As cross-border and international retail grows, global trade management software is quickly becoming a necessity for retailers. In the latest Precision Report we look at how changing online shopping habits have turned the internet into a global marketplace.
For many decades retail was an unchanging industry. Customers went to a shop — generally a local one — to make their purchases. For the most part, customers took their new goods home with them. Unless the retailer sold big ticket items, such as furniture — or sold through a catalog like Sears — they did not have to worry about delivery. Online shopping has changed all that. Just when retailers may have thought that they had a handle on the new normal, online shopping evolved as the number of shoppers making cross-border purchases skyrocketed. Let’s have a look at some figures.
In Europe, 71 percent of shoppers made a cross border purchase in 2017. That’s according to a study by UPS released in February this year. Naturally, a number of shoppers within the European Union buy from neighboring countries also within the bloc. However, over half of EU shoppers have also bought goods from retailers outside the continent. Shoppers do this looking for better prices or specific brands of products.
The Irish are Europe’s — and the world’s — biggest international shoppers. Ireland’s 2.2 million online shoppers spent a huge €2.7bn on overseas purchases last year.
This trend is not unique to Europe. A huge 83 percent of online shoppers in Canada made an international purchase last year. The same is true for 81 percent of online shoppers in Brazil and 78 percent in Mexico. Nearly half — 47 percent — of consumers in the United States make international purchases too. This may be a lower percentage, but it is not an insignificant amount.
Similar shopping patterns can be seen in the Middle East and Asia. Recent research from PayPal and Ipsos found that 61 percent of online shoppers in the UAE made an international purchase in the last 12 months. China has the largest online shopping market in the world. China’s 500 million online shoppers are predicted to spend over US$1 trillion in 2018 — US$125 billion of which will be spent with retailers outside China.
The internet allows retailers to connect with shoppers in different geographic locations. This offers tremendous opportunity, but it also means that retailers are now competing with international as well as domestic rivals. Furthermore, fulfilling international orders also creates complexity for retailers.
Global retail supply chains are increasingly distributed. Rather than shipping large volumes of products to a distribution center, more and more retailers are working directly with customers and vendors in more markets. They are also delivering greater numbers of smaller shipments to more places.
The global trade management software that retailers traditionally use is optimized to a work with a centralized supply chain. Today, retail supply chains need to support multiple selling channels, as well as multiple sources of origin. Products move to and from points around the globe on their journey to store, to consumers, or even to retail partners like Amazon. This has created an increasing need for global trade management software to help retailers keep up.
Retailers are competing in a global market. To make fulfilling international orders profitable they need to reduce the effort and cost required. They also need to mitigate the complexities and risks associated with international trade. Let’s have a look at these.
One of the easiest ways to annoy your customer is a late delivery. And one of the easiest ways to ensure you’ll disappoint them is documentation or license requirement errors. Despite that, documentation errors are responsible for nearly half of all delayed international parcels.
Most retailers do not sell restricted goods. But that does not mean that they do not need to perform due diligence. Any enterprise must ensure that their suppliers (and in some cases, customers) are not on any Denied Party Lists published by various international and government agencies. Denied parties are people and organizations with links to drug trafficking, money laundering or terrorist activities. It is possible to manually screen against these lists, but it is a time-consuming task.
Online shoppers turn to international retailers looking for lower prices. Retailers shipping high volumes of low cost items can find delivery costs squeeze already tight margins. Consumers want their deliveries as quickly — even if they are coming from halfway across the world. At the same time free or low cost shipping is expected. Retailers shipping internationally need to get their packages to their customers as quickly —and as cheaply — as possible.
Global trade management software helps retailers manage the challenges of selling internationally. A global trade management software simplifies the complexity of cross-border shipping in a number of ways. This includes automating export processes, documentation production and customs reporting. This ensures that each shipment has the correct documentation. As a result, your goods will glide through customs, saving you time and money as well as keeping your customer happy.
In addition, global trade management software records and stores all shipment data in a clear, consistent manner that is repeatable across customers, shipments and countries. This again saves time, reduces labor, increases efficiencies and helps you deliver stellar customer service.
Retailers can use global trade management software to screen all orders automatically. The system either clears the order for shipment or flags it for export compliance issues. Global trade management software also allows you to capture and calculate various costs associated with a shipment. That could be for a line item or indeed a complete shipment so that you have a true picture of what your international deliveries cost.
Precision Software, a division of QAD Inc., provides industry-leading global trade management, transportation execution and multi carrier shipping software solutions from a single, integrated platform. Preeminent industry leaders in every region of the world rely on Precision’s global support centers to leverage thousands of carriers and manage millions of shipping transactions every day. Our open architecture easily integrates with Enterprise Resource Planning, Warehouse Management Systems and legacy solutions. An ISO-certified company, Precision Software assists companies to minimize shipping costs, optimize first mile and last mile deliveries, automate free trade agreement compliance, avoid customs delays and mitigate the risks associated with dynamic trading environments to maximize their competitive advantage. Precision Software’s customers span multiple industries including banking and finance, life sciences, high technology, retail, industrial, automotive, higher education and public sector as well as logistics providers. For more information about Precision Software, visit www.precisionsoftware.com.