Businesses with exceptional products can look towards cross border selling. There are at least two challenges in cross border selling:
1) Merchandising (ie make the product as per cross border demand),
2) Selling cross-border covering operation, selling, taxation, etc
There are two value chain models for logistic/shipping in Cross Border E-Commerce.
1) Cross Border Shipping,
2) Local Distribution.
Cross-border shipping occurs when goods are transported from one country to the next, with no inventory being stored in the destination country. The goods will go through customs and import duties may have to be paid depending on existing trade agreements and de minimis values. In the case of cross-border e-commerce, shipping is only paid when a sale has been made.
As an alternative to cross-border shipping, creating a traditional local distribution model involves setting up warehouses and managing fleets to manage deliveries in the destination country. Often, this is done to reduce shipping times when orders arrive as the inventory is kept closer to the country. It is vital to estimate demand carefully to prevent stock-outs or oversupply.
The cost of holding is not only high but also comes with high risk. This risk is also known as inventory exposure which includes the risk of inventory storage costs, spoilage costs, and obsolescence cost. Setting up and maintaining offices, import licenses, and warehousing to handle your inventory is an expensive investment.
With the cross-border shipping model, your inventory exposure will not be as high as a local distribution model if you run a centralized logistics model. This is because storage costs are incurred only in the origin or hub country with a centralized logistics model.
Using a local distribution model can involve high amounts of initial lead time. In some countries like Indonesia, it could take around 6 months before you obtain your import license that is compulsory for a local distribution model, and more time is needed to establish teams, warehouses, and fleets. This slower time-to-market could cost you potential sales.
Considering a merchant company with it’s origin in Pakistan. The merchant company will parcel the product to the merchant’s warehouse where the company needs to deal with the origin customs and other channels to ship it to its destination country. The merchant company pays the cost for shipment with all the legal formalities in the home country. On the clearance, the company has to pay duties again to claim their products from the customs department to ship it to the shipping partner’s distribution hub and then to the customer. It takes 1-2 days to establish a supply chain network. Once, the item is shipped to the destination country, the cost of transportation, import duties, and other handling charges are all incurred by the merchant company that increases the cost of the product.
Whereas on the other hand, you can export in bulk using the local distribution model. The parcels from the merchant country are moved to merchant warehouse in the origin country where after clearing the customs, parcels are shipped through ocean freight to the destination port. You would need the import license and have to clear the customs to move your parcels to the 3rd party warehouse. The cost of a warehouse is very high which then locally distributes your products to the respective customers.
Why not make the process simple by handing over all the process to E-Tailing. Whether cross-border shipping or local distribution, you do not have to pay extra for any license fees to import the parcels in the destination country nor there is any need to pay high rents to the third-party warehouses.
E-Tailing will do all the process from shipping to local distribution. Our team makes sure that all the products are safe and secured and timely delivered to the customers in all the geographic regions. With the low lower initial investment, and faster service to different geographical locations. E-Tailing makes sure the smoothness of the process. We are a registered company having operations and all the necessary licenses in the USA.