Posted on: 30 June 2015
Two thirds of global consumers use online retailers to shop internationally1. In Europe, internet sales have been growing year on year since 2014 and are expected to increase by 18% in 20152.
With so much demand for products coming from people across the world via their computers, tablets and phones, it’s no wonder that small online retailers are expanding their reach to beyond the UK’s shores.
But it isn’t as simple as you might think. International eCommerce is complicated and competitive. A team that has tried to improve the technology and make the process of order fulfilment more reliable and flexible is James and James. We have recently interviewed James Hyde, their founder and Operations Director. Here he shares his insight into the factors small online retailers need to take into account when setting up order fulfilment for export to Europe and beyond, and the value getting it right can bring to their business.
What technology and infrastructure needs to be in place before an online retailer exports in Europe?
It depends on the volume of orders a retailer will be sending. It is very important to know your products’ UN numbers and HS codes no matter what the volumes as many deliveries need to identify the contents of the package as some carriers have restrictions. For example, nail varnish can be sent via the Royal Mail domestically though there is a maximum of four bottles per parcel. You cannot however send nail varnish internationally with the Royal Mail Airmail. There are a small number of carriers who will handle it but the costs are high. Another example would be lithium batteries that are an internal part of a product. This will need a special label on the outside of the packaging to identify that it contains dangerous goods.
This is about all you need to export physical products to the EU. Companies selling imported goods to private individuals in the EU do not need to pay additional taxes or duties for the recipient or the sender - other than UK VAT which would need to be charged anyway. This is because the EU is a free trade zone and there are no customs borders.
If you are selling to another VAT registered business in the EU, again there is no import duty and you do not need to charge them VAT but you must put their VAT number on the invoice. It is important to note, however, that some European countries are not in the EU.
What does an online retailer need to know about exporting to the rest of the world?
If you are exporting from the UK to the rest of the world it becomes a little more complicated as the recipient will need to pay any local import taxes or duties. In order to meet import requirements the appropriate customs documentation will need to be placed on the outside of any shipment including: commercial invoices - usually in triplicate, showing the country of origin (where it was manufactured) unit costs and total cost. You will also need to include a CN22 form. All items with contents up to the value of £270 must have a signed and dated CN22 form. Items sent with a value in excess of £270 must have a fully completed CN23 customs declaration form.
More information about customs declarations forms can be found on the Royal Mail website.
You do not need to charge customers outside the EU UK VAT but it is very important to note that retailers need to maintain adequate records to provide the necessary proof of export (in the event of inspection).
The technology needed to meet most of the requirements around VAT are features of most eCommerce shopping carts systems. For a low volume retailer the correct labelling and customs forms is not too much of a problem as the process can be managed manually. However, as order volumes grow this will become unmanageable eventually and then a strategic investment in fulfilment and shipping technology becomes a better option than simply employing more and more staff. Most fulfilment technology can automatically produce the correct customs documentation to ensure successful fulfilment of export orders.
How does an SME's customer service need to adapt to fulfil orders in Europe?
There are many questions the retailer will need to consider and again this will depend on the volume of orders received from European customers. There are different time zones to consider. Is your order volume so great that you need to offer late night and early morning customer phone support and live chat? Or is UK business hours email support enough to manage enquires? If your customers need to return an item how will the process be managed? Will you be offering free international returns? If you are selling on any of Amazon’s European marketplaces you will need to provide a return address in the country of the market place. So if you sell on Amazon DE you need a German return address.
What value does effective, efficient order fulfilment bring to an exporting business's ability to bring in revenue and make a profit?
Effective and efficient order fulfilment ensures that orders are right first time every time including what is picked and packed, the accuracy of labelling and inclusion of documentation. Without these, shipments will be delayed either before despatch, with the carrier or in customs clearance. Successful fast fulfilment ensures the customer experience is the best it can be which in turn leads to repeat business, positive reviews and good word of mouth. Many retailers focus on the customer experience on their websites or in store. However the last leg, fulfilment is often overlooked. Outsourcing fulfilment to a third party specialist brings savings for storage, packaging supplies and shipping costs.
How is the cloud involved in order fulfilment and how does an SME choose the right CSP?
Using cloud technology is a fundamentally different approach to order fulfilment. In the old days retailers operated a warehouse by downloading and printing off orders, they would then walk around the warehouse ticking off orders with a pen. The more responsive warehouses started to react to these new pressures: they deployed a Warehouse Management System; they regularly downloaded orders from sales platforms and imported them; they then got some fancy barcode scanners and compulsively barcoded everything.
Now they can provide stock reports without having to walk round the warehouse doing a stocktake - they can email this to their clients each week. Perhaps they can save the office some typing by integrating with the carriers’ labelling systems. To complete the effect, they can even put the results of their work online somewhere so the clients can download reports of what was despatched.
But this isn't cloud technology it is online but it is not as effective. Retailers may not even notice the difference until there is a problem. Staff still have to remember to import orders at the right time; there’s still a delay between an order being packed and anyone outside of the warehouse knowing it. If you upload files to a carrier with all the day’s orders and there are any errors there will be a delay in anyone knowing and the parcels will have left the building.
Cloud technology operates in real time. Orders are imported automatically, addresses can be checked as soon as they arrive, corrected and despatched with the best chance of getting to the recipient. Best of all customer service personnel can see the whole process as it happens live through a web portal. There is no delay, it all operates over the internet and retailers do not have to wait to find out what is happening with their orders.
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