Largely due to the recent advancements of large online retailers such as Amazon and Walmart, consumers’ expectations are extremely high when it comes to purchasing products on the Web. For merchants with multiple warehouse locations or retail stores, same day deliveries are more realistic and allow customers to receive products faster than ever. Add to the mixture that companies like Amazon offer their “prime” service to reduce some of the shipping charges and it’s no surprise that online shoppers expect their products to be shipped quickly and with minimal cost. Consumer expectations are making logistics challenging for smaller companies that don’t have quite as powerful logistics and distribution networks. After all, how does the smaller retailer compete with larger companies and offer such short shipping transit times and low shipping rates? Unfortunately, the problem is only further compounded for smaller businesses when shipping to international customers – with customs considerations and import taxes to not only delay delivery timeframes but also add additional layers of cost.
TRANSIT TIMES AND SHIPPING COSTS CAN MAKE OR BREAK THE SALE
Recent studies have shown just how important transit times and shipping costs are for e-commerce customers. A recent comScore survey indicated that one in every four online shoppers abandons their purchase due to delivery dates or costs not meeting their expectations. Furthermore, 55% of all consumers who abandoned their cart did so in part because of either shipping costs or delivery timeframes. Simply put – if a customer doesn’t get the shipping solution that they want or need, they’ll abandon the process.
THE PROBLEM CAN BE WORSE FOR INTERNATIONAL SHIPPING
When a retailer ships from the US to Canada, there are other factors that delay the shipping process and add costs to the equation. For example, some shipments will require customs, taxes, and even brokerage fees. This process of “crossing the border” also adds significant time delays before consumers receive their order. Even large companies encounter these problems. For example, when you reference eBay’s shipping policies for international shipments, you’ll find some very interesting facts.
When it comes to costs, even the most inexpensive services (USPS International Shipping, for example) adds significant costs. According to eBay’s policies, “Canada Customs ONLY assesses taxes (GST or HST) on goods valued at $20 CAD (about $18-22 USD) or more. Taxes are generally about 5-15% (depending on the provincial destination). An $8.50 ‘handling’ fee is also added when an item is taxed.”
Costs aren’t the only compromise for cross border shipments – consumers can expect to experience significant time delays. Again, according to eBay’s policies: “Unfortunately some packages can take 2-plus weeks to get to Canada from the US because they can get held up in the customs bottleneck (especially crossing through Detroit/Windsor). Please allow 2-3 weeks for most packages.” Yes, you read that right – it’s commonplace for shipments to take over 2 weeks to deliver to a Canadian customer from the US.
OUTSOURCED FULFILLMENT OFFERS A SOLUTION
Especially for those smaller companies without a large warehouse and distribution footprint or the ability to open up a warehouse in Canada, outsourcing offers a way of overcoming the international shipping challenge. First, by shipping product in bulk to a 3PL warehouse in Canada, product is available to send to Canadian customers on demand, having already cleared the customs hurdle. Shipping timeframes can be reduced significantly. Second, oftentimes companies can cut overall shipping costs to consumers by clearing customs and shipping in bulk rather than shipping individual orders cross border. In the age of “free shipping”, cost savings is critical for merchants to compete and thrive.
Some outsourced order fulfillment companies have taken things a step further. For example, at Ottawa Logistics, we offer outsourced warehouse options in both the US and Canada, giving merchants one place for all of their warehousing and fulfillment needs within both countries. This further alleviates the hassle of managing outsourced relationships since warehousing for US and Canada is handled under one roof. Not only do merchants have only one point of contact but managing overall inventory becomes easier when done through one seamless inventory management system.
FINDING A BETTER SOLUTION WILL BECOME A REQUIREMENT
With each passing day, e-commerce is changing. Most recently, companies are experimenting with same day local delivery options that can bring an order to a consumer within hours. According to a recent American Express article, “A crop of new startups have sprung up to help local stores compete on same-day delivery. Many of these services are currently only available in limited areas, such as within certain cities or even neighborhoods. But many hope to expand in coming months.” These services, such as UberRush, Deliv, WeDeliver, and Shutl intend to disrupt the entire shipping process. The only thing that is certain is that the landscape will change, and companies that don’t adapt with the changes will be left in the dust.