Arvato Supply Chain with Guide for Cross-Border E-Commerce

Arvato Supply Chain Solutions has compiled essential strategies, business models, and challenges of cross-border supply chains and fulfillment solutions for brands and retailers in a guide. With this, Arvato aims to address the fact that many customers are unfamiliar with cross-border e-commerce.

(Gütersloh) In the global e-commerce market, shopping revenues of around 3.35 trillion euros are expected in 2022 – a trend that is rising. According to the forecast from the data portal Statista, these revenues are expected to rise to about 4.61 trillion euros by 2025. Cross-border online trade is becoming increasingly important. It is projected that cross-border business will account for around 22 percent of all e-commerce shipments of physical products in 2022 – up from 15 percent in 2016.

“We have found that despite the growing popularity and market size of cross-border e-commerce, many decision-makers are not familiar with the specifics of the process and the associated challenges,” explains Abbas Tolouee, Senior Consultant at Arvato Supply Chain Solutions. Tolouee is the author of the white paper “Internationalize Your Brand: A complete guide to cross-border e-commerce.” “In our guide, we highlight the opportunities and risks of cross-border online trade and aim to provide appropriate assistance and guidance.”

The advantages of a cross-border strategy are clear

The advantages of a cross-border strategy are clear: brands and online retailers can gain access to new, sometimes rapidly growing markets worldwide without having to immediately establish local branches or hire employees. Orders can be placed through their own country-specific web shops or through marketplaces. The goods are then distributed from the domestic central warehouse to other countries. With this model, retailers can initially test how their product is received in the target market. The next step would be to establish regional warehouses in the respective countries to meet the increased demands of end customers and high volumes.

Smooth fulfillment processes are essential

The success of cross-border e-commerce critically depends on the logistical processes and the smooth delivery to end customers. When a customer orders a product, the rest of the shopping experience must also be perfect. According to research, smooth fulfillment processes along the entire supply chain are required. This includes not only goods receipt, storage, picking, packing, and delivery of orders but also returns management, payment processing, and customer service.

“A transparent inventory management is also essential, ensuring that the right item is available in the right channel at the right time from the central inventory, given the increasingly smaller shipment sizes, high peak volumes, and rising delivery speeds,” says Abbas Tolouee. “A perfect supply chain is an important part of our customers’ internationalization strategy,” confirms Berthold Reinke, Vice President Global Business Development at Arvato Supply Chain Solutions. “Equally important is recognizing growth opportunities and market developments early. Our industry and sector experts continuously monitor various markets and growth sectors around the world to support our customers’ international online business.”

Observe tax and customs regulations

Additionally, when shipping cross-border, the respective tax and customs regulations must be observed. “This is an aspect whose complexity should not be underestimated,” emphasizes Abbas Tolouee. For example, it must be clear from the beginning who is responsible for import taxes, as no customer wants to be surprised by unexpected fees. Therefore, a solution with prepaid shipping fees is often used – for example, the international trade clause Incoterm DDP (Delivery Duty Paid), which obliges the seller to handle customs clearance, payment of taxes, and import duties. The online buyer does not need to take any action and can transparently see what costs are being charged at the time of purchase.

Understand local peculiarities

In addition to logistics, a localized and personalized online presence is also an important component of cross-border commerce and a key to sustainable growth in cross-border markets. Online shoppers should not only be able to shop in their native language but also use local payment methods. Brands and retailers must also learn to understand their local buyers and their respective local peculiarities and preferences to establish their cross-border strategies successfully and sustainably in the long term. Market entry can occur gradually. While an initial online presence with international customer service and international payment and delivery options may suffice at the start, localized websites with localized services will be needed for further growth – up to fully localized web shops with an embedded fulfillment system and local customer support, delivery options, and preferred payment methods. This approach is particularly suitable for markets with high potential and steady growth.

The complete white paper on cross-border e-commerce is available for download at:

arva.to/internationalize-your-brand

Photo: © Arvato Supply Chain Solutions / Image caption: Abbas Tolouee