One of the many difficult decisions to make when expanding into a new market is is where to hold stock. Should you spit inventory and ship to the end customer from within the new market or offer internationally from your current fulfilment centre? Both methods come with their own complications.
Understanding the options:
Sending goods to the end customer within the same territory is relatively straightforward and low cost as the goods are already in the destination country and individual shipments won’t need to pass through customs etc, whereas any goods crossing borders are subject to a whole host of additional regulations such as tax and compliance. Despite this, the flexibility and set up speed of shipping internationally still makes this an appealing solution. Here are the advantages of each:
Key factors to consider:
Where is the new market?
If you are currently shipping from elsewhere within the EU, of the barriers that apply when shipping between countries have already been removed. These countries are relatively close and have good transport networks between them, so transit times are likely going to be low. For example, if you currently ship from Spain and the UK and want to sell in Portugal you can do so from your existing base in Spain.
If you are looking to ship from the UK to US this is potentially more difficult due to additional customs challenges and longer transit times.
What platform are you going to sell on?
If you are entering the market with a marketplace strategy you may need to meet some requirements set by the marketplace themselves in relation to shipping. These are common requirements globally as they enable the marketplace to guarantee a high level of service to their customers and ensure sellers are not impacting their reputation.
Marketplaces may dictate that you must have domestic fulfilment or be able to delivery to the customer in a set time frame in order to sell on their site.
What are you looking to sell?
Are you entering the market with your entire product range or testing the waters with some best sellers?
Splitting inventory across multiple markets can have a number of impacts; having less stock in your main market for order surges and supplier delays, holding too much stock in a market with no demand results in storage fees and other costs as well as impacting cashflow. The more SKUs you want to do this with the larger the problem may become.
In addition, certain products may have restrictions for international shipping due to dangerous goods etc.
Some of most regulated products are:
• Food (e.g. dairy products, noodle soups)
• Fireworks
• Sunglasses
• Children’s toys
• Diamonds
• Watches
• Weapons (including replicas, parts and ammunition)
• Pharmaceuticals
• Alcoholic and non-alcoholic beverages
• Fragranced goods such as perfume
• Apparel shipments above a certain value
• Mobile phones, laptops, e-bikes and other electronics with a lithium battery
How much is the average shipment worth?
Consignments below £150 can be shipped across border in the EU with an IOSS number (international one stop shop) which enables you to sell to all 27 EU member states with just one VAT return. Goods subject to duties, such as Alcohol, Tobacco and Fragrances cannot be sent using this method and high ticket goods are also subject to additional restrictions.
Do you expect many returns?
If your products have a high return rate, shipping internationally may result in additional challenges and costs. It is another key factor to consider for your customer experience.
Our advice:
If you are completely new to the market, it is better to offer international shipping, to establish demand before adding the complications of split inventory and setting up in a new territory. The flexibility and ability to start trading quickly with minimal set up costs, gives you time to learn the new market before incurring additional costs and admin required with managing multiple territories and service partners.
You can also offer international shipping to multiple markets with ease and confirm that you are focusing on the right market to hold stock in when the time arises. Since Brexit, international shipping methods have been improving, with the likes of IOSS and Fedex Express helping sellers offer a fast, convenient delivery for customers throughout Europe, often in less than 7 days.
The benefit of working with a 3pl that works in multiple markets including the UK and Europe, means that when it comes to expanding across markets, you have access to global shipping channels and can then hold stock in the new market once demand is established, without having to develop new relationships with suppliers and have multiple fulfilment practises to follow. You are able to benefit from a consistent service across the new markets, managed through a single dashboard.
