How the Postal Treaty Withdrawal Impacts Retailers
When shopping large online retailers, such as Amazon.com or eBay, it's impossible not to notice the seemingly impossible low cost of many China-sourced products. In fact, upon further inspection, it's often the case that all these extremely low-priced items even include free shipping. This begs the question: How can China afford to ship products to the United States at such an extraordinarily low cost?
The United States is part of a 144-year-old agreement called The Postal Treaty, which allows for international merchants to easily sell small items online via subsidized shipping rates. This treaty — along with another that the U.S. made directly with China in 2011, the ePacket — has completely transformed the global e-commerce landscape and allowed items under a certain weight, from phone chargers to hair accessories, to be sold at unprecedent cheap rates.
However, the State Department recently announced plans to begin the process of withdrawing from this treaty, which will make it less profitable for countries like China to sell small items in the U.S. This lack of competition will likely lead to a large uptick in U.S. e-commerce activity, one that retailers should start to prepare for now. To manage this sudden increase in online customer traffic, retailers should turn to a streamlined technology solution that employs end-to-end supply chain visibility and keeps pace with the constantly changing market. These additions will ensure retailers are well-equipped to handle the impending increase in sales.
As e-commerce business likely picks up, it's imperative that retailers streamline processes across all channels, both in-store and online. Retail solutions that connect disparate data points will ensure retailers will have all important logistics information in one centralized location. For example, if online inventory of a certain product sells out, the right solution should be able to easily identify where it is still in stock in-store, and direct consumers to that location. Finding and implementing a technology service that does this will keep your business running smoothly as increased e-commerce demands roll in.
Gain Supply Chain Visibility
With an uptick in e-commerce comes an uptick in supply chain activity. This increase in movement can be managed with retail technology that provides end-to-end visibility into goods at rest and in transit, and allows retailers to pivot strategies and routes at a moment’s notice. In order to ship and deliver products effectively, this knowledge and control is vital. Furthermore, with inventory changing daily, keeping up with what's going on both in and out of the stockroom is crucial. By adopting a solution that affords retailers full visibility, they'll be better equipped to handle the supply chain demands that come with the increased e-commerce activity.
Meet Future Market Changes
Perhaps most importantly, the withdrawal from this treaty is just one in a long line of legislative trade changes that have been proposed over the last year. The trade landscape is constantly shifting, so keeping pace with the changing market by evolving to fit fluxes in demand is crucial to surviving and thriving. This will become especially more pertinent as online customer traffic increases and customer expectations shift. Technology will help businesses stay on track of demand and adapt to changing elements in the market.
Although the U.S. will approach the withdrawal from The Postal Treaty slowly and cautiously, retailers need to start preparing immediately. Adopting a software with an omnichannel approach, supply chain visibility and market upkeep will allow businesses to get ahead of the game and be ready for when the increase in e-commerce demand inevitably begins — because if the U.S. doesn't withdraw from the Postal Treaty, another trade change cannot be far behind.
David Dorf is the vice president of retail at Infor, a $10 billion business application software provider with solutions specifically tailored to the retail industry.
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David Dorf is the VP of Retail at Infor, a $10 billion business application software provider with solutions specifically tailored to the retail industry. After working with clients like DSW, Nordstrom, and Whole Foods, Infor is a trusted source on retail best practices and streamlining operations.