Latest news from Direct Link

Focus on Germany – a key player in the European e-commerce market

Germany is characterized by a large population and high internet penetration. More than 57 million Germans made purchases online during the last year. A good part of those, more than 50 %, also bought physical products from a foreign country which makes the German market very interesting from a cross-border perspective.

The United Kingdom, US and China are the most popular foreign markets for German online shoppers. Clothing & footwear, followed by home electronics and CDs are the products most frequently bought online from other countries.

Image: Wikipedia Facts about Germany » Capital city: Berlin » Population 15–79 years old: 66 million » Languages: German » Currency: Euro » Internet penetration: 89 % » Proportion of the population that has shopped online: 87 %

Image: Wikipedia

Facts about Germany
» Capital city: Berlin
» Population 15–79 years old: 66 million
» Languages: German
» Currency: Euro
» Internet penetration: 89 %
» Proportion of the population that has shopped online: 87 %

According to new figures from BEVH (“Bundesverband E-commerce und Versandhandel Deutschland”), German e-commerce maintained strong double-digit growth during the second quarter of 2016. E-commerce sales of goods increased by 15.8 % between April and June. That means that the growth during the second quarter more or less kept up with the strong 17.7 % increase seen in this year’s first quarter.

The fastest-growing product group in the second quarter was computers/accessories/games, with a 37.7 % increase compared to the same period last year. Clothes/fashion, which is the largest online product group in Germany, grew by 3.5 % which is well in line with the development in other major European e-commerce markets during the second quarter.

One vital thing for e-commerce companies planning to enter the German market to keep in mind is the issue of returns. A majority of German online shoppers consider an easy-to-understand and trouble-free returns process as one of the most important criteria when choosing from where and whom to buy online.

Source: PostNord study and BEVH

Is the world getting smaller or is it drifting apart?

E-commerce is most certainly growing and taking a larger portion of the total retail revenue. No one doubts that.

What is less known is the fact that cross border e-commerce is growing faster than domestic e-commerce. Both in value as well in number of buyers. This development is already changing the stage for some market players, and it applies both to businesses as well as governments.

If we start with the commercial players, we see that there are two camps:

One camp that is negative to the growing cross border e-commerce resulting in increased competition. It might have been so that Company X had the sole representation of an attractive brand in a certain market and suddenly it got competition from players in other geographies selling the same brand, maybe at a lower price?

The opposite is of course the company that sees a potential for growth by reaching out to new geographies without classic physical investments in shops, delivery centers, etc. Classic factors limiting geographical expansion are suddenly not that important anymore, and crossing borders means larger audiences and more opportunities for businesses.

Similarly, looking at governments, and other public-sector actors, also these can be divided in two camps:

sign with customs agent

Image: Pixabay

One camp believes that cross border e-commerce is a threat to the tax base. Therefore, these governments and organizations will lower customs thresholds in order to either get more fiscal income or to make cross border e-commerce less attractive and by that “protecting” their domestic players.

A good example here is that China during the spring of 2016 increased the customs charges on inbound e-commerce. Probably in order to gain income as well as to “protect” domestic sellers and to control currency flows.

The opposite, of course, is when a country wants to stimulate cross-border trade and make it easier for private individuals to buy online from other countries. One way of making this happen is to increase the exempt amount for e-commerce – the cut-off point at which customs duties and sales tax will be charged. One example is the United States, which this spring increased the threshold from USD 200 to USD 800.

So, when we look out through the window – what kind of world would we like to have?

Seeing that two large economies go in opposite directions, I can make out two scenarios:

A world that gets smaller and where cross border e-commerce is simple. Lowered customs limits is one component.

Or a world that drifts apart with increased trade barriers, more and more complex rules, and maybe even “geo-blocking” in one way or other. Similar to Netflix giving its users access only to locally-allowed content.

The choice, unfortunately, is not yours, but you can at least have an impact by how you conduct your e-commerce business.

Per-Arne Lundberg, Chairman Direct Link Group

IRCE 2016 – three important takeaways

The Internet Retailer Conference Exhibition, IRCE, is held every year in the USA and gives a good opportunity to learn more about what’s new in the e-commerce world. One of this year’s major topics during the conference was Amazon.

As Amazon accounts for 33 percent of all e-commerce in the US, this behemoth is something all actors need to relate to. Everyone is talking about how to utilize Amazon in the best possible way. Marketplaces are growing around the world, but are still not nearly as big as in the US. However, the international competition is increasing, and the more e-tailers sell abroad, the more they should consider marketplaces.

IRCE conference

Photo: author

Another trend this year is the customer perspective, or rather the importance of having one. It has been a big topic for several years, but this year has shown more proof and more practical examples of the importance of focusing on customers. The more personalized the shopping experience is and the more engaged customers are in your brand, the more loyal they become. Put the customer first at all times and place yourself in their shoes.

Omni-channel retailing is no longer a distant buzzword but instead is now a reality, and several brands and retailers are integrating their different channels. Their stores enable digital growth, and vice versa.

To summarize, my most important takeaways from this year’s IRCE conference were:

  1. Use marketplaces for increased traffic and conversion
  2. Put the customer first at all times
  3. Integrate different sales channels for maximum effect and customer experience

 

Carin Blom, ecommerce expert and retail analyst at PostNord

30 years of experience from the forefront of international logistics

What advice can a man who has experienced more than thirty years of global growth in retail give to internationally expanding e-commerce companies?
Well, first and foremost – don’t underestimate the importance of logistics and deliveries. There’s no way of getting around it.

photo of Erik Nauclér

Erik Nauclér

Previous to his retirement, Erik Nauclér was responsible for building the international transport network and managing the logistics involved in entering new markets for H&M, one of the world’s leading retail brands. H&M has more than 4 000 stores in 61 markets, and also has a strong online presence. When Erik Nauclér first joined the company in 1981, there were around 122 to 124 stores in 5 countries, of which about 100 were located in Sweden, the country where H&M was founded.

After hearing Erik speak at the e-Commerce conference in Stockholm in May, Erik and I sat down for an interesting talk about the logistics industry. In Erik’s mind, there is no difference between a traditional bricks and mortar shop and an e-commerce outlet when it comes to the demands on the logistics supplier: “You have to live up to consumers’ expectations when it comes to deliveries.”

In the past few years, Erik has been consulting e-commerce startups, and he has several pieces of advice to share that he believes apply regardless of sales, distribution and delivery method:

1. The biggest logistics company or carrier is not always the best choice

As a small or midsize e-commerce company, you will often find that the bigger players will not pay a lot of attention to you or invest enough resource into your business. The “one size fits all” approach often promoted by the global players does not allow for a lot of flexibility or really taking care of the client and their business goals.

2. Do NOT focus on price only

Retailers often put a string of demands on their manufacturers, such as quality, environmental sustainability, work force protection, ethical business practices, etc.. However, when it comes to transports, logistics, and deliveries, far too often it is the price that is the only deciding criteria.

3. Establish a long-term relationship with your supplier

If you sign one-year contracts, you will have three to six months of implementation during which you experience hick-ups and problems, three months when things are starting to run smoothly, and then you have 3 months where you have to prepare and conduct a new purchasing process. Why would you not like to keep your peace of mind for a bit longer?

4. Be open to change

Even though long relationships with suppliers can be rewarding, you can always learn more. Be open to new influences, meet other suppliers and experts from the industry in order to pick up best practices and improve your solutions. And if the supplier gets fat and happy – throw them out!

Jonas Prosell, Head of International Business Development, Direct Link Sweden

Successful returns

I started my sales career in early 2000 selling educational software for the Office package over the phone. It was a tough job in a tough environment. We were placed in what was called and felt like a “bunker”. The “bunker” was basically a dark basement with very few windows located in the city center of Stockholm.
The targets were high and to reach the targets you had to make hundreds of calls per day to reach a potential customer and to make a sale.

"return to sender"After an order, customers had two weeks to return the items, and unfortunately, I had more returns and less sales than the people sitting closer to the window. This got me thinking – what did they do differently than me? And could I mimic what they were doing? I asked them for advice, and half expected them to tell me the story of their life. However, alongside recounting their sales victories, they also emphasized the importance of returns.

While I saw a return as a failed sale, my successful colleagues saw it as an opportunity. When they got a return, they instantly followed up with the customer and asked why the program was sent back. Many times, the return was due to a lack of time to even open and start using the software.

Returns management that allows consumers to return their items is an essential part of any successful e-tailer’s supply chain strategy. Offering free returns and simplifying the return process is a great way to reduce reluctance and make a sale.

When ecommerce first took off, there were many experts that doubted that shoes and clothing would sell. They guessed that customers would think: ”I have to try these items before I’m willing to buy them.” However, this doubt was overcome with the help of free returns, and clothing and shoes are now the top sales categories for goods bought online. Even the Italians have started to understand that shoes can be bought online!

The ”bunker” where I started my sales career is probably an apartment in the overpriced city center in Stockholm today, but the lesson of handling returns is still valid.

I know an e-tailer will incur short-term costs, but if returns are handled well, this will work toward achieving long-term goals – it will enable sales in the first place, but also lead to better reviews and more sales by loyal customers in the future.

Bjorn Moberg, Regional Business Development Manager, Direct Link Asia Pacific

Five ways to increase online sales and customer satisfaction

Today, a large part of purchases are multi-channel, often due to the fact that many consumers do their research online followed by a visit to a store for the actual purchase. Only 6-7 % of purchases are made completely online. Why is that?

photo of Arne Andersson

Photo: PostNord

When asked about their reason for shopping online, consumers state convenience as the main argument. So why aren’t more purchases done over the Internet? One important reason is that the shipment process often is not convenient enough. Companies that understand this and adapt their supply chain processes are therefore the future winners.

What online shoppers want can be summarized in 5 tips:

1. Offer them freedom of choice

Having only one delivery method makes consumers feel trapped. Psychologically, being given at least two delivery options, such as standard or express, is almost a demand from today’s consumers.

2. Speak the language of the receiver

Do not simply display the carrier’s product name in the checkout process. Make the options understandable to the customer and think about how to best explain to them what you mean.

3. Offer a simple return policy

Online stores have vastly different rules for returns and consumers are often unsure of what rules apply. Simplify and clarify the process or face the risk of consumers cancelling their purchases.

4. Effective tracking of shipments

One of the most common wishes from consumers is the ability to track their parcels. Tracking has been available for a long time but now you have the possibility to package the tracking in a more attractive manner; for instance by having an app that consumers download to their smartphones. This makes it easier and more fun to track your parcel.

5. Take the customer’s perspective

Earlier, it may have been a cliché that you should always look at things from the customer’s point of view, but now it’s a fact. Customers have more and more to say about your business and can easily replace one supplier for another if you don’t deliver on your promises. Therefore, it is important to go the extra mile and truly make an effort to understand what can improve the customer experience during delivery.

Arne Andersson, e-commerce expert PostNord

Preparing for the challenges of Black Friday

Online sales on Black Friday and Cyber Monday have increased tremendously during the last couple of years. This sales peak is getting more and more important, not only for retailers but also for e-tailers, and not only in the US market – where it all started – but worldwide.
At the Internet Retailing Expo in Birmingham in late April, Black Friday and Cyber Monday were the topic of discussion in several of the seminars. Especially for logistics and customer service managers, it has become increasingly important to plan how to handle this sales peak.
In the seminar “Black Friday Post-Mortem”, John Munnely, head of Operations at John Lewis, shared his experience about how supply and distribution must be aligned and prepared for fluctuations in buying behavior.

Handling Black Friday

diagram of online sales at John Lewis from 2012 to 2016

Photo: author

Higher e-commerce sales at John Lewis were first observed on Black Friday 2013, see photo. In 2014, there was a real boom. As Black Friday is now here to stay, it’s essential to have a clear strategy for how to handle all the challenges associated with it, said John Munnely. And not only from a sales perspective, but also with regards to warehouse and distribution capacity, as well as taking account of customer satisfaction. It’s important to analyze how much capacity you can afford and which delivery alternatives are possible to offer at the time.

Sales around Black Friday are focused on discounts, which also makes it important to value the delivery proposition.  Are fast deliveries important for Black Friday customers or are keeping promises the key to customer satisfaction? For Black Friday, fast deliveries cannot be the first offer, said Munnely. For the days before Christmas, however, this is necessary. Black Friday should be seen more as an “ordering event” rather than a “delivery event”.  Keeping delivery promises and being transparent in the delivery chain is generally the best offer to Black Friday customers.

Black Friday is here to stay, and its extreme demands make early plans for how handling this event a necessity. The offering strategy, forecasting, fulfilment capacity, delivery proposition and customer service must all be aligned in a coherent plan. This is the lesson learnt from the past two years, said Munnely. We are only as strong as our weakest link.

E-commerce in the Nordics report 2016 now ready to order

The countries that form the Nordic region have a long history of distance selling. This fact, in combination with a lot of vast and sparsely populated areas, but with a very well developed infrastructure, makes the Nordics a mighty region for e-commerce activity. In 2015, Nordic residents made online purchases totaling more than EUR 17 billion.

cover of E-commerce in the Nordics report 2016The newly-published PostNord study “E-commerce in the Nordics 2016” is based on interviews with more than 18 000 Nordic inhabitants between the ages of 18 – 79. E-commerce in the region has experienced steady growth for quite a number of years, and 75 % of the Nordic population shopped online during an average quarter in 2015.

The top three product categories to buy online are still clothing and footwear, media products, and home electronics, with cosmetics, skin and hair care as a strong runner-up.

A full 25 % of the total e-commerce trading comes from international sellers. The Nordics is one of the keenest regions in the world when it comes to cross-border online shopping. The UK is still the largest market to buy from but it has been losing market shares somewhat to Germany the last few years. The US and China come in at a shared third place.

A much discussed topic within the e-commerce community today is delivery options and the importance of speed. We know from earlier studies that consumers’ expectations vary. Danes are still those of the Nordic residents who have the highest demands when it comes to fast deliveries. They are willing to wait 3.4 business days for delivery. The average for the Nordic region as a whole is 3.9 days.

When it comes to mobile devices used for online purchases, the smartphone continues to gain momentum. Especially in Sweden where 20 % of the purchases are being made from a smartphone, whereas Danish and Norwegian consumers show a preference for using tablets.

As usual, the E-commerce in the Nordics report is packed with information about trends and consumer behavior that is vital for any company doing, or planning to do, e-business in this region.

To learn more, order your free copy of the report.

Impressions from the Last Mile Fulfillment Asia conference in Singapore

Björn Moberg, Business Development Manager at Direct Link APAC, in the stand with potential customers at LMF Asia 2016

Photo: author
Björn Moberg, Direct Link APAC, with potential customers at LMF Asia 2016

In early March, professionals from all parts of the e-commerce ecosystem and from all over the world came together to participate in LMF Asia 2016. More than 100 exhibitors and over 80 international speakers, covering cross-border e-commerce from every conceivable perspective, created a dynamic and exciting atmosphere. Direct Link APAC participated with a booth and a presentation on European e-commerce.

For a southeast Asian e-commerce company wanting to expand to new markets, it’s natural to first examine the opportunities in neighboring countries in the same part of the world. And most of the companies do just that.
But for a growing number of these, this just isn’t enough anymore. After establishing themselves in for example China, India and Malaysia, a lot of Asia-based e-commerce companies are now starting to look westward, towards the US and Europe.

Establishing your company in a region that is quite different regarding culture, consumer behavior, buying habits and so on is a big step to take, but the opportunities are also enticing, to say the least. If we look back a few years, European e-commerce consumers bought products from China, for example, mainly because the prices were much lower than at home. Price levels are of course still an important factor but definitely not the only one. Today, people from other parts of the world are also interested in Asia because they gain access to a much wider product range with brands that are not available in their home markets.

This development also puts some pressure on Asian e-commerce companies. It’s no longer just a question of getting a product from the seller to the buyer. Today we are talking about The Customer Experience. And that involves everything from the purchase to the final delivery. The offer on the web site, the payment options that I get, the delivery options, whether there is easy-to-understand information about returns, and so on. All these features are competitive differentiators that will decide whether the customer will come back the next time.

And today, more and more Asian companies understand the importance of having solid information and knowledge about consumer behavior and expectations in the foreign markets they are interested in establishing themselves in. Providing this information and insight is one of the most rewarding parts of what we do and it’s a great feeling when we at Direct Link can help companies access new markets.

Going postal?

The number of e-commerce goods sent via tracked postal services is increasing day by day. This puts a lot of pressure on the delivering postal operator, since the addresses often need to be entered manually into a system in order to handle things such as notifications. Naturally, this is costly and time-consuming. Prioritization may be made in other areas.

This has led to the situation that in many places, the distribution of tracked service items is considerably slower than the untracked service. Customs clearance is another source of delay, where in many cases the postal operator is in the hands of the customs authorities.

However, tracking is highly prioritized by merchants.

road sign "Success ahead"

Image: Pixabay

If you are using postal services, make sure you are using the right service for the right type of goods to the right destination. For the e-commerce merchant, it’s usually a jungle trying to figure out what service to use and to which destinations. Additionally, distribution time and tracking quality may vary considerably between postal operators.

A good logistics supplier should be able to give advice in this area and also provide simple, suitable and manageable solutions for merchants depending on price, service, tracking options, value of the goods and how the goods will be delivered, which has been discussed previously in this blog. This could of course also comprise DDP or other non-postal solutions to specific destinations, depending on the shipment profile of the goods and the situation in the destination country.

This does not imply that there is a turnkey solution, since all merchants have different, although similar, needs. A tailored and agile solution will be needed to get the best result for every scenario. A logistics supplier should also be aware of what’s happening globally and continuously suggest improvements, since the distribution world is changing constantly and finding the best way should in my view be a highly prioritized task for logistics companies.