, sales director at Diss Promotional Services, says storing products in mainland Europe can have cost benefits.
"In instances where the volume of business allows, it may be possible to hold a remote store of product items already in mainland Europe." This therefore cuts out the need to cross the Channel.
Fulfilment company iForce has partnered with outsourced operations solutions firm NewRoads to offer its clients a cheaper solution. When a customer from the US places an order online, iForce automatically sends the file to NewRoads, from where the item is delivered.
Commercial director Neil Weightman says this enables iForce to skip across zones and therefore deliver products quicker and cheaper.
Clients can also send packs via a lower grade service. Diss Promotional Services, for example, might hold 3,000-4,000 goods before despatching them in bulk. "We only use it when clients agree and the product delivery timescale is not vital. Currently our client advertises up to 14 days for receiving items and this is met 99.8 per cent of the time," Oxley says.
Items can also be shipped rather than sent via airmail, but they can take weeks rather than days to reach their destination. In those circumstances, customer expectations must be carefully managed.
Most suppliers however apply computerised look-up tables, such as iForce's SMaRT product, which calculates the relevant documents needed to accompany a pack, as well as the most cost-effective route it should take.
Brands should also offer a return policy, and to reduce the number of returns, it's important to consider what items should and shouldn't be sold online. "Returns can be as high as 40 or 50 per cent – particularly in the clothing market," says Dole.
Customers should be able to return faulty items at no additional cost and with ease. Royal Mail for instance offers International Admail Packets, which allows businesses to preprint pre-paid return labels with an overseas PO Box address.
So it seems the global market is saturated with opportunities, which means it is now down to clients to explore the most cost-effective options that match their individual needs.
CASE STUDY: HEINZ DIRECT
Global food company Heinz created its Heinz Direct arm in 1998 as a means for UK expatriates to order Heinz brands they couldn't buy in their new countries of residence.
The website offers products at UK supermarket prices, including traditional Heinz favourites such as salad cream, baked beans and sandwich spread.
Two of the key items are Heinz hampers and Baby Food hampers which include promotional items such as mugs and a shopping bag, as well as food items.
When a hamper is ordered and processed, Diss prepares the customs documentation and labels the hamper as a gift.
"In that way a lot of customs issues are resolved," explains Stewart Oxley, sales director at Diss Promotional Services.
"Some countries will impose taxation and import duty, but 99 per cent of the time labelling the item will alleviate that."
The hamper is then shipped through Parcelforce to its destination and customers can expect to receive goods within 14 days. Even so, Diss states that buyers should allow for 28 days, in case of any stock issues or payment clearing.
Diss rarely encounters problems with customs once products reach their destination, although some items have been removed in countries with a ban on imported dairy products, for example.
Heinz's return policy states that any damaged items customers receive, such as dented tins, should be disposed off, and Diss will then take steps to ship a replacement.
TOP TIPS ON… INTERNATIONAL FULFILMENT
1. Carry out a test mailing with different packaging options. Consider the size and weight of the item and choose flexible and light materials that can accommodate multi-part orders.
2. Mark the name of your company on packages, so if any paper work goes astray, the origin of the pack can be easily identified.
3. Review different despatch methods, and explore different carriers' delivery performance in all regions you're likely to mail.
4. Remember to include information on or with the pack such as PPIs, a recipient address, a return address, the service (for example, airmail), and any customs forms.
5. Be wary of choosing the cheapest option. Local carriers might offer competitive prices, but can suffer from shortage of vehicles or drivers at peak times.
6. Keep customers in the loop. Send e-mail alerts saying when items have been despatched and when they can expect to receive them. Ensure items are mailed in sufficient time during busy periods, such as in the run-up to Christmas.
7. Prepare to deal with returns. State terms and conditions on your website and ensure it's clear where goods should be returned. You may also want to operate a call centre to deal with customer complaints or queries.
