Headlines regarding post Brexit cross-border trading challenges dented businesses’ confidence in their ability to expand successful ecommerce retail operations outside the home market. But with cross-border trade booming globally, is there a risk that UK retailers are missing out?
Global marketplaces have not just expanded rapidly in recent years, they have added sophisticated translation, multi-currency, customs and tax support, making cross-border retail increasingly accessible to businesses of all sizes. Drop shipping has removed the need for complex, international logistics.
With the right approach, expanding a proven brand and product line via a multi-channel, multi-marketplace, multi-country model is a fast track to business growth. Yet 46% of retailers are still relying on manual integration to online marketplaces, according to a recent survey by Linnworks, significantly limiting their ability to tap into new, global opportunities.
With 86% of UK and 95% of US customers already selling cross-border, Chris Timmer, CEO of Linnworks, explains how a connected commerce operations platform can transform global retail success.
Global Opportunity
An unpredictable global economy has created well documented challenges in recent years. Yet ecommerce is still booming: the global ecommerce market is set to exceed $6.3 trillion (£4.9 trillion) this year. Fuelling that growth is retailers’ increasing confidence to expand outside their local markets. The cross-border ecommerce consumer market is currently valued at $793.7 billion (£618 billion) and expected to reach $3 trillion (£2.34 trillion) by 2028 – a compound annual growth rate of 25.1% since 2022.
Easy access to this global opportunity has been fuelled by the proliferation of marketplaces in recent years. With 70% of customer searches originating on marketplaces and social media, retailers of every size, including entrepreneurs, can now reach a global audience from their existing locations. Add in the explosion in drop shipping, and retailers can scale up without the need for staff or warehousing in each region. The entire global retail model can be handled from the existing set up, enabling a step change in revenue and profit.
As one of the largest ecommerce markets in the world, the UK should be leading the way, yet many retailers lost confidence to trade overseas after the decision to leave the EU. Fear of incurring additional costs, new customs’ tariffs and distribution complexity acted as an expensive deterrent. However, marketplace technology has also improved in recent years, enabling retailers to address many of the issues associated with language, currency and local requirements that have previously discouraged cross-border selling.
Minimal Investment
There is no doubt, however, that adding marketplaces can add complexity and risk. Especially if the retailer is still using a manual approach to integrating with marketplaces — something that becomes ever more challenging when working in different languages, currencies and regulatory environments. It can be onerous to manage multiple marketplaces, operating in different regions if the entire sales model requires constant manual intervention.
From managing the order process to locating stock and tracking third party logistics (3PL) performance, adding marketplaces and channels creates a level of complexity that needs automation and end-to-end ecommerce visibility. Indeed, it is the growing recognition that retailers are missing a massive cross-border opportunity that is increasingly the trigger for exploring connected commerce operations solutions that connect and automate every aspect of the ecommerce process.
Operationalising ecommerce allows a retailer to embrace multiple channels and marketplaces seamlessly. By leveraging an ecosystem of integrated solutions that includes inventory, listings and shipping, as well as support for each country’s language, currency, specific regulations and requirements, including VAT and customs tariffs, a retailer can confidently take a brand proposition global. This functionality is particularly valuable for UK retailers concerned about the implications of Brexit on cross-border trade. The new requirements can be managed within the system, ensuring the retailer is compliant and, critically, is not going to incur additional costs or tariffs that would impact the profitability of each sale.
Intelligent Expansion
By operationalising the core aspects of their ecommerce business, retailers can confidently manage their cross-border expansion strategy. With a single view of their entire retail operation, a retailer can move away from micro-managing each customer order and embrace a more nuanced approach that reflects customer demands in different markets.
For example, a single, reconciled view of inventory across warehouses and 3PLs not only ensures complete visibility of the process but also provides vital insight to support further expansion or a change of approach. Does drop shipping work in all markets or would it be more cost effective to adopt a local warehouse model in one or more geographies – or would partnering with a local 3PL in one or more regions present a more viable option?
Some markets prioritise speed of delivery, others – such as Europe – are looking for more environmentally friendly delivery choices. With a robust, operational hub to streamline the ecommerce model, a retailer can focus on the added value issues. These include efficiently managing multiple fulfilment models to meet country specific expectations or leveraging marketplace idiosyncrasies to smooth out the peaks and troughs in demand and better align buying patterns. Plus, with this approach, a retailer can scale up and down with ease. It is simple to add a new marketplace or test a new market with minimal investment, enabling a business to quickly grasp new opportunities as they arise.
Conclusion
Any business can be global today. With the right approach, an ecommere retailer can achieve a market presence that would previously have required offices and warehouses, staff and face-to-face distribution contracts. Today, a business can use marketplaces and drop shipping to reach customers from Australia to Patagonia. It can use 3PLs to manage small local distribution hubs. And, of course, leverage real-time updates from marketplaces, suppliers and 3PLs to track the process end-to-end.
Access to customers and products is just the start. The quality of the customer experience, from ordering through fulfilment, is paramount. Some markets are trickier to break into, due to culture and ecommerce adoption. Expectations of delivery timelines and cost vary, even more so when factoring in currency fluctuations. The opportunity is compelling. But without a robust, end-to-end platform to operationalise the entire cross-border ecommerce process, retailers will struggle to maximise both the potential and the bottom line.
Investing in a connected commerce platform that provides a single source of truth irrespective of the number of marketplaces, channels and countries allows a retailer to focus on growth. For UK retailers, despite Brexit, scaling up a proven value proposition by expanding outside the local economy remains a compelling opportunity.
