Die Geheimnisse erfolgreicher Direct-to-Consumer-Unternehmen lüften

1. How to organize the efficient delivery of your products internationally?

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E-commerce represents 6% of French exports, so there is no time to lose to avoid being behind others! But it is also more cautious to anticipate your development abroad, to avoid logistical expenses and international discredit.

As far as delivery abroad is concerned, the rules are different: the laws in force are not the same, the carriers vary, the competition does not play on the same elements... In short, a new marketing and logistics strategy is needed. And when it comes to making choices, some options are better than others. Here are 4 tips to keep in mind when exporting to and from the European Union! 

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2. The choice of logistics partners based on the country of destination, for a fast and

efficient delivery.

One of the main questions when an e-commerce company organizes its export is which carrier to choose? Depending on countries and customers, requirements and constraints may vary. The ideal carrier is the one who gets your parcels to their destination without a hitch. But how do you choose one?

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The usual carriers to speed up the delivery of your package

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Your international shipments can always be handled by your local partner, such as La Poste. Its international Colissimo delivery service allows you to send large letters or parcels up to 20kg in amore or less long time.

The undeniable advantage: it's a well-oiled machine, with no unpleasant surprises. You have an online price list and a calculator to estimate delivery times according to the weight of the parcel, the delivery route, and the circumstances. Convenient for your reliability!

Using private carriers such as FedEx or Chronopost is also an option, especially for express deliveries. These carrier shave platforms all over the world, which allows for faster delivery.

That said, if speed is favored, costs are also a factor. Depending on the weight of the parcel and the distance travelled, delivery rates can rise quickly. So, if you are in doubt, you may wonder what your customers abroad want: to receive their product quickly, or to benefit from more affordable delivery rates?

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Contact specialized delivery services

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To avoid any risks, it is also possible to work with a logistician who has experience in international parcel shipping.For example, Trôpicfeel has chosen to work with Bigblue for its worldwide deliveries. From order preparation to the last mile, everything is planned to provide a high-quality delivery experience for your customers! It's all about finding a logistician who you can count on.

Some carriers are specialized in delivering parcels abroad and in underserved areas, such as EasyDelivery. The steps involved are quite simple. Let's take the hypothesis in which you sell jewelry. One of your customers who comes from an area outside the Customs Union wishes to place an order for a daisy necklace. If you propose a delivery by EasyDelivery, here is how it will happen:

• ‍Your customer creates an account with EasyDelivery.
• This registration results in the creation of an address in the name of your customer, in the EasyDelivery warehouse closest to his home.
• Once the order is placed, your necklace is sent to the EasyDelivery warehouse.
• EasyDelivery receives the order and sends a summary to the buyer: size of the chain, status, etc.
• The buyer accepts the order, and EasyDelivery resends the daisy necklace to their home address through carefully selected carriers.

So, even if the shipment takes time, your customer benefits from accurate parcel tracking and trouble-free reception! 

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_{Bigblue tips
‍When creating your e-commerce website, it is strongly recommended to set up a tracking system. Not only does this reassure your customers about the delivery of the product, it also provides you a legal proof of shipment in case of litigation. Also, it is important to choose a carrier that provides insurance. Some only insure the product up to the French border, while others cover it until delivery. Choose what best suits the needs of your customers!}

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3. Analysis of international shipping costs, to avoid unpleasant surprises

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Before you expand abroad, find out about shipping costs and the different rules to follow, as they can vary greatly from one country to another. So much so that a delivery in a foreign country may not be financially worthwhile for your e-commerce business. 

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Customs fees

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Larger parcel shipments within the EU do not generate customs duties, but only the payment of VAT, which is therefore included in the delivery price. When shipping outside the EU, the costs vary depending on the destination country, the nature of the goods, their value, and their origin.

Customs charges are different from one country to another, as are shipping constraints. For example, having your daisy necklace delivered in Switzerland and Germany does not involve the same steps.For any delivery outside the Customs Union, there are additional declarations that must be completed. For example, on the parcel sending the necklace to Switzerland, you will have to provide the CN 23 declaration and an invoice estimating the value of the necklace. Any omission of official papers may delay or even cancel the shipment of the package. And of course, the return is at your expense!

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Transparent communication for every order

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For your export, research is not the only condition for success: communication plays an important role. According to the circumstances and regulations of the receiving country, your buyers may have to pay additional costs.

Whether it is because you have forgotten or because of a fixed reception fee, parcel shipments sometimes imply the payment of charges on receipt. And to avoid disappointing your customers, it is your duty to clearly communicate these risks. For example, sending your daisy necklace to a French overseas territory is not free, even if the territory is technically French. As soon as it is received, your client will have to pay VAT, dock dues, regional dock dues and customs duties if the value of the necklace is higher than 150€. If your customer is not aware of the additional costs, they may not place an order with you anymore!

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_{Bigblue tips
When establishing your export strategy, remember to make all the information available to your customers on your website. We advise you to dedicate an entire page to the rates, lead times and costs involved in shipping outside of France. The more transparent you are, the better you will be able to anticipate the unexpected.}

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Once you have established yourself on the international scene, you can limit the risks associated with delivering a broad by providing several storage and processing locations. Fewer surprises, and faster delivery!

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4. Find out about the legislation before shipping orders to play it safe.

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In France, 24% of products sold in e-commerce are returned to the sender. No matter the reason for the return, it is often at the expense of the seller, which can quickly become expensive. To avoid this kind of situation, find out about the laws enforced in the country of delivery!

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The legality of deliverable goods

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In addition to the customs declarations, some details about the goods must be displayed on the package. For example, for fresh or particularly valuable products, labelling rules vary from one country to another. Composition regulations are not always the same, and if you forget to display them, you may have to return the product.

Plus, all countries are different when it comes to prohibited goods. For example, if a customer living in Vietnam wants to order the daisy necklace you sell, study the regulations carefully! Indeed, in some countries it is forbidden to export jewelry and precious metals.

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Regulations for returning a shipped order

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Regulations are also very important when it comes to returns. Indeed, purchases within the European Union are subject to a cooling-off period of 14 days. After receipt of the order, a customer therefore has two weeks to return the product. For all sales outside theEuropean Union, there is no right of withdrawal. It is therefore often the law of the selling country that applies.

To avoid additional charges, you can go even further and study the regulations country by country. Indeed, in the event of a product return, it is important to define who is responsible for paying there turn costs - you or the buyer? The regulations vary according to location.For example, in France it is the buyer's responsibility. In Germany, however, it is only buyer's responsibility for goods with a value of less than 40€. Not being aware of these particularities can cost you in the long run!

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_{Bigblue tips
‍As a French e-merchant, don't offer delivery to all foreign countries without prior analysis! According to French law, every seller is bound to their offer once it is issued. In other words, if you offer delivery of your daisy necklace to Vietnam and a Vietnamese customer places an order, you will not be able to retract your offer, and you will be obliged to carry it out.} 

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5. Studying your competition's modes of delivery to better adapt to the market

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The final touch for successful international delivery is competitive intelligence!

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Study the local market

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As with your product launches in France, it is preferable to study offer and demand before launching on the international scene. Conduct detailed research to find out if the goods you are selling a rein demand abroad, or if they are even known.

Here are some simple, but crucially important questions to ask yourself: is my product being sold by local companies? Is there enough demand to secure my place in the market? To find the answers to these questions, you can contact the Public Investment Bank. Based on well-founded statistics, you can minimize the risk for your development abroad.

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Analyze your competition and their shipping methods

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For more pragmatic solutions, it is sometimes enough to observe local competition by searching on the net.

You will then obtain information on the fastest carriers and the most efficient logistics strategies. In addition to giving you a real view of the state of the local market, studying your competition allows you to identify cultural specificities.

More concretely, Louyetu, a French jewelry brand, sells its products all over the world. Its website is designed in white and pastel colors. Even though these types of colors represent purity and may catch the eye of the European customer, this will not necessarily be the case for every country or culture. In China, for example, white is a symbol of mourning.So, this jewelry brand won't exactly be a big seller in China!

To sell your daisy necklace in China, you could therefore study Chinese jewelry sites to make note of some marketing and design tips. Adapt your website to the countries and customers you are targeting!

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_{Bigblue tips
In addition to spicing up your website, don't forget about the packaging. Your product's packaging makes all the difference, especially when it crosses borders. Your packaging should be well thought out to avoid logistical problems, but also to appeal to customers. So, don't hesitate to take a look at the packaging offered by your competitors. The choice of color or shape can make all the difference!}

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6. What is the right behavior for delivering abroad?

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The development of your e-commerce on the international scene requires some thought. To ensure your success, nothing should be left to chance: the choice of the logistician, the marketing strategy, the delivery options, the regulations to be followed...

In order to successfully export your products abroad, put yourself in the shoes of your target customers - what do they want?By adapting to the tastes of your buyers and local particularities, you put luck on your side.

Anticipation is the key to success!

Today, more and more consumers are ordering clothes, cosmetics and even eyeglasses on e-commerce websites. The problem? It is not possible to try out these products. A customer will consequently order several models or sizes and then send back those that do not fit. The return rate for in-stores trade is 8% compared to 23% in e-commerce. This new practice, which replaces traditional in-store shopping, increases the number of trips of the goods and their impact on the environment. 

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1. Free returns policy:

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Free returns have become a standard, even though not mandatory, in the fast fashion industry and are intended to attract more and more consumers. However, in terms of air pollution, the return of a parcel is not totally "free".

In recent years, consumers have become more aware of the environmental impact of brands and tend to choose eco-responsible ones, which is good news for the planet. But, they often have a lack of visibility on the entire delivery chain of their command and the impact a return can have. 

I decided to order a pair of boyfriend jeans, this summer's trend, which I've been hesitating to buy for a couple of weeks. Online, It's hard to imagine myself wears them, from the high of my 1.65m, when the jeans are often worn by a model who is 1.75m tall. To be sure to get the jeans that would fit me perfectly, the reflex would be to order several sizes and several models. Then, to pick the one that suits me best and send the rest of my order back to the brand. 

This new " Try before you buy " trend is not without consequences from an environmental point of view. The numerous trips back and forth of marchandises caused a lot of CO2 emissions. Worldwide, Forbes has identified more than 17 billion returns produced each year, emitting 4.7 million tons of CO2 or the equivalent of one million Paris-Buenos Aires round trips by plane. 

The policy of free returns pushes people to buy only for an event. It was observed that some people bought a dress or suit to go to a party and return the item the next day. Even if, it allows customers saving money, it is a bad habit for the planet.

Some associations are trying to change the way fashion industry works. Fashion revolution Belgium has created a campaign focused on the effect of the free return policy, "the Highway fitting":

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2. Product returns' pollutions:

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The packaging: 

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Let's tack back to our boyfriend jeans' example, let's imagine that one of the items I ordered is too small. So I decide to return it, there are 2 options: use the original package, but most of the time it has been thrown away, so I'll choose the second option: use a new packaging. The jeans that are too small, back at the warehouse, will be removed from this second packaging, then prepared again to be shipped again. It will have experienced 3 different packagings from my order to the return. This new common practice, leads to the multiplication of waste paper, plastic, cardboard ...

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The journey: 

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Returned jeans also have environmental consequences related to the multitudes of trips they do. Once packed, the parcel will be dropped off at the post office or at a pick-up point. It will then be carried by the shipping company to the warehouse. 

If the returned jeans pass the quality control, they will be put back in stock and are likely to repeat the same journey again and again until they find their perfect buyer. These round trips of goods caused greenhouse gas emissions and traffic congestion in urban areas.

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Returned products: 

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The product management varies from one sector to another, from one parcel to another, from the conditions of one product to another...

If you are not convinced of the color of your new Iphone offered by your aunt for Christmas, you can send it back. Apple will then recondition it before selling it as a new one. For our too small boyfriend jeans' example, there is a 50% chance that they will be put back in stock to be resold later. 

What is not communicated is that 30% of the returned products are destroyed. In 2018, Amazon suffered a scandal for choosing to destroy returns in perfect conditions to avoid "wasting" time checking them and putting them back online.

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3. How to reduce these returns as a brand? 

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Improve the product description:

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A short and not very detailed product description can lead to customer returns. About 1 consumer out 4 returns a product which does not match its description.

A good way to reduce returns is to give as much details, about the product, as possible in order to minimize unpleasant surprises. For our boyfriend jeans, the important details are the materials (elastane, cotton...), the shape (slim, boyfriend...), the color (black, raw, faded...), the size of the mannequin wearing it...

As for sizes, in France, regulations are not strict and there can be up to 10 cm between the same size from one brand to another. The "Vanity Size" (or "flattering size") is responsible for this phenomenon. Fast fashion brands intentionally enlarge clothing sizes to flatter their customers. Results, a multiplication of product returns and a difficulty to find the right size in this panel of brands: nearly 1 woman out of 3 does not find her size. 

Few brands have clearly realized it and offer personalized guides, according to the size, weight and comfort preferences of the customer (wide or fitted).  

Asos has even developed a "fit assistant". First, the user enters his personal measurements then he is guided through the purchasing process. The fit assistant will propose the sizes adapted to the user's morphology.

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Improving your product descriptions will guarantee a reduction of returns and have a positive effect on customer satisfaction. The products will be as expected and there will be no more unpleasant surprises at the reception.‍

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Incorrect address: 

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As an e-commerce brand, have you ever experienced a product return due to a mistake in the customer's address?  Automatic filling, typing mistake, wrong zip code... Mistakes can be numerous but easily avoidable. 

There are several solutions. You can verify an address on La Poste website for free, if you have any doubt, or you can hire a company to correct and validate the addresses in your customer database.

At Bigblue, we have developed an algorithm to avoid mistakes about the addresses. If there is any doubt, the brand will be notified or e-mailed to avoid unnecessary returns.

Checking all of your customers' addresses will help you to reduce your returns quickly and easily. 

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The packaging: 

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Some returns are inevitable, why not working on the packaging to reduce their impact? 

Certain brands have designed their packaging to allow their customers to reuse them. Nespresso delivers its capsules in packages that are reusable, transformable and recyclable, to send shoes that have been sold on Vinted for example.

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As an e-commerce brand, a simple solution to reduce the impact of your returns, is to make sure you use recyclable and/or recycled materials for your packages. Results, a better brand image among your consumers and a reduction of your waste caused by customer returns.

You can find various companies specialized in the production of environmentally friendly and reusable packaging. Depending on your needs, you can work with companies such as Packhelp or Hoopie... 

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To go further...

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LinvingPackets, a French startup, is known for its innovative packaging. They have created an intelligent, and secure packaging made of polycarbonate that is endlessly reusable. It would prevent the production of cardboard boxes but also the use of paper labels and bubble wrap. This innovation considerably reduces the environmental impact of the packaging. Although, this solution is still in the development stage and difficult to apply to the current e-commerce market, but it is a great promise for the future. 

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4. The transparency of logistics: 

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Millenials are increasingly buying from eco-responsible brands. They are looking for organic, environmentally friendly products ... 46% of French people bought an eco-responsible product in 2019 according to a study conducted by the French Fashion Institute (IFM). But, consumers are not necessarily aware of the carbon effect of their parcel. E-commerce brands will have to "educate" their customers to reduce returns, their ecological footprint and thus improve their brand image . In other words, to inform their customers about the entire logistics process and why not give them an estimate of the gas emissions caused by their shipping order. For example, DHL offers to calculate the CO2 emission of a parcel by taking into account its dimensions, weight, the point of departure and arrival, and the transportation method. 

Offset your brand's environmental footprint by choosing partners who reduce their energy costs. For example, since 2012, La Poste group's mail/parcel service has achieved carbon neutrality. This means that all the CO2 emissions caused by this service have been compensated by their environmental projects, such as reforestation in French's regions.

Reducing returns also involves educating and raising the awareness of your customers. An estimate of the quantity of CO2 emitted for delivery and return of a parcel should be added on the payment page of the order and/or on the return slip. As a result, consumers will become fully aware of the impact of their order on the environment and perhaps double-check the size and/or color to avoid a return. 

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5. In brief...

Millennials and Generation Z are now used to being able to return their orders of their favorite brands free of charge. As an e-commerce brand, you have to shake up their habits and reduce returns. This would have positive effects on your business: reducing your environmental impact, improving your brand image and reducing your return costs. The solutions, proposed in this article, are adapted to each stage of your company's evolution, starting with the correction of mistaken customer addresses and ending with innovative technologies and materials.

The e-commerce sector is evolving rapidly, with an increase of 13.4% in the number of orders in 2018 according to Sendcloud. As a result, the delivery of goods is responsible for more than 30% of greenhouse gas emissions each year.

More and more e-merchants and supply chain managers are becoming aware of this problem and are finding alternative solutions to reduce their environmental impact. In this article we will look at the best solutions to move from ultra-polluting to totally green transport!

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1. Logistics and transport: air pollution in its purest form

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As an e-commerce brand, you organize deliveries on a daily basis. Whether by river, air or land, these deliveries have a cost: in addition of being expensive, they are also environmentally unfriendly. More than ⅔ French people order regularly on the internet, and while the number of orders is constantly increasing, the Fevad says that the average basket size is falling.

In other words, this does not mean that the French consumers order less than usual. They order in smaller quantities and more frequently. And who says more orders, says more round trips of goods, often by truck. Hello carbon footprint!

In France, more and more innovative start-ups and large companies are developing applications, techniques, and vehicles to enable you to continue to deliver your goods while going green.

What are these alternative and innovative solutions? From reverse logistics to electric drones: we explain everything.

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2. The road in full transition

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While waterways and railways remain the fastest and cheapest transport solutions for e-commerce goods, they are not necessarily the most practical. Not all cities in France are well served to ensure a high level of customer service.

That is why transporters started to think about changing deliveries by road completely. For example, the transport company Marc Schubel Transport & Logistique has found two solutions to reduce the environmental impact of its trucks: 

• ‍The eco-driving: Drivers are trained to adjust their driving. A solution simple to implemented which a training.‍

• The software for route optimisation: All the company's vehicles are equipped with it. It allows them to organize their stops in order to reduce the number of kilometres driven. A real saving of fuel, time, and energy.
  

You'll probably tell me that this is not something you can implement at your level, and you're right: there are other elements of transport on which you can have an impact. 

One of the solutions is, from the very beginning of the logistics chain, try to reduce packaging by trying to adapt it to the product it contains. If there is less packaging, the product fits in less space and a truck can carry more products for the same environmental footprint!

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3. The automation of electric vehicles

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Following the same logic, transport vehicles are gradually evolving. While more than 80% of them used to be diesel-powered a few years ago, the reality today is quite different. More and more road transport vehicles are NGV (Natural Gas for Vehicles) trucks or simply electric.

This makes it possible to significantly reduce the emissions of greenhouse gases, whether for short or long distances. More and more carriers are offering electric options. For example, the La Poste group uses the largest electrical vehicle fleet in the world!

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4. Avoid express delivery

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The last-mile theory explains that during the delivery of goods to a customer, the last stage (i.e. the last few kilometres leading to the customer's home) is the most polluting. Since this part is personalized to each customer, it often occurs that carriers travel with a nearly empty vehicle. So the ratio between the quantity of goods delivered, and the energy spent, is really not balanced.

Some carriers change their approach and become more responsible with greener solutions to deliver your packages.  That being said, the express delivery option prevents the application of these new green solutions. When your customers select express delivery, the carrier is not waiting to have a lot of parcels to deliver. The priority is no longer on optimizing delivery rounds but ensuring that they are delivered as quickly as possible. Over longer distances, the carrier will use the aeroplane to deliver the packages, with an even more significant impact on the environment.

As the express delivery is highly appreciated by customers, the idea is not necessarily to remove it completely from the options. Make sure, as a first step, to inform your customers about the environmental impact of this option through a newsletter, for example. Show your customers that waiting 1 or 2 more days is not only better for the planet, but also good for their wallet!

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5. Cargo bikes to optimize transport in the city

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The cargo bike is another alternative to overcome the last-mile. A bicycle (electric or mechanical) is far less polluting than a car, or any other motor vehicle. For this reason, transporters are starting to develop a whole system of bicycles in France's largest cities.

Even though this solution requires sporting skills for delivery people, it allows goods to be delivered more efficiently and ecologically, regardless the density of traffic. They have a small trailer in which they place parcels: simple, efficient and environmentally friendly!

This solution is ideal for cities with heavy road traffic: it allows faster deliveries. And in addition to reducing pollution, drivers have no problem parking!

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6. Collection points for sustainable urban delivery

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Pick-up points deliveries are increasingly used. They reduce the number of journeys: carriers no longer waste time dropping off each order at separate addresses, but concentrate the goods at pick-up points. Owners only have to pick them up when they have the opportunity to do so.

According to Sendcloud, the use of pick-up only benefits the environment if the customer has less than 6.7 km to get the goods. Beyond this distance, customers tend to use their own vehicles, which does not make the pick-up point delivery option any less polluting. A home delivery is then preferable, and so take advantage of the delivery drivers' tours and their electric vehicles!

Pick-up points are scattered all over the major cities, so there are good chances that your customers will have one close to their homes. The only downside: the opening hours. Pick-up points often open at traditional hours: 10am-7pm, which sometimes makes it difficult for e-buyers to find the time to stop by.

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But there is a solution to every problem! To avoid this kind of situation, the deposit system is more and more popular. It takes the form of lockers accessible 24 hours a day, 7 days a week. All your customers need is the code that has been sent to them to open the corresponding locker. And that's it! In France, Amazon and La Poste use this solution to deliver their parcels.

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Bigblue Tips

Reduce shipping costs and improve conversions with Bigblue's logistics expertise. By offering a pickup point option alongside Mondial Relay, you minimise expensive home deliveries for customers who prefer in-store options. We even have developped a Pick up point selector app for Shopify store owner. 

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7. The ingenuity of the warehouse barge on the Seine river

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A new feature for 2019: a delivery warehouse boat has been set up in Paris! Every day, the employees on board prepare the boxes and deliver them to three specific delivery points.

Excellent for ecology, but also for speed! The barge can store many parcels, and its fluvial circulation (in addition to being less polluting) allows it not to be slowed down by the Parisian traffic. For the moment, Le Monde states that only Lyreco and Ikea are delivered by the Fludis barge: but the potential for development is enormous! 

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8. Electric drones as a form of transport

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This pro-ecological alternative is not for now. It is a project for the years to come: the perfect compromise between home delivery and respect for the environment.

This rather far-fetched idea involves the use of fully electric drones to deliver small packages (weighing less than 3 kg) to the customer's doorstep. With this technology, there's no risk of getting stuck in traffic jams!

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9. In short, what is the future of distribution logistics?

Many alternatives already exist today, to enable you to develop completely green logistics. Combining customer satisfaction and respect for the environment is not unattainable.

Even if some ideas are still at the project stage, those that are already in place are easily achievable. Whatever the nature of your e-commerce, reducing greenhouse gas emissions is far from being too complicated.

What if all you had to do was change your habits to save the planet?

Introduction

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Winter is coming ;) and in a few weeks, people will be sharing love (and gifts). The holiday period is well known as the busiest and most important time of the year for shoppers and e-commerce brands.

The holiday season accounts for 20% of the retail industry’s annual sales, and it is often responsible for up to 30% of some independent retailers’ total sales.

Holiday e-commerce sales account for $126 billion in 2018 worldwide, a 16.5 percent increase from the $108.2 billion generated in 2017. It actually had an average growth of 15.8% over the last four years, and it is also expected to grow in 2019.

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For some online retailers, the holiday season is the most stressful one of the year. While for some others, it can be a huge opportunity to capitalize on and exceed your business goals. With Black Friday, Cyber Monday, and Christmas, you have more than one occasion to attract new customers and grow your sales.

So to ensure that you succeed during this period, you will need to prepare and plan every aspect of your business, from marketing to customer service. You will have to make sure that every process in on point for the big rush in operations.

To help you out with that, we prepared for you a list of 6 mistakes to avoid during the holidays period.

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1. Not ordering enough inventory

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This period of the year is high in demand, and more demand requires more inventory. However, too often customers add items to their cart only to find out that it is out of stock. Stockouts can generate a lot of frustration, especially for potential new customers who are visiting your website for the first time. 

To avoid that, make sure to forecast demand so that you know approximately how many products you will sell. If you were in business in previous holiday seasons, you can use historical data to predict sales levels this year. You should also take into consideration other factors such as the products you will mainly showcase, your marketing campaign, and discounts. 

Diving deeper into these numbers will give you some insights into how your products are going to perform.

Once you know approximately how many items you will sell during the season, you can then order enough items for the holiday rush and hopefully, your stock will be full enough by mid-November.

If you are externalizing your logistics processes and inventory management to a logistics provider, make sure that his solution connects to your shop and gives access to real-time data. This is essential if you want to monitor and track your orders, stock levels, and other important metrics.

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2. Ignoring shipping deadlines

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This time of year, I can guarantee you that most of your customers want to receive their orders before December 24th, especially if it is a gift they intend to offer to one of their relatives. 

Since transportation carriers are overwhelmed during the holiday season, they all set deadlines and cutoff dates to when an order should be placed, to ensure it arrives on time for Christmas Eve. 

To set the right expectations with your customers, make sure to highlight your shipping deadlines. Try to communicate around it on your website so that your customers know when they should place their order by and which shipping method they should choose. So don’t forget to add your deadlines to your shipping policy, your checkout confirmation page, and your FAQ.

According to ShipStation, while customers prefer free slow delivery for themselves, they are also 76% more willing to pay for fast delivery when they are buying a gift. 

This means that the closest we are to Christmas, the more customers will be willing to pay to have their family’s gifts shipped on time. In this case, offering a fast delivery option is a clear opportunity to stand out for your competitors, meet your customers’ expectations, and drive more sales.

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3. Spoiling the Christmas surprise

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One of the biggest mistakes that e-commerce brands make during the holiday period is spoiling the Christmas surprise. After all, your customer might live with their companion, and he doesn’t want the gift to be revealed by your beautiful branded boxes. 

To avoid that, make sure to offer a gift-wrapping option on your check-out page. This will help you distinguish yourself from your competition and show to your customers that you care about every little detail. 

Instead of ruining the surprise, opt for making it even special by adding a small “thank you and Merry Christmas note”. This will not only surprise positively your customers, but it will also show them that you care.

Undercutting your prices is not the only way to differentiate yourself from your competitors. You can choose to focus on other factors such as quality of service, convenience, and empathy. This will help you to build long-lasting relationships with your customer base, attract a loyal following, and succeed in the long-term.  

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4. Not providing live support

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During this period, everyone is in a rush to get gifts fast and make their purchase before the sales are over. To help your customers through that consideration phase, you will need to ensure that they have all the information needed to make the right purchase decision.

Taking a proactive approach to customer support is crucial if you want to drive more sales for your business. For that, you will have to optimize your product pages and update your FAQ with all the questions related to shipping, returns, discounts, and special offers.

You can also implement live chat support on your website. By doing so, you will be able to answer customers who are often looking for fast answers and are in a hurry to move on to the next sale or product on their gift list.

Think about automating your support process, as it can help you to respond faster to your visitors and convert these visitors to customers. There are many solutions on the market like Zendesk, Gorgias, or Botmind that can also help you to automate your chat.

Finally, make sure to train your customer support team properly before the rush period arrives.

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5. Not extending your return's deadline

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Since a big part of the products purchased during the holidays are gifts for relatives, more than 11% of all items ordered during that period are returned.

It is, then, crucial for you to extend your returns deadline and give people more time than usual to make returns or exchanges. This will make your customers feel more secure with the purchase and have more trust in your brand. 

Making returns painless will help you boost loyalty and encourage your customers to purchase more items from your website, as it will act as a major differentiation point in the eyes of your customers

In this case, don’t forget to highlight your extended return policy on your website and communicate around it via email and social media. This will help you more exposure and attract more customers.

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6. Neglecting shipping addresses validation

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One of the biggest mistakes e-commerce brands can make during the holiday period is neglecting to check and validate shipping addresses. 

Actually, with the rush and all the buzz around sales and special offers, many customers accidentally place their orders with the wrong shipping address. 

Shipping to an incorrect address may ruin the whole experience. It will leave you with no choice than having the package returned to your warehouse, which means more costs, less profit, and unhappy customers. It also slows down the efficiency of your logistics during the time of the year when you need it the most.

So remember to validate the shipping address before making the delivery of the order. This will help you avoid last moment confusion and will give you the opportunity to fix it proactively by contacting your customer and changing the address. 

This also shows your customers that you care about them and about their experience. Thus, you will be able to build trust and ensure they come back for more.

Finally, even if checking every shipping address is a huge and tiring task, in the long run, the extra time it takes is worth the pain it saves. You can also opt for some tools like Bigblue, which does it automatically.

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Conclusion

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The holiday period can be really intimidating for e-commerce owners. It is a really busy period, competition is fierce, and the customers’ expectations reach an all-time high.

To ensure that you survive and you succeed during this period, taking a proactive approach is crucial. Letting your customers know that their packages will arrive on time is also essential if you want to drive more sales and boost conversions.

As mentioned earlier, focusing on price discounts isn’t the only way to differentiate yourself from your competitors during the holidays. You can opt for other factors such as personalizing items with gift-wrapping and thank you notes or extending your return policy deadlines. 

Avoiding these mistakes and implementing these solutions is no easy task. 

For sure, it takes time, but this will be a time well spent!

Gone are the days when business decisions were made based on gut feelings and personal preferences. Nowadays, entrepreneurs and managers rely on data to gain a clear and accurate understanding of their businesses and make informed, objective decisions. This is true for businesses of all sizes, from multinational brands to small e-commerce shops. By collecting and analysing the right data, businesses can learn more about their customers and offer greater value through their offerings.

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In the world of e-commerce, logistics plays a key role in the buying experience. This is why it is crucial to track the right KPIs related to logistics. This allows you to gain insights into how every aspect of the funnel is performing and make better decisions to ensure your brand can scale in the right direction.

To help you out, we've selected six logistics KPIs that every e-commerce business (regardless of what you sell) should track:

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1. Delivery Lead Time:

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It refers to the amount of time between the moment an order is placed and when it is delivered to the customer.

Lead time has a direct impact on customer satisfaction. No one wants to wait several days to receive their new lamp, and no one wants to receive it later than expected.

Tracking your average lead time by country and by carrier will help you give the most accurate information to your customers and so set the right expectations. I'm not talking about the lead time the carrier is promising on its website, but the real one that you are analysing.

Another great way to optimize your delivery lead time is to work with the fastest carrier by country.

Let’s say for example that Carrier X takes 3 days to ship your lamps to Spain and 4 days to Portugal, while Carrier Y takes 2 days to Spain and 5 to Portugal. Then it is much more interesting for you (and your customers) to work with Carrier Y in Spain and Carrier X in Portugal. You can also work with the carriers in order to find ways to reduce your lead times, but you must remember that this shouldn’t come at the cost of quality.

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2. % of Customer Service Inquiries Related to Logistics:

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Refers to the amount of customer service inquiries related to logistics against the total amount of customer service inquiries.

This percentage will help you determine how effective your logistics processes are. If 90% of the customer service calls you receive are related to logistics, then it reveals that your logistics processes aren’t efficient at all (and that you should probably get a new logistics provider).

You can segment this ratio into categories: inquiries related to shipping, returns, delays, etc… This will also help you spot the problems that your customers are facing and complaining about, and solve them.

If 30% of all the inquiries are about the return process, then maybe you should take a look at your return policy and optimize it. 

The data collected by your customer service team is invaluable as it provides the most accurate insights on the main bottlenecks your customers and business are facing.

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3. % of Damaged Goods per Carrier:

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It refers to the number of damaged goods per carrier against the total goods shipped by the same carrier.

Receiving a damaged order is one of the most frustrating experiences that customers might face. Tracking the percentage of damaged goods for each carrier will highlight which ones are the most reliable and ensures that you work with partners that have the same quality standards as yours.

You will definitely want to keep the ones with the lowest percentage, thus the best quality of service, and stop working with the carriers that have the highest percentage.

Don’t forget to work closely with your transportation partners to brainstorm and optimize your processes. 

Since damaged goods means revenue loss, tracking this KPI will not only lead to improving your customers’ satisfaction but also reduce unpleasant costs and increase organic revenue.

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4. Safety Stock or Buffer Stock:

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It is an additional quantity of an item held in inventory in order to reduce the risk of stockouts. It acts as a buffer in case your item is selling faster than planned or your supplier is unable to deliver additional units at the expected time.

Here’s the formula to calculate it:

Safety stock = (Maximum daily usage * Maximum lead time in days) – (Average daily usage * Average lead time in days).

To help you understand it completely, let’s imagine you sell home furniture online.

Your average daily sales for the new lamp are 20. It takes 4 days, after the reorder, for the new inventory to arrive at your warehouse. During weekends and bank holidays, you can sell as many as 25 lamps per day. The maximum time for your supplier to deliver the new inventory to your warehouse is 6 days.

Safety Stock = (25 x 6) – (20 x 4) = 70

So your safety stock for the new lamps is 70 units. 

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Many growing e-commerce brands forget to update their safety stock thresholds. Don’t make that mistake!

If you’re scaling your e-commerce operations, make sure to update your safety stock thresholds every month. Since you’re growing and making more sales, you might want to adjust your safety thresholds according to your sales growth.

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5. Reorder Point:

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It is the inventory threshold that signals the perfect time to order new inventory. It helps you ensure that you reorder in time and avoid running out of stock. Here is the formula to calculate it: 

Reorder point = (Items sold per day) x (days it takes for new inventory to arrive) + safety stock 

To illustrate, let’s take the previous example with the lamps:

Reorder point = (20 x 4) + 70 = 150

In this case, the perfect moment for you to order new inventory from your supplier is when it reaches 150 units in stock. 

As already mentioned, many growing e-commerce brands forget to track and update their safety stock and reorder point which can result in stockouts, lost revenues, and frustrated customers.

In case you’re working with a logistics provider, make sure that his solution natively connects to your store. It is also essential to have a system that automatically updates your stock levels whenever a product is sold or returned. This will help you to accurately monitor your inventory and have an accurate decision-making.

It is important to set a threshold for each item so that you’re alerted automatically when the limit is reached. This will help you gain time and avoid checking your stock levels sometimes.

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6. Return Rate:

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It refers to the number of orders returned against the total number of orders shipped.

According to Statista, returns will cost 550 billion dollars by 2020 in the US only. This represents 15% of all revenues generated from e-commerce, and it reveals to be a clear conversion and profit killer. Despite that, online retailers are still overlooking this part of the process. And that’s a huge mistake. 

Returns, if managed properly, can be a great opportunity to showcase the quality of your services. Thus, racking your return rate is essential to better understand the state of your customers and your business. 

Here’s how to calculate your return rate:

Return Rate = Amount of products returned / Amount of products shipped. (hesitating between products and orders)

To illustrate, let’s take the same example of the lamps. Let’s imagine that you sold 348 tables and that 19 of those were returned. In this case, the return rate of the lamps is:

Return Rate = 19 / 348 = 5.4% 

Doing this for every product will help you spot which specific products are causing problems to customers. 

You will be able to point out any quality or communication concerns related to the specific products that are returned. Maybe some of them have mismatching product descriptions and don’t meet your customers’ expectations. 

Reducing the number of returns will help you to save costs, increase customer satisfaction, and gain additional revenue. 

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7. Conclusion:

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Running an online business is not an easy task, especially when the competition is fierce and customers are more demanding. Using a data-centric approach and basing your decision-making on accurate and objective insights is essential to provide great customer experiences and grow your business.

If you are externalising your logistics operations, make sure to work with a partner who has the same approach as yours, who connects natively to your shop, and who gives you access to real-time data.

Tracking these KPIs will help you improve the efficiency of your logistics processes. You will be able to better understand the state of your operations, spot the main bottlenecks, and design the best solutions. 

Optimizing these KPIs will ensure that you scale your business in the right direction and that you build the right foundations for future growth.

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In the e-commerce industry, logistics play a pivotal role in the customers’ experience. When a customer orders the new pair of socks you just launched on your website, he expects it to be shipped at his place quickly and for free.

In fact, 91% of consumers leave when shipping isn’t free or fast enough. Shipping is the main factor that customers take into consideration before making their purchase decision. 

To ensure that you actually get these customers to shop from your store, you will not only need to offer a convenient shipping experience to your customers but you will also have to inform them about it and make sure they have all the necessary information before the checkout process.

Having a detailed shipping policy that provides all the necessary information to your customers and is easily accessible will help you build trust in your brand, reduce cart abandonment rates, and drive more sales.

To help you out with that, we will share with you some ideas that will help you optimize your shipping policy:

1. Share all the necessary information:

The primary goal of using a shipping policy is to provide your customers with all the necessary information regarding your shipping processes and how your products will arrive at the front of their doors. Information such as:

• Courrier options:
  This covers all the shipping companies that you use to get your products delivered to your customers. It will help your customers understand who your partners are and have a better idea of your service.‍
• Service types:
  Here, it is crucial for you to cover all the logistics related services. So you will have to share all the different shipping options that your brand offers such as same-day shipping, standard, or click and collect.
  Providing many shipping options to your customers will help them choose the most convenient ones according to their preferences and needs.‍
• Transit time:
  Okay, this might be obvious for services such as same-day shipping or overnight shipping, but it certainly is not when it comes to standard and international shipping. Your customers want to know how much time they’ll be waiting before they get their products. So in order to reach their expectations, it is crucial to share the average lead times per region and how many business days it will take to receive their items.‍
• Pricing: 
  According to the Baymard Institute, the main reason (53% of the times) behind cart abandonment is extra costs (shipping, fees, taxes) that made the total cost either too high or unclear for the customer. Try to think about it, do you know anyone who likes to pay a certain amount and then discover later that he has extra expenses? Or who likes to pay more for the shipping than the product itself? No one wants to pay a 15$ extra cost, especially if the new pair of socks they bought costs 11$.
  So if you want to ensure that your customers aren’t running away from your site before making the purchase, try to include all the shipping related costs to your policy. 
  If you offer free shipping, make sure to highlight the conditions like the minimum order value or the products that qualify for free shipping. This will help your customers to better understand your pricing and will have fewer surprises.‍
• Tracking:
  Customers expect you to keep them updated about the state of their order. Showcasing all the information related to tracking is, thus, mandatory. We’ll cover that deeper in the following paragraphs‍
• Restrictions:
  If you cannot ship your products to some places or if your products are prohibited in some regions (don’t worry, socks are just fine everywhere), you might want to share that with your customers. You don’t want your customers to through the whole checkout process only to find out that they can’t receive your products after all. 
  

Providing all the necessary information to your customers will ease the work of your customer support team, as they will have fewer inquiries to answer. (Of course, this doesn’t mean that you should not leave your customer support email, in case they want to contact you.)

By giving the right information straight from the beginning, you’ll be acting proactively and you will avoid any bad surprise for your customers, and that from the moment they hit the purchase button till the moment they receive their parcel at their doorsteps.

2. Highlight your shipping policy:

It is crucial to make your shipping policy easily and quickly accessible for your customers. Think about adding it to the header of your website and thus make it visible from any page of your website. This will allow your customers to check it at any stage of their experience and to find the information they’re looking for at any time.

Also make sure to showcase it in your cart, products and checkout pages. This will help your customers to find all the needed information before making their purchase decision and thus build trust with your brand.

Another good way to highlight your shipping policy is to attach to the order confirmation email so that your customers can easily find it even after they make their purchase.

3. Follow up information:

One of the most important parts of your shipping policy is the follow-up and the tracking system that your customers will use to know where their products are, by that I mean, at which stage of the shipping process is their order! 

According to Metapack, 81% of customers check the tracking page at least twice for each order. In order to meet their expectations, you will have to give them the opportunity to track their shipment online and in real-time. 

The main purpose of tracking emails is to facilitate the tracking of your customers' orders, so it is necessary to add the related data:

• The link of the tracking page
• The expected date of arrival of the package
• The tracking number
• The summary of the order
  

This is an important step to ensure proactive support and it will help your team to avoid answering the same question (where is my order?) hundreds of times again. Actually, 47% of online customers choose not to buy a second time because they didn't know where their package was either during fulfillment or delivery. 

Since tracking emails have a really high open rate (64%) and customers visit follow-up pages 2.4 times on average, you could take advantage of it by showcasing complementary products that might push your customers to make another purchase. 
Don’t forget to add to your policy page all the information and links related to the follow-up and tracking system. This will relax your customers before and after they make their purchase.

4. Leave your contact details:

Packages get lost or are misplaced even with the best shipping processes in place. After all, you give them to your courier and he could deliver them to the wrong address or the packages could be lost in transit. 

So many things might happen between the time you hand the packages to the carrier and the time it gets to your customers, and when it does, you want to make it easy for them to contact you and give you all the necessary details. For that, make sure to add your contact details in your policy page and tracking emails.

Establishing good communication processes is an important factor in delivering the best customer experience ever.

5. Don’t forget your return policy:

While a shipping policy might include some information about returns, it clearly isn’t a return or refund policy. If your customers’ packages are lost or damaged, creating a detailed return policy alongside the shipping one is crucial to guide customers through your reverse logistics processes and avoid any more inconvenience.  

According to Invesp, 92% of consumers will buy something again if returns are easy. Having an effective return policy is a clear opportunity to turn a negative experience into a positive one. 

Your return policy should help you cover all your bases by making clear what your company’s stance is regarding damaged product returns, return shipping costs, and incorrectly delivered purchases. Taking this proactive approach when it comes to returns will help you build trust, showcase your quality of service, and ensure that customers are coming back to your website.

6. Conclusion: 

Logistics is at the core of the e-commerce customer experience whether you are selling sock or fridges online. This had led customers and other online businesses to set high expectations related to shipping and returns. Amazon, for example, changed the whole industry by launching its Prime Delivery. To meet these expectations, you’ll need to provide the best experience possible and this starts with your logistics (shipping and return) policies.

Remember that if you provide your customers with the right information to support their decision, you will not only drive more sales but also gain satisfied customers and that is the fundamental purpose of a shipping policy: break down clearly and simply all the shipping related information to support the customer before, during, and after the purchase decision.

The payment industry is often regarded as a complex and quite opaque ecosystem. For someone who has not been initiated to the payment world, it can be pretty hard to understand who are the different players involved in transaction processing, what are their roles and how the different pricing models are built. In this article, we are going to answer these questions and we will see how you can actually build a payment structure that drives revenue and supports your growth.

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1. Understanding the payment process

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Let’s start with the basics. To be able to optimize your payment performance, the first step is obviously to understand how transactions are actually processed. There are multiple players involved in an online transaction to make the money transfer from the customer’s bank account to the merchant’s. There are two steps in the transaction: the Authorization Process and the Settlement Process. During the Authorization Process, the bank of the customer is queried on the capacity of the customer to pay the amount corresponding to the purchase. Note that during the authorization, the transaction’s value is deducted/put on hold from the customer account. The settlement (capture) can be requested up to 7 days later by the merchant. The diagram below presents the different actors and how they cooperate:

• Authorization Process: 1 — The customers communicate their card information through the payment gateway (Payment Gateway providers can be Stripe, Adyen, Checkout.com…). 2/3 — The acquirer sends the authorization request to the bank of the customer through the Card Network (card networks can be Mastercard, American Express, UnionPay…) 4/5/6 — The issuing bank analyzes the transaction and accepts or declines it. It communicates the answer to the acquirer through the card network. The Issuing Bank’s answer is then communicated to the merchant and its customer.
  
• Settlement Process:
  7 — The merchant sends the card information of the customer to the acquirer to allow it to make the money transit.
  8/9/10/11 — The Acquirer collects the funds from the issuing bank and sends the money to the merchant.

What is important to understand is that the communication between the Acquirer and the Issuing Bank is the critical part of the whole process. As a merchant, you obviously want the Issuing Bank to authorize the transaction. We will see later that some Acquirers have better connections with some Issuers, which increases the chances of the transaction being accepted. One of the key KPI of your payment performance is your Authorization Rate (successful transactions / total transaction requests).

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2. Work with the rights Payment Service Providers

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Before thinking of any optimization actions, the first thing you have to do is to find the most relevant Payment Service Provider(s) for your business.

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The parameters you need to take into account

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Payment Service Providers (PSPs) allow merchants to accept a wide range of Payment Methods, most of the time in several areas.

The services provided by Payment Services Providers mostly differ on:

• The payment methods supported (credit/debit cards, direct debits, online banking, wallets…)
• The currencies supported by the gateway
• Features & integrations provided
• Security and uptime (Be sure to work with a PSP that has the relevant certifications: PCI DSS Level 1)
• The pricing (most of the time, a flat fee + a percentage on each transaction)

The first step is thus to analyze your customers, or potential customers, to make the best choice. You also have to take into account your development strategy if you plan to open new markets and to accept payments in more areas in the future.

Broadly speaking, keep in mind that Payment Service Providers are more likely to deliver a good performance with issuers the most represented in their domestic market as they have better technical connections with local issuers than a foreign player. To have more complete information on the parameters to take into account, you can read this article about how to choose your Payment Service Providers.

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How to compare different payment service providers

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You can split PSPs into 2 different categories. On one hand, you have historical players of the payment industries: the banks. They will often provide good pricing for acquiring and processing services but they don’t have the agility to provide the best level of user experience or the most features. From our experience, integrating their APIs can be challenging because they tend to be a bit archaic. On the other hand, you have the “new generation” of payment providers. They are focused on their payment service and often provide a more “developer-friendly” integration and easy-to-use dashboards. They will also be more willing to provide good acceptance performance on multiple markets and to better manage cross-border transactions. These newcomers can however be more expensive, as you may assume!

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Talk to your industry peers

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A good way to gather insights about which Payment Service Providers will meet your expectations is to talk to your counterparts. There are plenty of world-class conferences that bring together all the stakeholders of the industry (payment teams, PSPs, banks...). Among the most famous ones, with several dates per year all around the world: Merchant Payments Ecosystem Conference, Money 2020, Merchant Risk Council. Here is a list of the best events you can go until the end of 2019, you can also check The Paypers.

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2 great tools to benchmark the PSPs:

• Chargebee, which provides a subscription billing solution created a free online comparison of different Payment Service Providers. It gathers some of the key elements about their offers (pricing, settlement process, compliances, payment methods and currencies supported, etc…).
  
• Telescope by ProcessOut: a tool you can start using for free that allows you to audit your payment infrastructure and to compare your payment performance with those of your industry peers and competitors. It doesn’t require any technical integration and it gives you some recommendations about how you could start optimizing some KPIs.
  

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Understand the pricings

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The price you pay to a PSP for processing a transaction can be hard to understand and quite opaque. There are two major kinds of pricing: tiered pricing and interchange pricing.

Tiered pricing is pretty easy to understand. You define with your payment provider what is a standard transaction for your business and each of these transactions will be charged the same way, with, most of the time, a flat fee + a percentage (entry tiered pricing is 2.9% + 0.3cts per transaction in the US and 1.4% + 0.25cts in EU).

Interchange Plus pricing is a bit harder to obtain from a provider and addresses companies with a high or a fast-growing volume of transactions. In a few words, your PSP will take a markup on the fees charged by the other players involved in the transaction. You can read Interchange Plus pricing vs. Tiered pricing to understand ‘who charges what’.

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3. Use at least 2 PSPs

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Optimize on acceptance performance

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If you want to start optimizing your payments, it’s essential to work with, at least, 2 Payment Service Providers. Some big players in the e-commerce industry are using more than 50. All the idea of payment optimization is to identify some patterns of transactions and to find the best partners to process these different groups of transactions. Apart from a few very specific businesses, it’s impossible that one PSP can deliver very high performance on each of your transaction patterns. Their performance will vary according to the areas, the payment methods, the issuing banks, etc…

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Optimize on pricing gaps

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Moreover, one of the biggest optimization leverage is the pricing of your providers. Similarly to the technical performance, you can find out which of your providers will charge you less for each kind of transaction.

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Be ready for the next step of optimization

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We’re going to see later that working with multiple providers will allow you to “retry your transactions”, using a third-party provider. It means that if your ‘PSP A’ can’t get the approval from the issuing bank for processing the settlement, a ‘PSP B’ and even a ‘PSP C” may try, maximizing significantly your Authorization Rate.

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4. Identify your strategic payment KPIs

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Depending on your industry, business and transaction parameters, you have to identify what are your most strategic payment KPIs. PSPs give you plenty of data, a good way to analyze this data with relevance is to aggregate it in a single place. Some payment analytics platform will provide this service. At ProcessOut, we have built Telescope this way: an audit and monitoring tool you can start using for free without any technical integration.

Here are 3 examples of KPIs you could start monitoring and improving:

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• Authorization Rate

= Successful transactions/total transaction requests

By analyzing your Authorization Rate per country, per card network, per gateway, etc., you will understand which transactions fail and can start to work on it. If you want to go deeper to this topic, you can read Money's on the table, check your Authorization Rates!

• Net authorization rate

This is authorization rate when removing duplicated transactions (automatic retries or users retrying at a later time). It is not easy to compute, but Telescope does it automatically.

• Average Fees Paid

= Overall amount of fees paid on transactions/number of transactions

In the same way, you can analyze it in different timeframes, according to your different PSPs, the amount of the transactions, etc… And start to think which patterns of transaction you should process with which PSP.

• Chargeback Ratio

= Number of chargebacks/number of transactions

If you’re not familiar with what is a chargeback, you can read what is a chargeback. This KPI helps you identify how much your business is impacted by fraud.

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5. The power of payment ‘Smart Routing’

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As the payment challenges of companies selling online continue becoming more and more strategic over the years, payment teams have started to do what is called ‘Static Routing’ and ‘Dynamic Routing’ (also named Smart Routing) to improve their payment performance. The global idea is to route your transactions to the PSPs that will deliver the best performance at the lowest price according to their parameters.

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What is Static Routing

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The purpose of Static Routing is to define Routing Rules to send your transactions to different payment providers. In practice, Data Teams work with Financial teams to determine these rules according to the strategy and the KPIs the merchant wants to improve.These routing rules could be:

• Route the transactions that come from a German Issuing Bank to PSP B
• Route the transactions < 25$ to PSP A
• Route the transactions > 199$, from the Card Network X, to PSP C

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What is Smart Routing (Dynamic Routing)

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Smart Routing is about using data and algorithms to reach the highest level of performance.

The algorithms will learn from the transactions of the past and from how these transactions have been processed to identify patterns and smartly route transactions to the best processor.

You can find third-party providers, FinTechs that do not actually process the payments but are focused on building the most powerful Smart Routing technology.

With the emergence of the internet and e-commerce, selling goods internationally has never been this easy. A customer could be sitting on his couch in Paris right now and still buy a product from Thailand instantly. This reveals itself to be a golden opportunity for e-commerce owners to grow their brand and expand their operations globally. 

According to Statista, global e-commerce revenues are projected to grow from 3 535 billion dollars in 2019 to 6 542 billion dollars in 2023 with a potential market of 4 billion people.

Expanding your e-commerce globally offers the opportunity to create a worldwide presence for your brand, which will drive sales and increase your revenues. 

You are at a point your sales are starting to be well established in your country and you are willing to grow outside of you frontiers, you may even have had your first orders internationally. We will put ourselves in the shoes of a European brand that wants to expand in the rest of Europe and further, though if you have questions from other countries, feel free to shoot me a message or to join our facebook community

Taking your brand worldwide comes with a little bit of apprehension, after all, you will be dealing with completely different processes. You will have to send your products to multiple countries and this implies dealing with different customs, tariffs, rules, and regulations while, at the same time, making sure that you still offer a pleasant experience for your customers. 

After all, customers still expect you to deliver their orders pretty quickly and for a small shipping cost (if not for free), that’s why you’ll need to

Here are some steps we prepared to help you implement cross border shipping, meet your customers’ expectations and ensure that your global expansion is successful: 

1. Choose the right service provider:

To ensure a successful global expansion, choosing the right carrier is crucial.

There are many carriers out there, so make sure to choose one that has low delivery lead times to the markets you’re targeting. Shipping cost is also another factor to take into consideration. You don’t want your customers to pay for shipping as much as they pay for your products, especially when you know that high shipping costs is actually the top reason for cart abandonment.

Double check if your carrier has an efficient tracking system, this will help you ensure a constant communication with your customers about the state of their delivery. 

Choosing a carrier who covers a large network is also crucial for your global expansion, as this will help you to ship your products to almost anywhere in the world.

2. Understand international logistics and customs clearance processes:

Global expansion and cross border shipping require a minimum understanding the customs clearance processes and its legal requirements.

Customs clearance is the documentation given by customs authorities to prove that the shipper has paid custom duties and completed the examination and assessment of the goods he’s importing or exporting. 

To make sure you successfully go through these processes, it is important to understand every concept of it:

EORI Number: 

The EORI Number is a European Union identification number used by customs authorities to easily identify a business. The purpose is for statistics, fiscal declarations and security.

To ship abroad, you have to declare your business to the administration to get the EORI number, because all businesses going through EU customs must have one. So make sure to declare your e-commerce before starting your expansion abroad.

Harmonized System Code (HS Code):

The Harmonized System is a global system that classifies everything (yes, literally everything) on the planet with up to 10 digits.

The Harmonized System is an indispensable tool for international shipping and trade. It is considered as a universal economic language (used by over 190 countries) that is at the core of the customs clearance processes. The system is well structured and is supported by many rules and laws to make its usage uniformized around the world.

Customs officers need to use the HS code to clear all the goods crossing international borders. It is also used by governments for internal taxes, trade deals, controlling goods and quotas, and making economic research.

Failing to put the correct code for a product will lead your shipment to be delayed and could result in higher duty and taxes. If you’re in doubt about the HS code of your product, it is more prudent to consult customs directly or experts in the customs clearance companies for advice on the correct HS codes to use.

Customs fees:

Customs fees are fees that you need to pay to ensure that you product is cleared successfully at customs, they are divided into 3 categories: Tariffs, VAT and handling fees.

Tariffs:

Tariffs are taxes paid on foreign goods imported into a country. It represents a percentage of the CIF Value. The CIF value is the addition of the merchandise price, the transportation cost, and the insurance fees. 

Each country has a threshold for import, it means that under that amount, you won’t have to pay customs tariffs. The threshold in Europe is 150 euros, which means there’s no tariff applied to products valued less than 150 euros.

Note that there’s no tariff applied for products shipped inside the European Union.

Value Added Tax:

VAT is a consumption tax that applies to all commercial activities including services and goods selling. VAT is paid to the revenue authorities by the seller of the goods, but it is actually paid by the buyer to the seller as part of the price. It is thus borne by the final consumer. 

The VAT paid by the consumer is calculated as a percentage of the CIF Value. The percentage of VAT applied to different goods and services varies from one country to another.

Inside the European Union, it is applied on business owners and goods sellers based upon their Annual Sales Income (VAT excluded) in the destination countries. 

Each destination country has its own Annual Sales Income threshold. If your revenues in the destination country are under the threshold, the VAT applied will be the one from the departing country.

Knowing how complicated it can be to understand (I know the struggle), let’s illustrate that with an example. As said in the beginning, let’s suppose you’re an e-commerce based in France and you want to expand your business to Europe and more specifically to Czech Republic. The Annual Sales Income threshold in Czech republic (your destination country) is 44 873 euros and your revenues in the country are below the threshold, the VAT applied in this case is France’s one.

When it is over the threshold, the VAT applied is the one from the EU country of destination. Taking the previous example, if your revenues are above 44 873 euros in Czech Republic, you will have to pay the VAT in Czech Republic.

Outside of the European Union, VAT will be charged based on the Incoterm you chose to use.

Incoterms are a set of rules which define where a transfer of responsibility occurs between the buyer and the seller regarding merchandise, customs, insurance, and costs. Incoterms are published by the International Chamber of Commerce (ICC) every 10 years.

There are 11 incoterms but when it comes to the e-commerce and B2C shipments outside the European Union, the 2 most used ones are DDP and DAP:

• DAP: Delivery at Place
  Here, end customers need to pay the customs fees upon pledge arrival before being able to collect their parcel. The selling price on your website should be free of VAT.

• DDP: Delivery duty paid
  Here, the sender (you) pays the customs fees in advance to the carrier. End customers collect their parcel without paying any additional fees on arrival. In this case, you can add VAT to the selling price on your website.

To provide the best experience possible for your customers, I advise you to opt for DDP as you’ll avoid any bad surprise for your customers won’t have to worry anymore after their purchase is made and this makes life easier for them.

Handling fee:

The handling fee is the amount charged by the carrier for the customs clearance. If the carrier has provided his help in managing and sorting all the customs related documents, it is natural that he’ll charge some fees for the service provided.

Now that we’ve gone through all the fees that you have to pay related to customs, we’ll move to the document that you’ll need, such as invoices, customs declaration, and certificate of origin.

To illustrate all the points above, let’s imagine that your brand is doing well in Europe and you want to expand further, you sold a shirt to a customer based in Brazil and here’s your context:

• Shirt value: 38€.
• Shipping fees: 8€.
• The tariff for the product to enter Brazil is: 35%
• The tariff threshold: 45€
• VAT for fashion in Brazil is: 17%
• Handling fees: 2€
  

Based on these data:

• Your product value is: 38€
• Your CIF value is: 46€ (38 + 8)
  

Knowing that your CIF value is above the 45€ threshold, so you’ll have to pay the tariffs.

• Tariffs = 46€ x 0,35 = 16,1€
• VAT= 46€ x 0,17 = 7,82€
  

If you chose DDP, the total amount you’ll have to pay as customs fees will be: 25,92€

(In this case, VAT should be included in your selling price and the customer should pay it during the purchase on your website)

If you chose DAP, the total amount you’ll have to  pay as customs fees will be: 18,1€ and your customer will have to pay the 7,82€ for VAT.

Customs Documents:

In order to go through customs, the officers will look at the paperwork needed for your shipment to cross the borders. Here’s the list of documents you’ll need for the customs clearance process:

Invoice:

A commercial invoice is an important document needed to clear your package through customs when shipping internationally. It is a proof of transaction between you and the buyer. It needs to be prepared by the seller (exporter) and can be submitted in any language, however, an English version is recommended to ensure a smooth customs clearance process.

The commercial invoice contains basic information such as the name and the address of the seller and the buyer, the date of issue, the invoice number, the name and the quantity of the goods shipped, the CIF Value, the HS code, the terms of delivery according to the appropriate Incoterm, etc…

When it comes to non-commercial shipments like gifts or samples, you can use a proforma invoice. It provides an estimate for the final amount of an order and can be used in importing and exporting to declare the value of goods for customs. A proforma invoice looks almost exactly the same as a commercial invoice. However, it should clearly state that it is a proforma to show that it is only an estimate and that the amount hasn’t been paid.

Customs Declaration:

Devided in 2 parts:

CN23:

CN23 is a customs document used for international trade when goods (which commercial value is under 1000 euros) are being transported outside of the European Union. It contains the nature of the goods, the country of origin and the customs tariff number. The document informs customs of the contents of your shipment and helps them to check it for prohibited or restricted items. Not providing the declaration may lead to delays on your shipment or your goods to be seized by Customs. 

SAD: 

The single administrative document (SAD) is a form used for customs declarations for shipments, in which commercial value exceeds 1000 euros. Just like the CN23 it is used for exports outside the European Union. 

Certificate of Origin:

An important part of the customs clearance process is to prove the origin of items that are shipped, in order to do so there are 2 ways:

• Invoice Origin Declaration:

If the CIF value is smaller than 1000 euros, then you can use the Invoice Origin Declaration, which certifies the origin of the products easily and directly on the invoice.

• Certificate of origin:

If the CIF value exceeds 1000 euros, then you’ll have to use a Certificate of Origin. It is a document declaring in which country the good was manufactured. It contains information regarding the product, its destination, and the country of export. It represents an important form because it can help determine whether certain goods are eligible for import, or whether goods are subject to duties.

PS: The origin of your product is the last country where a transformation occurred.‍

3. Conclusion:

Expanding your e-commerce brand to a global scale takes a lot of time and effort, you will need to ensure that you products arrive in a fast way to satisfy your customers expectations, for that it is necessary to understand and master all the cross-border processes. This might be easy to manage if your volume is low but in case you have a bigger volume, I advise you to partner with a logistics provider who will be able to automate all these processes and will generate automatically all the documents needed for customs clearance.