Looking to drop shipping for cross border opportunities
Retailers are no longer limited to reaching people in specific geographic locations. Unlike brick-and-mortar stores, which have limited reach based on the regional populations, online stores can be accessed by customers anywhere in the world. This can lead to significant sales growth if merchants are willing to use methods like drop shipping to capitalize on these opportunities. Whether they want to build foreign distribution centers or leverage drop shipping to reach customers abroad, they have numerous options at their disposal.
Extending the customer base by reaching new markets
One recent infographic from PayPal made the benefits of going global apparent. The good news for most merchants is that selling goods internationally is no longer just for big corporations. With the power of the Web and the right tools, even smaller merchants can enter foreign markets without risking too much. According to PayPal, customers in emerging markets are expected to spend close to $30 trillion annually in 2025, which is double the amount they spent in 2010.
Some retailers may have better luck than others reaching international customers. For example, 21 percent of auto parts sold by companies in the United States each year wind up going to international customers. Fashion and apparel are equally popular abroad, with 20 percent of sales in this category coming from foreign markets. Sports equipment, software, gaming hardware and software, computer hardware and toys are also popular among international customers. If merchants sell in these industries, they should consider expanding across borders.
PayPal anticipates a 192 percent increase in the number of cross-border shoppers over the next four years, which may explain why foreign economies are becoming more appealing to US retailers. For example, Multichannel Merchant recently reported that the African economy has more than tripled within the past decade, with West Africa leading the charge. West Africa has proven to be quite resilient to the economic fluctuations observed elsewhere throughout the continent.
What can retailers do to prepare eCommerce operations for international distribution?
Merchants will need to prepare in a number of different ways if they want to expand internationally.
The first hurdle sellers will have to cross is order fulfillment. If they are only shipping a few orders abroad, it may be worth it to just deal with slower delivery times and higher shipping expenses. However, if they are making a lot of international sales, they will need to consider localizing their order fulfillment options. Drop shipping is one alternative to consider, as using this method allows sellers to avoid having to invest in infrastructure to serve international customers.
Retailers must also consider their inventory management needs. Some inventory may not be popular abroad, while other items may feature certain colors or symbols that can be taboo among foreign customers. Understanding the culture of new markets will not only help retailers capitalize on the preferences of a new customer base, it will also help avoid offending prospective shoppers accidentally.
Localization should be extended beyond inventory management as well. Understanding the holiday schedule in foreign countries can help retailers add more peak seasons to the mix and elevate sales.