Member Article

Expanding into new European markets: what you need to know about fulfilment strategy

Deciding to move into a new market is exciting for any company: it’s a time of optimism and opportunity, but also of trepidation and risk.

Business leaders will spend months and even years deciding and planning for the demands of different regions. There’s a lot to consider – from assesing which markets they want to be in and customer appetite, to suitable product ranges and marketing stragies.

But many retailers treat fulfilment strategies as a tactical rather than a strategic consideration. This is a mistake: a compelling delivery proposition is a vital element of customer experience and, regardless of where a consumer lives, they will want their expectations to be met. Foreign markets are hard enough to crack as it is, so failing on fulfilment first time round can prove fatal.

As a first step, retailers must understand the lie of the land, which is why we initiated a study into how delivery and returns differ between the primary European markets of the UK, France and Germany. Not only do the results shed new light on the ever-evolving ecommerce landscape, they demonstrate that building a successful fulfilment strategy can be a competitive advantage for businesses.

We found that the fulfilment stakes are higher than ever: On average, retailers now offer 3.3 delivery options, and 40% offer four or more. Expectations of different delivery methods and pricing may vary, but what’s clear is that retailers hoping to expand need to be prepared to invest in multiple flexible options to meet customer demands.

Think global, act local

Individual consumer expectations will be dictated by what local retailers offer, so understanding the local landscape is imperative.

Getting the basics right is a start. 80% of European cross-border shoppers cite delivery costs as a highly influencing factor when considering purchasing from an international website – and a further 64% state that delivery time is equally important. If a retailer’s offering in these areas doesn’t align with local organisations, customers are likely to avoid purchasing from them.

Alongside speed and cost, it’s also important that delivery methods fit local behaviour. Retailers must localise based on research into the options commonly offered by local players, and scrap options they offer in other regions that don’t translate. For example, Automated Collection Lockers are widely used in Germany but Click & Collect still reigns supreme in the UK.

Of course, balancing consumers’ expectations with economy is tricky, and offering too wide an array of delivery options can impact the bottom line. That’s why it’s important to realise that customers don’t want you to go to the moon and back, they want a consistent, reliable and reasonably priced service. This is just as important at home as abroad – and nailing the basics will encourage repeat custom.

The pay off from returns

Although returns are often seen in a negative light by retailers, they remain an unavoidable cost of doing business. Delivery is just one side of the fulfilment coin – and in many cases, it’s returning an item that is the all-important final touch point between business and consumer. Instead of treating returns as an annoyance, retailers can use them to improve the customer experience and build all-important brand loyalty within a new market.

We found significant differences between the prevalent returns offerings in the three markets we studied, meaning cross-border retailers will need to tailor their returns as well as their delivery strategies to align with local expectations. In Germany, for example, the vast majority of retailers offer returns through DHL PackStation and Hermes Paketshop networks.

To do this most effectively, retailers must engage with suplliers on the ground in new markets. One-size-fits-all relationships with large global carriers may be appealing, but they don’t offer the full range of delivery options, whereas local partnerships can provide far better value for money and scope to meet specific regional needs.

And there are added efficiencies to be had by consolidating in-country options. Using a local returns option in France, for instance, means parcels are consolidated in bulk in a French warehouse before being sent back to the home country warehouse. Rather than sending thousands of individual parcels cross-border, retailers can instead ship en masse on a less regular basis.

A word of warning

The UK has long been at the forefront of ecommerce evolution in Europe. This has given rise to an assumption that players in other regions are less advanced than their UK counterparts, but our findings show that both local and cross-border retailers are catching up and could be an unanticipated source of competition.

When it comes to traditional (standard and express) delivery, for example, non domestic retailers are strongly competing with local players. They may remain marginally behind on delivery speed and cost to the customer but they edge ahead when it comes to offering free home delivery. They also offer on average lower qualifying spend levels for free delivery – on average £13+ less than their local counterparts.

European retailers across the board are rising to the fulfilment challenge, so UK businesses rest on their laurels at their own risk when moving into new markets.

Enda Breslin is Head of Sales and Business Development Europe at leading global omnichannel ecommerce technology and operations provider, Radial.

Radial recently released their European eCommerce Delivery & Returns Index 2016. The survey of 100 leading online and multichannel retailers selling in the UK, France and Germany will help you understand customer expectations in each market when it comes to delivery and returns. The report is available to download here.

This was posted in Bdaily's Members' News section by Enda Breslin, Radial .