Challenges of Cross-Border International Trade
In our ever-evolving global trade scenario, businesses find themselves navigating through unfamiliar waters. They're encountering escalating obstacles within a trading landscape that's becoming progressively intricate.
Here are several key obstacles within the supply chain that businesses and their network of suppliers must surmount in order to establish a successful cross-border trading capacity:
Logistics and supply chain
Cross-border trade introduces a unique set of challenges in the realm of logistics and supply chain management. Tracking orders, assessing liabilities for in-transit goods, and ensuring on-time delivery become intricate tasks due to multicarrier handoffs and border-related delays.
There are 2 options to navigate this complexity: the choice between cross-border shipping and localized fulfillment. Cross-border shipping, originating from international locations, entails a more comprehensive documentation process compared to local shipments. Alternatively, localized fulfillment involves strategically storing inventory within regions aligned with your cross-border strategy, allowing for efficient domestic shipment to customers from these designated hubs, thereby minimizing international complexities.
Leveraging technology offers a streamlined solution to these challenges through multicarrier software platforms, also known as logistics control towers. These platforms expertly select optimal shipping partners, chart efficient routes, prepare parcels for seamless export, and seamlessly relay exporter of record details and liability aspects to third parties. Additionally, they encompass comprehensive management of international commercial terms, including essential features like Delivered Duty Paid (DDP), a vital component in curbing cart abandonment rates and preventing unexpected customer charges upon delivery.
Customer
When it comes to international markets, customers anticipate a seamless experience akin to their local transactions, complete with language, currency, and customer service tailored to their region. Any departure from this norm could result in added complexities and ultimately hinder buyer conversion rates. The risk of abandoned shopping carts rises when translation is unreliable or currency conversion is not automated. Hence, an effective cross-border trading strategy hinges on a strong localized checkout procedure.
Fortunately, there are experts in the field, including specialized technology and logistics providers, who are well-versed in addressing these challenges. Partnering with such professionals can ensure a smooth and personalized customer journey, erasing potential obstacles and enhancing the overall shopping experience.
Brands
Global brands aiming to establish a direct-to-consumer sales channel on a global scale encounter similar challenges to retailers. Traditionally, these brands may have focused primarily on marketing, advertising, and commercial sales efforts. However, to effectively establish a direct cross-border route-to-market and eliminate retailer margins, brands need to expand their expertise to encompass international tax, customs, and logistics aspects.
Shifting the focus from marketing alone, brands should now consider developing their own or partnering with specialized capabilities in international tax, customs procedures, and logistics. By doing so, brands can not only enhance their global reach but also gain greater control over their distribution, paving the way for more efficient and cost-effective cross-border operations.
Tax and Customs
When international customers face unexpected charges, such as customs duties and taxes, that weren't disclosed at the point of purchase, it not only breaches certain consumer regulations but also shakes their confidence in buying from overseas. This scenario becomes a hurdle in nurturing repeat business, as customers are unlikely to consider further transactions. To foster a thriving cross-border approach and implement DDP (Delivered Duty Paid) pricing effectively, maintaining price transparency and a comprehensive grasp of the fully landed cost components is essential.
In this context, having a clear understanding of all charges involved and displaying them upfront is crucial. This is where specialized technology providers play a significant role. They can offer services that encompass item customs classification and tax and duty calculation, taking into account the product type and the destination country. By ensuring accurate cost estimation at the outset, these services help avert unforeseen charges later in the shipping process, thereby safeguarding customer satisfaction and bolstering confidence in cross-border purchases.
Paperwork, regulations and compliance
Cross-border trade is accompanied by a slew of paperwork, regulations, and compliance tasks. From customs declarations and product licenses to packaging requisites, export evidence, and invoices, these documents can greatly differ across markets. Grasping these regulations poses a challenge for most businesses, and achieving full compliance can be even more daunting. Notably, certain product categories like alcohol, food, cosmetics, and electronics face more stringent regulations. Ensuring their legality within specific markets requires meticulous checks prior to completing the necessary documentation.
The swift and cohesive implementation of sanctions by certain Western nations following the Ukraine invasion hints at a growing likelihood of trade restrictions persisting, including export controls, in future geopolitical confrontations. Staying compliant and evading both political and public scrutiny in this rapidly evolving regulatory landscape necessitates agile automated screening tools seamlessly integrated into enterprise systems.
To efficiently manage these requirements and minimize physical paperwork, businesses can integrate specialist technology and logistics partners into their international trade strategies. These partnerships offer services such as automated alerts for restricted or prohibited products, online customs declaration generation, and real-time adaptation to new regulations. By leveraging these resources, businesses can streamline processes, mitigate the risk of fines and compliance issues, and enhance their overall trade experience.
Returns
In today's landscape, customers have higher expectations when it comes to returns policies, a crucial factor in driving sales both locally and across borders. The absence of free returns can significantly impact purchasing decisions, leading consumers to explore alternatives even if they come at a higher cost. The simplicity and customer-friendliness of the returns process are paramount, and businesses that fail to provide this may lose potential buyers.
The returns process often poses challenges for businesses due to limited visibility and control. Gaining insight into returned items and their condition is a challenge until they physically arrive. This lack of transparency can result in costly and time-consuming processes, causing delays in getting resalable stock back into the market. These issues are exacerbated by longer international transportation timeframes and associated delays.
The complexity of cross-border returns is further compounded by customs duties and tax implications. These considerations can differ from outbound movements due to the availability of returned goods relief on double duty payments.
To alleviate operational burdens, partnering with an end-to-end returns intermediary with established multicarrier international capabilities is a strategic move. While consumers seek to protect their choices, businesses aim to manage costs – finding the equilibrium between these needs can be challenging. Specialist partners possess the technology to facilitate parcel tracking, enhance supply chain visibility, and optimize costs through strategies like exchanges, salvage, or scrapping. To ensure profitability, businesses are advised to incorporate the cost of cross-border returns services into their margins.
By adopting such approaches, businesses can not only elevate customer satisfaction through seamless returns but also maintain their financial viability in the ever-evolving landscape of international trade.
Plusius is at the forefront of transforming the logistics industry with its innovative magic sauce ‘Logisync’ solution. This comprehensive payment infrastructure offers a complete audit trail solution tailored for the logistics sector.
With Plusius LogiSync, we synchronize crucial data across the entire supply chain, enabling us to deliver an audit trail that meets the stringent requirements of even the most meticulous jurisdictions. This level of accuracy and transparency sets a new standard in logistics management.
One of the Plusius products DutyPlus developed specifically to help logistics partners do business on the global level converting Delivery Duty Unpaid (DDU) to Delivery Duty Paid (DDP).
