Smart Globalization: Order Fulfillment
Digital commerce has made Europe one of the first places US-based retailers look to expand their business. The continent is full of digital-savvy consumers and serves as an attractive market for mature NA retailers. Europe represents a large portion of the web’s total global user base, making it an attractive step for expanding companies.
The Smart Globalization series looks at the many challenges faced by eCommerce professionals trying to expand their business into Europe. Our first installment has to do with order fulfillment.
Order Fulfillment Models
The top challenge for European expansion is order fulfillment selection and implementation. European consumers expect quick shipping and fulfillment: delivering on this expectation is critical for successful expansion.
The first step is deciding upon an order fulfillment model and getting it implemented. The three primary options are cross-border shipping from US facilities to European shipping addresses, outsourcing to a 3PL (third party logistics provider), or fulfilling directly from your own warehouse located within Europe.
Cross-border shipping is exactly what it sounds like: shipping from the US to European addresses.
Pros: This is typically the simplest option to implement from a technology perspective. Cross-border shipping leverages existing headcount and can be successfully executed with relatively low capital investment.
Cons: At the same time, this method results in the weakest consumer experience. Shipping times are very high in this model, consumers usually are forced to pay import duties, returns and exchanges are complicated, and it is very challenging to implement any kind of localized merchandising strategy.
To try and avoid some of the issues inherent to the cross-border model, some merchants elect to partner with a third-party logistics provider to handle shipping and order fulfillment.
Pros: Utilizing a 3PL doesn’t require capital investment in warehousing infrastructure, minimizes the need for additional headcount, and enables localized merchandising strategies. Customers are able to receive their orders in an appropriate amount of time, enhancing their experience.
Cons: That being said, merchants will have to deal with the complexities of contracting out their fulfillment work. Any commerce website will require integration with the 3PL’s backend infrastructure, and the merchant’s desired customer experience will then be constrained to the capabilities of the 3PL.
In-Market: Direct to Consumer
Last, merchants can always elect to set up infrastructure and enable direct-to-consumer order fulfillment from Europe itself.
Pros: This model provides the best opportunity to deliver a positive customer experience. Order times are minimized, merchandise can be easily localized, returns and exchanges are simplified, and the merchant is in full control of the customer experience from order through delivery.
Cons: At the same time, this model requires the most capital investment, adding considerable risk to expansion ventures into the smaller markets. Headcount will need to be hired to facilitate on-site operations as well.
All in all, order fulfillment plays a major role in any merchants EU expansion strategy. Brands willing to spend the time and money to establish D2C fulfillment channels in Europe usually see positive results from the enhanced customer experience.
Likewise, retailers who make smart 3PL partnerships or are able to successfully manage European consumer expectations from the US will see success as well. What order fulfillment comes down to is understanding your business, your customers, and what needs to be done to meet and exceed their expectations.