The e-retailer heads into the holiday shopping season behind a 30% increase in fulfillment spending and a widening net loss. North American sales increased ...
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Calculating and converting such duties is part of Comerxia’s core technology. “We have a number of resources we go to for information and detailed updates on taxation in various countries,” Rusick says. “We have access to various country web sites, and can take a company’s online catalog and funnel it through our landed cost calculator and charge the right tax. Most of all, we can guarantee it to the customer, who doesn’t have to get any surprise fees.”
Companies like Comerxia can also process payments for foreign orders and convert them to U.S. currency for American e-retailers. That’s crucial in countries like Germany, where less than 20% of the population uses credit cards while the majority of Germans rely on bank transfers. In such a scenario, consumers receive invoices via e-mail generated by Comerxia for orders they place with American e-retailers.
All or some
This kind of checkout technology is one of three major components Comerxia offers to e-merchants. In addition to overseas web marketing services, the company’s technology also can automatically determine which carrier to use for specific shipments. By negotiating with various carriers, Comerxia can determine the best carriers for particular countries-or regions within countries. “So when we quote a landed cost, we have already determined who the carrier will be for that specific order,” Rusick says.
Costs for using service firms can range from $5-$15 per order depending on the characteristics of each order and the level of service the merchant chooses. For Vcommerce, basic implementation costs range from $100,000 to $250,000, based on the amount of modules and customizations clients choose, says senior director of product marketing Scott Mandeville.
As with Comerxia, e-retailers can outsource their entire e-commerce operations to Vcommerce-such as web site design, order payment processing, customer service, site translation and international fulfillment as a whole-or only certain elements. Vcommerce works with a community of partners that includes web analytics firm Omniture Inc., enhanced customer service provider RightNow Technologies Inc., and direct e-mail solutions provider Dynamics Direct Inc.
“Our approach varies based on the business model of our clients: Some prefer to distribute from an in-country warehouse; others prefer to ship from the U.S. to international destinations, either through standard carriers or through global e-commerce logistics providers,” Mandeville says.
Borderfree is a Toronto-based company that is primarily designed to help U.S. e-retailers get their goods in the hands of Canadian customers. “We provide a localized shopping experience that mirrors the feeling of buying from a Canadian merchant, including guaranteed landed costs in Canadian dollars and in-country returns capability,” Bartlett explains. The company’s approach gives U.S. merchants access to the Canadian market without having to invest in changing back end systems and processes.
Working with the carriers
Merchants should expect to spend 20 hours or so to integrate their sites with Borderfree. As part of the set-up, Borderfree builds landed cost technology into merchants’ web sites-all in guaranteed Canadian currency. The company provides credit card verification, which eliminates credit card fraud exposure to U.S. merchants, Bartlett says, pointing to a historically prevalent problem marketers have had in handling foreign orders. In fact, in the Internet Retailer survey, 25% of respondents cited fraud concerns as the biggest obstacle to foreign sales.
Internet retailers may instead opt to work directly with carriers themselves. DHL, UPS, FedEx, and even the U.S. Postal Service all offer a range of services designed to make overseas fulfillment easier. In addition to shipping, DHL GlobalMail, for instance, offers such services as address and parcel fulfillment services, in which marketers can house their goods in DHL-hosted foreign distribution centers; inventory management; pick and pack; insurance; and database management. “Our solution is pretty limitless in terms of where you want to go and what you need,” says senior vice president of marketing and commercial affairs David Marinkovich.
FedEx offers a free service, Global Trade Manager, which uses the country of origin and the consumer’s country of destination to estimate the cost of duties and taxes for marketers and their customers. “By integrating GTM to online retailers’ web site/checkout process, retailers are able to provide total landed costs,” says FedEx senior marketing specialist Jose Li. To complement Global Trade Manager, FedEx offers a comprehensive suite of international shipping options for e-retailers. With Global Trade Manager, FedEx incorporates an online visibility tool called Insight-also a free service-that informs e-retailers of order status, so they can contact customers if their packages are held up in customs or otherwise delayed.
Some FedEx services, such as Global Express Guaranteed, are in partnership with the US Postal Service. In addition to offering several international shipping services, the USPS is developing a solution for e-retailers to present landed costs to overseas customers, says package services manager Jim Cochrane. He says USPS hopes to launch the service early next year.
And then there’s UPS, which works with such e-merchants as Nike.com and Jockey.com, handling foreign warehouse management and fulfillment through its supply chain solutions group. In January, UPS launched its own landed cost engine designed for small to midsize e-retailers.
Several UPS clients leave most of their foreign fulfillment details in UPS’s hands. “We designed our site in cooperation with UPS,” says McGeohan of ProShopWarehouse. UPS handles the logistics end of its overseas business, although all orders actually originate out of ProShopWarehouse.com’s Franklin, Ohio-based fulfillment center. ProShopWarehouse.com handles some matters on its own. “You have to put together some paper work-four forms have to go into customer invoices,” he says.
Part and parcel of its strong partnership with UPS, ProShopWarehouse.com has been aggressive in gaining favorable contracted rates with UPS. What’s more, “We look at our bills to make sure there aren’t any extra charges in there-and that we’re at least breaking even on the shipping,” McGeohan says.
For some e-retailers, such as intimate wear e-merchant Figleaves.com, handling all overseas matters internally can work. Launched six years ago in London, the company set up a U.S. headquarters and web site a year ago. And although the company ships all orders out of its British-based fulfillment center, plans call for Figleaves.com, which serves consumers in 66 countries, to open a distribution center this year in the U.S. and Canada. United Kingdom orders account for 70% of Figleaves.com’s sales, U.S. orders 20%, and the rest of the world 10%, according to senior vice president and U.S. headquarters leader Ed Bussey.