The best (and worst) international shipping strategies
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Expanding internationally is a major milestone for any brand, representing an opportunity to reach new markets, increase revenue, and build global brand recognition. However, the journey to international success comes with its own set of challenges, particularly in the realm of shipping and logistics. Understanding the best way to ship internationally is crucial to ensuring your products reach customers quickly, safely, and cost-effectively.
International shipping is more than just transporting goods across borders; it involves navigating a complex web of regulations, customs procedures, and logistical hurdles. The choice of shipping carriers, whether you're working with well-known providers or niche international shipping companies, can significantly impact your business. Selecting the best international shipping companies that align with your brand’s needs is essential for maintaining customer satisfaction and optimizing costs.
One of the most important decisions a brand can make when expanding into new markets is whether to ship cross-border or to establish local fulfillment centers. While cross-border shipping might seem like a straightforward option, it can quickly become costly, especially if your products are in high demand. On the other hand, placing inventory in-country and fulfilling domestically can reduce shipping times and costs, but it also requires careful planning to avoid unnecessary overhead expenses.
International shipping rates are influenced by various factors, including the size and weight of your shipments, the shipping method, and the destination country. By understanding these factors, brands can make informed decisions and secure the best international shipping rates, ultimately boosting profitability and customer satisfaction.
As you consider expanding your brand internationally, it’s essential to avoid common mistakes, such as delaying the decision to establish local fulfillment, prematurely investing in multiple inventory locations, or relying solely on low-cost carriers. These errors can lead to increased shipping costs, logistical inefficiencies, and a negative impact on the customer experience.
In this guide, we’ll explore the best strategies for shipping internationally, choosing the right carriers, and making informed decisions about inventory placement, helping your brand thrive in the global market.
Exploring International Shipping Carriers: Common and Niche Options
Popular International Shipping Carriers
When expanding your business internationally, choosing the right shipping carrier is critical to your success. Well-known and trusted carriers like FedEx, DHL, and UPS dominate the global shipping landscape, offering extensive networks, advanced technology, and reliable service. However, while these carriers are often the go-to choice for many businesses, it's essential to consider whether they truly align with your specific needs and goals when shipping internationally.
Let's delve into the strengths and potential limitations of each of these major players.
FedEx: Reliability and Extensive Global Reach
Strengths:
FedEx is synonymous with reliability and speed, particularly when it comes to international shipping. The company operates in over 220 countries and territories, providing an extensive global network that few can match. This makes FedEx an excellent choice for businesses that need to ship products to a wide range of destinations. FedEx offers various shipping services, including FedEx International Priority, which guarantees delivery in 1-3 business days to major markets, and FedEx International Economy, which offers a more cost-effective option for less urgent shipments.
The carrier is also known for its strong customer service and robust tracking capabilities. FedEx provides real-time updates and allows businesses and customers to monitor their shipments every step of the way. This level of transparency can enhance the customer experience and reduce the burden on your support team, particularly when handling high-value or time-sensitive goods.
Limitations:
However, FedEx’s premium services come at a cost. The speed and reliability that FedEx is known for often translate into higher shipping rates, which can be a significant consideration for businesses looking to optimize their international shipping costs. While FedEx does offer more economical options, the prices may still be prohibitive for businesses with tight margins or those shipping low-cost goods.
Moreover, while FedEx’s network is vast, there are still certain regions where the company’s presence may not be as strong, particularly in remote or underdeveloped areas. In these cases, relying solely on FedEx might not be the most effective strategy, and considering alternative or niche carriers may be necessary.
DHL: Global Coverage with a Strong Presence in Europe and Asia
Strengths:
DHL is a powerhouse in the international shipping arena, particularly in Europe and Asia, where it boasts an incredibly strong network. DHL Express is renowned for its speed and reliability, with a promise to deliver parcels to most destinations within 1-4 business days. DHL’s extensive coverage makes it an ideal choice for businesses targeting key markets across the globe, especially in regions where it holds a competitive edge.
DHL also shines in its ability to handle complex shipments. Whether you're dealing with oversized packages, hazardous materials, or perishable goods, DHL has the infrastructure and expertise to manage these challenges effectively. The company’s customs brokerage services are another major advantage, helping businesses navigate the often complicated customs processes in various countries, reducing the risk of delays and additional fees.
Limitations:
On the downside, DHL can be more expensive than some other carriers, particularly for services like DHL Express. The high cost of using DHL may not be justifiable for every business, especially for those that ship low-margin products or need to offer free or discounted shipping to remain competitive.
Additionally, while DHL excels in certain regions, its service levels may vary in others. For instance, in North America, DHL’s network is not as robust as FedEx or UPS, potentially leading to longer delivery times or less reliable service in this region. Businesses that rely heavily on North American markets may need to consider whether DHL is the right fit or if a more regionally-focused carrier would be more effective.
UPS: Strong U.S. Presence with Comprehensive Global Services
Strengths:
UPS is another global leader in international shipping, particularly known for its strong presence in the United States. UPS offers a wide range of international shipping options, from expedited services like UPS Worldwide Express to more economical choices like UPS Worldwide Saver and UPS Standard. The company’s extensive U.S. network makes it a preferred choice for businesses that ship frequently within North America but also need reliable services for international markets.
UPS’s commitment to technology and innovation is also a significant advantage. The carrier offers advanced tracking tools, supply chain solutions, and logistics support that can be particularly beneficial for businesses with complex shipping needs. Additionally, UPS’s My Choice service allows customers to customize their delivery preferences, which can improve the overall customer experience and reduce the burden on your customer support team.
Limitations:
However, similar to FedEx and DHL, UPS’s premium services come with higher shipping rates, which can be a barrier for businesses looking to minimize their international shipping costs. While UPS does offer more cost-effective options, they may not be as competitive as those provided by other carriers, particularly in markets where UPS does not have a dominant presence.
Another potential limitation is that UPS, while strong globally, may not offer the same level of service in certain regions as it does in North America. For businesses targeting markets in Asia or Europe, DHL might offer more reliable service in these areas, depending on the specific destinations.
When to Consider Alternative or Niche Carriers
While FedEx, DHL, and UPS are well-established and trusted choices for international shipping, they are not always the best fit for every business. For brands with unique needs, such as shipping to remote locations, handling highly specialized products, or seeking more cost-effective solutions, niche carriers might offer better value and more tailored services.
Niche carriers often specialize in specific regions or types of shipments, offering personalized service, local expertise, and potentially lower rates for certain lanes. For example, a carrier specializing in Latin America or Africa might provide more efficient service and better rates than a global carrier in those regions.
Ultimately, the best way to ship internationally depends on your specific business needs, target markets, and budget. While FedEx, DHL, and UPS offer unparalleled reliability and global reach, it’s crucial to assess whether their services align with your goals or if alternative carriers could provide better value for your international expansion strategy. Next, we’ll dive into more of these less common options.
Niche and Lesser-Known Carriers: Understanding Asset-Light Shipping Solutions
Defining "Asset-Light" Carriers
In the world of international shipping, “asset-light” carriers are service providers that don’t own traditional assets such as trucks, planes, ships, or warehouses. Instead, they leverage existing networks, partner with third-party providers, and utilize technology to offer efficient, cost-effective shipping solutions without the overhead of maintaining their own fleet or infrastructure. This approach allows these companies to be more agile, often providing flexible and scalable shipping options that can adapt to the varying needs of eCommerce businesses.
Pros:
Cost Efficiency: Asset-light carriers can offer competitive pricing by partnering with multiple providers and optimizing routes, making them an attractive option for businesses looking to minimize shipping costs.
Scalability: These providers can scale services up or down based on demand without the constraints of managing physical assets, making them ideal for businesses with fluctuating shipping volumes. Just be careful when making volume commitments to these carriers that could eventually affect pricing due to seasonality or other changes in your business.
Flexibility: By not being tied to a specific network, asset-light carriers can select the best partners and routes for each shipment, potentially improving delivery times and reducing costs.
Cons:
Limited Control: Since they rely on third-party assets, these carriers may have less control over the shipping process, which can sometimes lead to inconsistencies in service quality. Pickup and delivery trucks, for example, may not accurately reflect the brand perception you are trying to achieve. Surprise delays or other issues in transit may arise without warning as well, even when things are otherwise running smoothly up until that moment.
Traceability: Asset-light carriers might not offer the same level of shipment tracking and visibility as traditional carriers, which can be a drawback for businesses that prioritize a transparent customer experience. Providers like Passport do a pretty great job of providing a technology stack to reduce this risk, but you’ll have to evaluate this based on your own expectations.
Potential for Longer Delivery Times: Depending on the partners and routes chosen, delivery times might be longer or less consistent compared to more established carriers with direct routes and extensive infrastructure.
Example: BoxC and Portless: Direct Shipping from China
BoxC and Portless are two examples of asset-light carriers that focus on shipping directly from China to global markets. These companies leverage China's massive manufacturing base and their partnerships with various logistics providers to offer a streamlined shipping solution for businesses looking to source products from China and ship them directly to customers around the world.
Why Shipping Directly from China Might Make Sense:
Cost Savings: For businesses that manufacture products in China, using an asset-light carrier like BoxC or Portless can significantly reduce shipping costs by eliminating the need to first import products to a domestic warehouse before re-exporting them to domestic and/or other international customers.
Simplified Supply Chain: These carriers offer end-to-end solutions, handling everything from product pickup in China to last-mile delivery in the destination country, which simplifies logistics for businesses. In this use case, you wouldn’t need a freight forwarder, customs broker, or 3PL to move inventory into a given market like the US or Europe.
Speed to Market: Direct shipping from China can reduce lead times for getting products to international markets.
When It’s Likely a Bad Idea:
Customer Experience Risks: While direct shipping from China can be cost-effective, it often comes with inconsistent delivery times and less reliable tracking, which can lead to a poor customer experience. This is particularly true for customers accustomed to fast, reliable domestic shipping.
Customs Delays: Shipments from China can be subject to unpredictable customs delays, which can further impact delivery times and customer satisfaction.
Brand Perception: For premium brands, the perception of shipping directly from China might not align with customer expectations for quality and service, particularly if delivery times are long or the packaging arrives in poor condition.
Example: Passport - Shipping Internationally from the U.S.
Passport is another asset-light carrier that focuses on simplifying international shipping for U.S.-based eCommerce businesses. They specialize in shipping from the U.S. to global destinations, offering a range of services that include end-to-end tracking, all-inclusive customs clearance, and related support.
Why Shipping from the U.S. Might Make Sense:
Improved Customer Experience: Shipping internationally from the U.S. through Passport can offer a better customer experience compared to shipping directly from China. Passport's focus on customer service and reliable delivery times can help maintain customer satisfaction, even with international orders.
Enhanced Tracking: Passport provides comprehensive tracking from the U.S. to the final destination, giving customers greater visibility into their orders and reducing the burden on customer support teams.
Lower Initial Costs: For brands just starting to expand internationally, Passport offers a cost-effective way to test the waters without the upfront investment required to establish international fulfillment centers.
When It’s a Good Starting Point but Not a Long-Term Solution:
Scalability Concerns: While solutions like BoxC, Portless, and Passport can be excellent options for brands new to international shipping, they may not be the best long-term solution as the business grows. Most of Rush Order’s largest brands, who are serious about international expansion, tend to outgrow these types of solutions. As their international sales increase, these brands often transition to putting inventory in-country to provide a cheaper, faster, and more reliable domestic fulfillment experience.
USPS, Hong Kong Post, China Post, and Other Regional Postal Carriers
For many businesses, especially those selling low-cost goods, regional postal carriers like The United States Postal Service (USPS), Hong Kong Post, and China Post can offer some of the same solutions as asset-light carriers with the most budget-friendly shipping options for international deliveries. These carriers typically offer the lowest rates, making them appealing for businesses with slim margins.
Pros of Using Regional Postal Carriers:
Lowest Shipping Costs: These carriers offer some of the most affordable international shipping rates available, which can be crucial for businesses selling low-cost items.
Wide Reach: Postal carriers typically deliver to a wide range of destinations worldwide, including remote and rural areas that might not be easily accessible by other carriers.
Cons and Potential Issues:
Long Delivery Times: One of the biggest drawbacks of using regional postal carriers is the extended delivery times. Shipments can take weeks, or even months, to reach their destination, which can lead to customer dissatisfaction, especially if expectations are not managed upfront.
Poor Tracking and Traceability: Unlike major international carriers, postal services often offer limited tracking capabilities. This can result in a poor customer experience, as customers may feel anxious or frustrated when they can’t easily track their orders. Most or all of the time, the postal carrier you use will end up handing the package over to a different postal carrier in-country for last mile delivery. Shipment tracking can either be A) unreliable at this hand off point, B) will stop showing movement after the hand off, or C) will stop showing movement once the shipment leaves the origin country.
Service Quality: Postal carriers are often less reliable than private carriers, with a higher incidence of lost or damaged packages. This is particularly problematic for businesses that sell higher-value items or rely on a strong brand reputation.
When to Use Regional Postal Carriers:
For Low-Cost, Non-Urgent Items: If your business sells inexpensive items on platforms like Temu, Wish, or Shein, where customers expect longer delivery times and prioritize low shipping costs, regional postal carriers can be an acceptable solution.
As a Last-Resort Option: For businesses that need to ship to remote or underserved areas where other carriers don’t offer service, postal carriers may be the only viable option, despite their drawbacks.
Finding the Right Balance
For businesses looking to expand internationally, choosing the right shipping strategy is crucial. Asset-light carriers like BoxC, Portless, and Passport offer flexible, cost-effective solutions that can be ideal for brands just beginning their international journey. However, as your business grows and international demand increases, it’s often necessary to transition to more robust fulfillment strategies, such as establishing in-country inventory and leveraging domestic shipping networks.
While regional postal carriers offer the lowest costs, their limitations in delivery speed and tracking make them suitable primarily for low-value, non-urgent shipments. Ultimately, the key to success lies in balancing cost, service quality, and customer experience, ensuring that your international expansion supports your brand’s long-term growth.
Benefits of Domestic Fulfillment in Foreign Markets
When expanding into international markets, one of the most important decisions a brand can make is whether to ship products cross-border or establish domestic fulfillment in key countries. While cross-border shipping can be a practical option in the early stages of international expansion, placing inventory in-country offers significant advantages that contribute to long-term resilience and growth.
Faster Delivery Times and Enhanced Customer Satisfaction
Domestic fulfillment centers allow you to store inventory closer to your customers, resulting in significantly faster delivery times. In today’s competitive eCommerce landscape, customers expect rapid shipping, often within a few days. By having inventory in-country, you can meet these expectations, providing a customer experience that matches or exceeds that of local competitors.
Faster delivery not only improves customer satisfaction but also reduces the likelihood of cart abandonment due to long shipping times. This can have a direct impact on your conversion rates and customer retention, as satisfied customers are more likely to return for future purchases and recommend your brand to others.
Reduced International Shipping Costs and Increased Profit Margin
Cross-border shipping can be expensive, especially when factoring in international shipping rates, customs duties, and potential delays. By fulfilling orders domestically, you eliminate many of these costs, allowing you to offer competitive pricing or improve your profit margins. Additionally, domestic shipping rates are generally lower than international rates, further reducing your operational expenses.
In-country fulfillment also enables you to take advantage of local shipping promotions and partnerships, which can lead to additional cost savings. For example, many countries offer discounted shipping rates for local businesses, which you can access by maintaining a presence in that market.
Improved Inventory Management and Flexibility
Having inventory stored in multiple countries takes a fair bit of work to setup in advance. Managing additional inventory sites also carriers overhead and workload. However, growing your fulfillment center footprint around the world provides greater flexibility in managing your supply chain. You can respond more quickly to changes in demand, ensuring that popular products are always in stock. This flexibility is particularly valuable during peak shopping seasons or when launching new products in international markets.
In addition, in-country fulfillment allows for more accurate forecasting and inventory planning. By analyzing sales data from specific regions, you can make informed decisions about inventory levels and product offerings tailored to local preferences, leading to more efficient operations and higher customer satisfaction.
Strengthened Brand Presence and Market Credibility
Establishing fulfillment centers in key international markets signals to customers that your brand is committed to serving their region. This can enhance your brand’s credibility and reputation, making it easier to build trust with new customers. A strong local presence can also provide a competitive advantage, positioning your brand as a serious contender in the market against both local and international competitors.
Challenges of Cross-Border Shipping
While cross-border shipping can be a viable option for brands just starting their international journey, it comes with several challenges that can hinder long-term growth.
Longer Delivery Times and Customer Dissatisfaction
One of the biggest drawbacks of cross-border shipping is the extended delivery times. Depending on the destination, it can take weeks for a package to arrive, leading to customer frustration and potential order cancellations. In a world where customers increasingly expect two-day or even same-day delivery, long shipping times can significantly impact your brand’s reputation and customer loyalty.
Higher Shipping Costs and Complex Customs Processes
Cross-border shipping often incurs higher costs due to international shipping rates, fuel surcharges, and customs duties. These costs can quickly add up, especially if your business is shipping a high volume of orders or if your products are bulky or heavy. Additionally, navigating customs regulations can be complex and time-consuming, with the risk of delays, additional fees, or even rejected shipments.
Limited Control Over the Shipping Process
When relying on cross-border shipping, you have less control over the delivery process. You’re dependent on third-party carriers to handle your shipments, which can lead to inconsistencies in service quality. For example, delays at customs, lost packages, or damage during transit are all risks that can negatively impact the customer experience.
Key Considerations for Inventory Placement
Deciding when and where to place inventory internationally is a critical decision that can shape the success of your global expansion efforts. Here are some key considerations to help guide your strategy:
Market Demand and Sales Volume: Start by analyzing your sales data to identify your top-performing international markets. If a particular country or region consistently generates significant sales, it may be time to consider placing inventory in that location. High sales volume justifies the investment in local fulfillment, as the benefits of faster delivery and lower shipping costs will have a direct impact on your bottom line.
Local Market Preferences and Regulatory Requirements: Understanding local market preferences is essential for effective inventory placement. For instance, customers in different regions may have specific product preferences or seasonal buying patterns. By storing inventory locally, you can tailor your offerings to meet these needs, ensuring that you have the right products available at the right time. Additionally, consider the regulatory environment in each market. Some countries have strict import regulations that can complicate cross-border shipping. By fulfilling orders domestically, you can streamline the process and avoid potential legal issues.
Logistics Infrastructure and Fulfillment Capabilities: Evaluate the logistics infrastructure in each potential market. Look for regions with reliable transportation networks, access to major shipping hubs, and established 3PL providers. Rush Order’s global network of fulfillment centers is strategically located to offer these advantages, ensuring that your products can be delivered efficiently and cost-effectively.
Scalability and Future Growth: Consider the scalability of your fulfillment strategy. As your brand grows, your international operations will need to scale accordingly. Starting with cross-border shipping can be a practical solution for testing new markets, but as demand increases, transitioning to in-country fulfillment will be necessary to support long-term growth. You can indeed leverage a “crawl, walk, run” strategy here.
Building for Long-Term Success
While cross-border shipping may be sufficient in the early stages of international expansion, placing inventory in-country is crucial for long-term success. By establishing local fulfillment centers, you can reduce shipping costs, improve delivery times, and provide a superior customer experience, all of which contribute to a stronger, more resilient global brand. Rush Order’s extensive network of fulfillment centers around the world is designed to help you navigate this transition seamlessly, ensuring that your brand is well-positioned to thrive in the global marketplace.
Factors Affecting International Shipping Rates
Assuming for a moment that you will either A) start by shipping cross-border to get your international sales off the ground, or B) leverage freight forwarders to bring inventory into domestic fulfillment centers around the world, it will be critical for you to understand the factors that influence shipping rates and transit times. In any flavor mentioned above, international shipping can be a significant expense, and without careful planning, it can quickly eat into your margins. By understanding the key determinants of shipping costs and implementing strategies to optimize rates, you can enhance your international logistics and maintain a competitive edge.
Key Determinants of International Shipping Costs
Several factors contribute to the cost of shipping products internationally. Here are the most critical elements to consider:
Weight and Dimensions of the Package:
Volumetric Weight: Many carriers calculate shipping costs based on volumetric weight, which considers the dimensions of the package in addition to its actual weight. Large but lightweight packages can end up costing more to ship than smaller, heavier items. To manage this, ensure your packaging is as compact as possible without compromising product safety.
Actual Weight: The physical weight of the package is a straightforward factor in determining shipping costs. Heavier packages generally incur higher shipping fees, especially for air freight. Optimize your packaging materials to reduce unnecessary weight while still protecting your products.
Destination and Shipping Zones:
Distance: The farther a package has to travel, the more it will cost to ship. Carriers divide the world into shipping zones, and the cost increases with the distance between the origin and destination zones. Consider focusing on markets closer to your fulfillment centers or exploring multiple regional hubs to reduce shipping distances.
Remote Areas: Shipping to remote or rural locations often comes with additional fees, as these areas may not be serviced as frequently or may require special handling. If your target market includes such areas, factor these costs into your pricing strategy or consider using regional carriers that specialize in these locations.
Shipping Speed:
Express vs. Economy Shipping: Faster shipping options like express or overnight services are significantly more expensive than economy options. While express shipping is essential for time-sensitive products or premium services, offering economy shipping as a standard option can help keep costs down for less urgent deliveries.
Transit Time: Longer transit times associated with economy shipping methods, such as ocean freight, can be more cost-effective but may not meet customer expectations in certain markets. It’s essential to balance shipping speed with customer satisfaction and overall shipping costs.
Impact of Customs, Duties, and Taxes on Shipping Rates
Customs duties and taxes are often overlooked but can have a significant impact on your overall shipping costs. Understanding these fees and how to manage them is crucial for optimizing your international shipping strategy.
Understanding Customs Duties and Taxes:
Import Duties: Most countries impose import duties on goods entering their borders. These fees are typically based on the product’s value, category, and country of origin. Understanding the duty rates in your target markets is essential for accurate pricing and cost management.
Value-Added Tax (VAT) and Goods and Services Tax (GST): Many countries also charge VAT or GST on imported goods. These taxes can be substantial and are usually calculated as a percentage of the product’s value, plus shipping and insurance costs at times. Some markets require businesses to register for VAT/GST and remit these taxes directly, adding to your administrative burden.
Strategies to Manage Customs Costs:
Classify Products Accurately: Ensure your products are accurately classified under the Harmonized System (HS) code to avoid incorrect duty charges. Incorrect classification can result in higher duties or penalties, so it’s essential to get it right.
Leverage Trade Agreements: If your country has trade agreements with your target markets, you may be eligible for reduced or zero-duty rates. Research these agreements and ensure that your products qualify to take advantage of these savings.
Understand Duties Paid by Customer versus Shipper (DDU vs. DDP): Decide whether you’ll cover customs duties and taxes (Delivered Duty Paid, DDP) or pass these costs on to your customers (Delivered Duty Unpaid, DDU). Offering DDP can enhance the customer experience by avoiding surprise fees at delivery, but it may increase your overall costs. DDU, on the other hand, keeps your costs lower but may deter customers who dislike dealing with customs fees.
International Shipping Success
Navigating international shipping expenses is a complex but critical aspect of expanding your business globally. By understanding the key factors that influence shipping costs and implementing strategies to optimize them, you can enhance your logistics operations, reduce expenses, and improve the customer experience. Investing in the right shipping partners, technology, and fulfillment strategies will help you build a resilient and scalable international business.
Avoiding Common Mistakes in International Expansion
Expanding into international markets is an exciting opportunity for any brand, but it’s also a process fraught with potential pitfalls. To ensure a smooth and successful transition, it’s essential to be aware of the common mistakes that businesses often make when scaling globally. By avoiding these missteps, you can optimize your international operations, control costs, and enhance the customer experience.
Mistake #1: Waiting too Long to Place Inventory in Key Domestic Markets
One of the most significant mistakes brands make when expanding internationally is delaying the placement of inventory in key markets. While it might seem cost-effective to manage international orders through cross-border shipping initially, this approach can quickly become inefficient and costly as demand grows.
Actionable Advice:
Invest in Local / Domestic Fulfillment as Early as Possible: As soon as you identify strong demand in a particular market, consider placing inventory in-country. This will allow you to offer faster, more cost-effective shipping, improving customer satisfaction and helping you build a loyal customer base in that region.
Leverage 3PL Services: Partner with third-party logistics (3PL) providers that offer local fulfillment services. Companies like Rush Order have a global network of fulfillment centers, making it easier to establish a presence in key markets without the need for significant upfront investment.
Mistake #2: Prematurely Establishing Domestic Fulfillment
While placing inventory in-country is crucial for long-term success, doing so prematurely can also be a costly mistake. If you establish domestic fulfillment before demand justifies it, you may find yourself burdened with unnecessary overhead expenses and logistical complexities.
High Inventory Holding Costs: Maintaining inventory in multiple locations can lead to higher storage costs, especially if demand in certain markets is still low. Additionally, managing inventory across several warehouses can increase the risk of overstocking or stockouts, complicating your supply chain operations.
Increased Inbound Shipping Costs: If you spread your inventory too thin across various markets, you may end up paying more for inbound shipping from your manufacturers. Smaller, more frequent shipments can be less cost-efficient than bulk shipping to a central location.
Added 3PL Expenses: Working with one or more 3PL providers in multiple locations around the world can lead to higher overall costs, including account management fees and minimums that may not align with your current sales volume. This can strain your budget and make it harder to achieve profitability in new markets.
Actionable Advice:
Analyze and Test Market Demand Before Expanding into Local Markets: Use data-driven insights to assess demand in potential markets before establishing local fulfillment. Consider factors like sales volume, customer feedback, and market growth projections to determine whether it’s the right time to expand.
Start Small and Scale Gradually: If you’re unsure about a market’s potential, consider a phased approach. Start with cross-border shipping and monitor performance closely. If demand continues to grow, then gradually shift to local fulfillment as it becomes economically viable. This is “crawl, walk, run” approach can be very effective.
Mistake #3: Relying on Low-Cost Carriers
If you decide to start with cross-border shipping, choose your carriers and service levels wisely. In an effort to minimize shipping costs, some brands turn to low-cost carriers for international shipments. While this might seem like a smart financial decision, it can backfire if the carrier’s service quality doesn’t meet customer expectations.
Long Transit Times: Low-cost carriers often have longer delivery times, which can lead to customer dissatisfaction. In an age where fast shipping is often expected, this can damage your brand’s reputation and result in lost customers.
Poor Traceability: Many budget carriers offer limited tracking capabilities, making it difficult for customers to monitor their orders. This lack of transparency can lead to frustration and increase the volume of inquiries to your customer support team.
Inconsistent Service Quality: Lower-cost carriers may have less reliable networks, leading to higher rates of lost or damaged packages. This not only impacts customer satisfaction but also increases the cost and complexity of managing returns and replacements.
Actionable Advice:
Balance Cost with Service Quality: Instead of defaulting to the cheapest option, consider carriers that offer a good balance of cost and service. Brands like FedEx, UPS, and DHL might have higher rates, but their reliability and customer service can justify the expense, especially for premium products.
Use Asset-Light Carriers Strategically: Asset-light carriers like Passport can be a great option for getting started with international shipping, offering a balance of cost-efficiency and service quality. However, as your brand grows, be prepared to graduate to more robust in-country solutions that offer better control and scalability.
Monitor Carrier Performance: Regularly assess the performance of your chosen carriers by tracking key metrics such as delivery times, customer complaints, return rates, and costs. This data can help you identify issues early and switch carriers if necessary to maintain profit margins and/or a high level of customer satisfaction.
Best Practices for Successful International Expansion
International expansion offers immense opportunities, but it requires careful planning and execution. By avoiding common mistakes such as delaying inventory placement, prematurely establishing domestic fulfillment, and relying on low-cost carriers, you can set your brand up for long-term success. Focus on optimizing your logistics, enhancing the customer experience, and building a scalable supply chain. With the right “crawl, walk, run” strategy, your brand can thrive in the global marketplace, delivering value to customers around the world.
Conclusion: Strategic Planning for International Success
Expanding internationally is a significant opportunity, but it requires careful planning to avoid costly mistakes. To succeed, prioritize placing inventory in key markets whenever possible to reduce shipping costs and delivery times. Avoid the pitfalls of relying on low-cost carriers that may compromise the customer experience, but don’t rush into establishing domestic fulfillment before demand justifies it.
By focusing on customer satisfaction, optimizing logistics costs, and building a scalable supply chain, your brand can thrive globally. Strategic decisions today will set the foundation for long-term success in international markets.
To learn more or schedule a free consultation with our international shipping experts, please contact us! We’re happy to chat and share our multiple decades of international shipping experience.
