The Size Of The Global Ecommerce Market
With a global market base of more than 2 billion online shoppers, e-commerce is one of the fastest-growing business sectors globally. In 2020, the eCommerce sector generated more than $4.2 trillion in revenue. Global eCommerce sales are projected to hit $6.4 trillion by 2024. In today’s update, we’ll cover how your eCommerce brand gets a bigger slice of this gigantic pie with cross-border shipping.
Cross-border shipping offers a fantastic opportunity to take your business into new markets. The number of consumers who are using their spending power to buy internationally is increasing. A 2020 study by UPS found that 83% of shoppers in Canada have bought from e–commerce stores in other countries, as well as 81% of shoppers in Brazil and 78% in Mexico. In the USA, nearly half (47%) of all shoppers had purchased from stores outside of the country.
Let’s dig in and explore the top 4 benefits of cross-border shipping.
Reduce Investment & Inventory Exposure
Holding inventory when expanding to new territory carries significant inventory exposure risk. You’ll incur high storage costs with a local distribution model because you need to make warehousing arrangements.
Leasing a warehouse is an expensive and time-consuming process that pads your overheads. Besides the monthly rent, you’ll need to staff the warehouse and pay for janitorial services and utility bills, further padding your storage costs.
You also face a high risk of spoilage, especially when dealing with delicate products. The merchandise might sustain damage during transit or inside the storage facility. If your marketing efforts don’t pay off immediately, you may be facing product obsolescence. The product may become dated, saddling you with additional losses.
Cross-border shipping eliminates the need to set up and maintain offices and warehouses in your target markets. Eliminating these components lowers your operating expenditure to maximize profits without huge price markups.
Better yet, you only incur the shipping costs after making a sale, and even then, you can build shipping costs into the price of the item. Technically, you don’t incur shipping costs since the customer pays for it upfront. Also, your storage costs will be cheaper if you manufacture, warehouse and fulfill your products in Asia.
Speed of Deployment & Execution
Finding and setting up the ideal warehouse location in a foreign country can be a significant headache. You’d need to visit the country personally or retain the services of a broker, both of which are tedious and expensive.
More to that, you’ll need to negotiate the lease terms and find a crew to staff the warehouse. You’d also need to pay for the necessary licenses and permits to operate within the new country.
You’ll then need to set up the warehouse to make it operationally ready. That means optimizing inventory storage and control so you can track, find, and pull the products quickly and efficiently. Once you have the layout down, you’d need to buy or hire the necessary equipment, including bins, shelving, and moving equipment.
You’d also need to map out your last mile distribution routes and transportation for shipping to your end customers. That could mean purchasing or leasing delivery vehicles, but realistically, it means partnering with a local delivery service.
You must address these issues before you ship out a single product for operational efficiency and to avoid incurring legal trouble. That could take months, which could significantly hamper your deployment speed.
Cross-border shipping eliminates all these hurdles to let you launch quickly in multiple locations. With this strategy, you’ll be shipping products from a centralised warehouse and leverage the existing fulfillment, inbound and outbound infrastructure to ship globally.
Geographic Reach
Expanding an ecommerce brand’s global fulfillment is a challenge that inhibits your ability to expand beyond the domestic market. Even so, you might experience challenges setting up an extensive network. Limited market coverage exposes you to heightened competition and could lead to lower sales and pricing wars.
Traditionally, geographical expansion is a costly strategy that entails setting up shop in a new location. That means incurring additional overheads in terms of new offices, fleets, and hiring workers In many cases, expanding to new markets often turns out into a cash siphon. The new operation ends up draining much of your working capital and cash reserves. It could leave you cash strapped with little to no results and an unknown break-even time frame.
Shipping your products from global logistical hubs like Hong Kong eliminates the likelihood of creating a cash siphon. It paves the way for a smooth and flawless geographical expansion strategy by leveraging a centralized logistical hub that is close to the breadbasket of Asia manufacturing and the widest selection of multimodal transportations delivering to 250 regions globally. In short, cross-border shipping from Hong Kong accelerates your ability to enter new markets by creating a streamlined supply chain process between your manufacturer, huge variety of transportation modes and easy access to the world.
Low Risk Test of New Markets
Most brands register challenges expanding to new locations because they don’t adequately test the new markets. At the very least, the build it, they’ll come approach is costly, ineffective, and best avoided. It increases the likelihood of failure because you’d flying in blind. Completely unaware of the new market’s supply and demand dynamics.
Cross-border shipping lets you test multiple new markets without the costly and potentially ruinous mantra of build it and they’ll come. It lowers the initial capital requirement and inventory exposure, increases the deployment speed, and bolsters your geographical reach. That frees up your time to let you focus your effort on testing new markets.
You can quickly establish the buying habits, competitive forces, and economic forces at play in each new location without crippling your cash flow. More importantly, cross-border shipping lets you test product demand in potential markets. You can zero in on the best regions and maximize profits.
Cross-border shipping is an incredible business scaling strategy for eCommerce brands, especially with the recent surge in online shopping. Increased internet penetration and the rise of the tech-savvy middle-class population spells a boom for eCommerce brands across the globe.
Having a reliable cross-shipping partner underpins your ability to create a global brand quickly and affordable. It supercharges your ability to scale operations and exploit emerging opportunities across the globe.
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