Earlier this year, at the World Economic Forum in Davos, a panel was convened to discuss the future of international e-retailing. Taking part were the CEOs of major international logistics, supply chain, and retail companies. The panel began by tackling the question as to why, despite evidence of substantial interest on the part of many would-be consumers, barriers to effective global e-retailing remain formidable.

The panel looked at three major obstacles. The first is the sheer costs involved in shipping products, paying customs duties, re-labeling packages and parcels to meet local regulatory requirements, and so forth. For instance, the CEO of a major postal services pointed out that goods sent from his country to another typically have to have their original labels removed and be relabeled for the target country, which is enormously time-consuming and costly. A related issue is verifying what is actually in the boxes, a particular concern to governments when the packages originate with smaller companies. At some point, even the most homesick among us, who otherwise would comprise a strong customer base for products shipped from one country to another, rebel as prices go sky-high.

The second barrier concerns the generally poor experience people have if an item needs to be returned. Just as it is expensive to get the item shipped in the first place, it is a nightmare if it doesn't fit or if the item wasn't shipped as expected. Providers with a local presence can overcome this by having customers return items to brick-and-mortar facilities, but this obviously isn't an option for someone who does business solely via the Internet.

I had an experience like this myself. I ordered a coat as a gift for a relative, only to be caught off-guard when it was shipped directly to him (from China) rather than to me. It got worse. When the package was opened he found that the coat, which had been advertised as a men’s medium, appeared sized for a 10-year-old. Oh well, the perils of e-commerce. When I tried to return the package I received an email from the Chinese vendor politely asking me whether I would accept a 50 percent refund for the coat and simply keep it, as it was too expensive for them to take it back. I replied that I really had no use for it, whereupon the vendor offered an 80 percent refund and the opportunity to keep the coat. That worked out well for the charity that I donated the coat to, but for me it clearly was not a very satisfactory e-commerce transaction.

One CEO panelist said, to much laughter, that the vendor was keen to try to make me happy because otherwise a negative experience like this could result in the vendor being dropped by its e-tail partner (in this case, Amazon) and thus cut off entirely from burgeoning international markets.  

The third barrier discussed was the reliability and convenience of receiving deliveries. Obviously, shipping products any distance increases the risk that something will go wrong, but those last few yards turn out to be particularly problematic. Indeed, stories abounded this past holiday season of thieves following delivery trucks around and making off with the deliveries as soon as the driver turned the corner. Also, for many working people, packages sitting around are a sign that no one is home and thus their house is vulnerable. Having products shipped to your place of work often earns you the boss's ire. Solutions discussed included something that Alliance Boots is trying in the U.K., what they call "click and collect," in which buyers order goods online but collect them in stores.

So, where did we land on the future of international e-tailing? That it will develop, probably slowly, but that advances in identification and sensor technology might solve these barriers (creating electronic labels that can be easily reconfigured, for example). Companies may find ways to share resources as a way to cut shipping and returns costs. And reliability and convenience might be as simple as hiring out your car to help people get those e-commerce packages to their doors when the time is right.  

 

Published on: Mar 26, 2014
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