Fulfillment 3PLs: The New Product Managers of Global Commerce
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We know that technology is making the world a smaller place. Today, any e-commerce merchant in virtually any country can sell their products in other countries across the globe, without possessing a physical presence in those countries.
Formerly domestic-only merchants can now directly offer their products for sale in numerous other countries via the support of e-commerce platforms like Shopify Plus, which can localize the customer’s online buying experience for the country of the merchant’s choice. Domestic online marketplaces like Newegg also offer support to international merchants to provide a near-seamless buying experience for the international consumer. While borders are not disappearing, they are getting easier to navigate for both the international merchant and consumer.
Using e-commerce platforms like these to manage and support international e-commerce transactions is amazingly affordable and can be directly integrated with a cross-border shipping solution.
In some cases, cross-border shipping solutions carry prohibitive costs and are subject to extended transit times, which can discourage the international consumer from clicking and ordering. However, this is where the domestic order fulfillment 3PL can help.
11 Considerations for 3PLs Doing Business with International Merchants
With the proper focus and merchant support, an e-commerce order fulfillment 3PL can manage all distribution and fulfillment components for the international merchant they represent. The 3PL can act as an in-country agent for the merchant and eliminate the need for the merchant to hire and support costly in-country management personnel. However, the merchant, in conjunction with the 3PL, must design a plan that supports their goals, objectives, and overall e-commerce value proposition. Such a plan should include:
- Identifying a product offering should be limited to the best-selling products with superior profit margins.
- The 3PL designates primary and secondary contacts that work directly with the international merchant and that can be easily reached via electronic messaging media across all time zones.
- A proper mix of products must be designated that will be attractive to middle and high-end customers.
- Higher-value products drive higher taxes and duties. This is an important consideration as duties and taxes must be built into the sale price of products.
- International returns management is difficult and costly to manage. A plan and detailed process in support of returns management must be documented.
- KPI’s must be implemented that measure all aspects of the expanded, country management 3PL responsibilities.
- Product replenishment cycle times must be respected as there is no such thing as just-in-time delivery for this type of distribution model. This will also drive higher inventory carrying costs.
- Product and SKU selection should focus on items with a smaller dimensional cube, that will drive both lower import/domestic parcel shipping cost and reduced warehousing expense.
- The fulfillment service provider must demonstrate an exceptional destination customs broker relationship and can normally recommend a broker that will work best.
- Real-time, online inventory management views are an absolute requirement so the merchant can remotely and independently manage inventory.
- A formal service level agreement (SLA) is mandatory in this type of customer/3PL relationship when there are no country-based employees to represent the merchant.
Finally, open lines of communication between the 3PL and international merchant are critical to the success of this type of cross-border fulfillment relationship.
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Dean Maciuba is the Co-founding partner of Crossroads Parcel Consulting and contributing editor to the Newegg Logistics blog. This content has been republished with the permission of the author and Newegg Logistics, where the article originally appeared.