For U.S. retailers and brands looking to expand globally and grow their revenue, Europe is very attractive. The e-commerce market is worth over $602 billion, with Western Europe accounting for approximately 68 percent of total European online retail turnover. Europe offers cross-border retailers access to over 500 million consumers and, unlike the U.S., is not monopolized by Amazon.com. This provides retailers and brands with a real opportunity if they can meet consumers’ desires.
One of those desires is a positive delivery experience. According to MetaPack research, 61 percent of respondents say a positive delivery experience incentivizes them to shop with an e-tailer again. It’s very important that e-commerce players are aware of the subtleties of buying preferences in the different markets, and can both provide and compete with the delivery options that local competitors are already offering.
For example, a major delivery difference between Europe and the U.S. is the preference for pick up, drop off (PUDO) and click-and-collect options. Results of MetaPack’s research reveal that delivery to a pick-up point or local shop holds strong appeal for European shoppers, who often use this service — particularly in France (58 percent), Spain (50 percent) and the Netherlands (46 percent). In Scandinavia, PUDO is used extensively and considered the No. 1 delivery preference.
So, in order to be successful, what key delivery-related elements should U.S. retailers and brands consider?
In order to compete in Europe, U.S. retailers and brands need to pit fulfillment options against customer experience. This can be narrowed down to considering the maturity of the cross-border offering, including delivery speed, delivery cost and fulfillment cost against customer experience. Simply put, as stock is stored closer to the customer, the speed of delivery decreases, but the fulfillment cost increases. As volume and customers increase, retailers can be expected to progress through the fulfillment models to ensure they can provide the delivery options and speed preferred by the local market.
There are four stages for the typical evolution of fulfillment for businesses building a supply chain strategy in Europe:
- Ship from the U.S.
- Single third-party logistics in Europe
- Multiple third-party logistics in Europe
- Own warehouse in Europe.
Companies have to identify what stage they're in as well as the suitability of staying in that stage or progressing to the next based on the volume of goods and customer expectations.
To maximize success in Europe, U.S. retailers and brands should consider the carrier landscape and use carriers to provide local delivery preferences.
The biggest difference to the U.S. market is the number and complexity of carriers. According to MetaPack research, two-thirds of European retailers use between two and 10 carriers, with half having about five carriers for domestic and international needs.
Despite the large variety of carriers in Europe, they can be grouped into the following:
- large integrators,
- country postal operators,
- commercial carriers; and
- niche or specialist carriers.
Large integrators, such as FedEx and UPS, serve the cross-border market but can be more expensive. Commercial carriers are often offshoots of the larger postal operators, such as GLS, part of Royal Mail Group. Niche carriers provide custom logistics services. For example, Addison Lee in the U.K. provides a same-day courier service.
Entering and expanding in Europe is challenging, but with the right guidance and preparation, it can be both achievable and lucrative. To be successful requires a clear understanding of the market, including online retail trends and customer preferences, fulfillment options, and the carrier landscape. Cross-border retailers that can provide a superior delivery experience will be able to succeed in building customer loyalty and benefit from consumers with an appetite for e-commerce.
Bruce Fair is chief revenue officer at MetaPack, an e-commerce delivery management software.