Global Fulfillment: A Challenge Worth Taking

Despite the explosion in e-commerce and the borderless nature of the Internet, the majority of today's online retailers cannot handle global orders. According to Forrester Research, 85 percent of e-tailers are unable to fulfill international orders because of the complexities of shipping across borders. Yet it is imperative to deliver to global destinations. With more than 30 percent of online shoppers located outside North America, major retailers accepting only U.S.-based orders are missing unlimited business opportunities.

Most companies want the world yet do not grasp the complexity of globalization. Those seeking to duplicate the success of domestic e-business efforts in other countries find it's not easy. Retailers cannot simply create a single Web site and expect to reach customers and distributors around the world.

By now, we all are familiar with the fulfillment and delivery challenges e-tailers faced this past holiday season. As more companies are discovering, Internet fulfillment and distribution systems are critical to handling demand chains that span across regions and involve a new order of complexity. Even bricks-and-mortar companies that have a shipping and distribution infrastructure find e-fulfillment systems are very different from their traditional supply chains.

E-tailers wishing to expand their operations globally have two options for Internet order fulfillment: in-house management or outsourcing to a third-party provider. When managed in-house, products are stored in physical fulfillment centers. This option enables full control over the order management and fulfillment process but requires extensive expertise outside retailers' core business competencies, as well as massive overhead — including labor, facilities and special equipment.

Increasingly, even the largest online and offline retailers, such as Nike and Blockbuster, outsource to e-fulfillment specialists. This option frees businesses to concentrate on their core competencies. The fulfillment partner sources and receives the purchased goods, stores them, picks them to fill customer orders and finally packs and ships them to consumers using established delivery providers such as Federal Express, Airborne Express and UPS.

Because e-fulfillment houses offer several advantages, this emerging marketplace is becoming crowded with new providers. Some of these players previously were providers for catalog sellers, while others are focused exclusively on serving the Internet retail community.

Few of these third-party providers, however, provide the expertise needed to manage the complexities of international commerce. Beyond the issues of local product sourcing and inventory management, building an effective global e-fulfillment system requires knowledge of local customs and business rules, as well as compliance with a host of taxation and regulatory issues. For example, if an order placed in France cannot be fulfilled in the local territory, the retailer must provide proof that a French supplier was not bypassed. Laws such as these protect economies and keep local workforces employed.

No matter their size or customer base, retailers need to be aware of these issues and, more importantly, to provide transactional support for end users in multiple languages and currencies because it is the basis for localized commerce. Without such support, a business desiring to conduct commerce will be unable to significantly penetrate local markets. Traditional retailers have understood this model for years. E-retailers should look to the experiences of the past and learn how markets are built and sustained in a global economy.

A qualified e-fulfillment partner also should provide services and software that offer prepurchase calculation of shipping, value-added taxes, duty and other global charges. It also should ensure regulatory compliance with international laws and offer multilingual customer service center and support and optional payment models that reflect the fact that most of the world does not use credit cards.

Companies must be able to grasp not only the complex interrelationships between the various systems and platforms but also the impact of using technology to help meet customer needs in any corner of the globe. Ultimately, the Internet's true benefit is its ability to connect companies to customers or businesses to suppliers, regardless of geographic location, currency or language.

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