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EcommerceBytes-NewsFlash, Number 2975 - January 09, 2013 - ISSN 1539-5065    1 of 5

Online Selling Trends Part 2: Global Shipping, Same Day Delivery

By Ina Steiner
EcommerceBytes.com
January 09, 2013




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EcommerceBytes asked a panel of experts a series of questions about online selling trends in our second annual "Online Selling Trends" feature. Part 1 is available on this page, where panelists discuss the challenges and opportunities online sellers face in 2013.

In today's installment, we move from challenges and opportunities to international shipping and same-day delivery. Our panelists include:

Axios Ventures founder and former Etsy CEO Maria Thomas (Online marketplace, angel investor)
Braintree CEO Bill Ready (Online and mobile payments)
Demandware Solutions Marketing Lead Gary Lombardo (Ecommerce platform)
DYMO Endicia co-founder and General Manager Amine Khechfe (Shipping service)
Google Shopping VP Product Management Sameer Samat (Shopping search platform)
One Million by One Million (1M/1M) founder Sramana Mitra (Global virtual incubator)
ShopRunner Chief Strategy Officer Fiona Dias (Members-only shopping service)
TIAS.com founder and CEO Phillip Davies (Antiques and collectibles marketplace)

Many panelists believe international markets are important - they can help sellers diversify risk so if one market's economy is going down, they are also reaching countries with stronger or growing economies. As far as the new trend of retailers exploring same-day delivery, it still appears to be out of the reach of even the larger retailers.

International selling, aka Cross Border Trade, is fraught with difficulty - how important is it for online sellers to actively engage in selling to international markets? What are the challenges and opportunites/ what trends or solutions do you see emerging?

Demandware Solutions Marketing Lead Gary Lombardo: It is very important for online sellers to actively engage in selling to international markets. What markets and what their approach should be depends upon their consumers.

The challenges include technical (managing a global infrastructure, integrating and synchronizing data, defining user access controls), operational (defining merchandise and customer service processes, gaining best practices/processes ), creating digital commerce capabilities (managing features across languages, currencies and sites, managing orders and services, streamlining transactions), and organizational capabilities (how to optimize a global organization and technology foundation, establish best practices for the organization).

The biggest opportunities out there from a market perspective are Mainland China (huge market, but fraught with challenges).

DYMO Endicia General Manager Amine Khechfe: I do about three or four webinars a year just on shipping internationally. I started in '08 when the economy was going down.

I was telling a lot of our customers, if you open up your store to international, you'll likely see a 10 percent pop, which will help the decline you may be seeing in the domestic market.

I'm a big fan of international selling. We've spent a lot of our R&D and marketing resources here to get international shipping as easy to use as domestic shipping. You wrote, it's fraught with difficulty. That's exactly the impression everyone has.

You used to have to fill out the forms by hand. Now software like ours does that. You used to have to sign the form after you printed it on the printer; now the software will sign it. You used to have to go to the counter to have a round stamp. Now our software even prints a black and white example of the round stamp. So it's really a perception that it's fraught with difficulty.

You do have to know certain things - for example, certain countries have certain restrictions and prohibitions. But that's in our software today.

You have to know what forms to fill - well, not really; the software figures it out for you.

I'm a big believer that international shipping a big opportunity, it's only getting easier. There are rules, but nine out of ten are taken care of by software.

I'll give you some metrics.

Spain: Endicia sellers going to Spain has declined 16 percent. That's because Spain has a bad economy right now.

Canada is up 30 percent; Australia is up 50 some odd percent; in Australia they changed their rules on trade and the Australian dollar is strong, so they're buying a lot of American goods.

Russia and Brazil are up 30 or 40 percent.

Those are great opportunities. If you have luxury goods, Russia and Brazil and China are really big for that right now - they can really be a driver for your business.

Canada is our biggest recipient of Endicia packages. They're also growing the most. When you have a bigger base, you think they're not going to grow as much, but Canada is still booming. The Canadian dollar is strong, the Canadian consumer trusts the U.S., there's a good cross-border activity.

Endicia customers are the number one shipper of packages to Canada. Next is Australia. It used to be number 5 three years ago. They've surpassed the big European countries because they've lowered the trade barriers. I think sellers should look at that. It's all opportunity.

There are some challenges. Spain is not doing that good. If you look at statistics, shipping to Italy, service is not good to Italy, but outside of two or three areas, it's really strong right now, and all the carriers are working well, and the cross border is taken care of by the carriers.

So it's not like you have to build a new competency, other than just make sure your goods are accepted in that country, but most of the online sellers know their products real well and what they are worried about are the nuances of taxes, which our software takes care of - shipping tariffs, knowing what the country accepts and doesn't accept, what forms to fill out - the forms are all on the software.

What happens if the seller gets bad feedback if their package doesn't arrive? That's really the concern. So you want to pick your mail classes that give you tracking.

In Chicago, in September, I was talking to a major retailer of women's clothing in the U.S., and they shared with me that they were a customer of ours.

They had been using our service to ship to Russia and decided that shipping women's apparel to Russia was more secure with the postal authority, and they send it Express Mail. They said their consumers in Russia will pay for that premium service because they want the tracking and the reliability, because the package carriers seem to have difficulties in that country.

My advice is to get your feet wet with Canada. Then expand to four or five countries, the UK, Australia, if you want to get comfortable before you venture into other languages. Dip your toe in, and then get confidence.

Our top three country destinations are Canada, Australia and Great Britain, followed by Russia and Brazil - those two were not in the top list a year ago. Brazil has quadrupled in three years. Russia is almost 10 times in three years.

One Million by One Million Founder Sramana Mitra: For small merchants, it is better to focus on specific markets and merchandise accordingly. Going too broad is harder to manage.

TIAS.com CEO Phillip Davies: We still have merchants on our system that simply will not accept International orders for merchandise on our site. Over the 17 years we have been selling online, there have been so many scams related to International orders that convincing merchants that all International orders are not all bad has been quite difficult. That trend will change as ecommerce sites adopt more safeguards for processing International orders.

What do you think of same-day delivery? Will any players get there in 2013, what will it look like?

Axios Ventures Founder Maria Thomas: Amazon has offered same-day service in select locations since 2009. Partially in response to Amazon's growing ecommerce dominance, eBay, Google, WalMart and USPS announced in the last few months efforts to move to same day delivery in selected markets. Amazon and WalMart are especially well-positioned in this arena via their extensive warehousing operations (in Amazon's case, their growing warehouse footprint) and increasing use of lockers at central locations.

Trying to beat Amazon and Walmart at the "everything now" promise is likely to be a losing proposition for the vast majority of businesses, but there are ways for small and medium sized businesses (SMBs) to compete. For example, many people value a more real and authentic shopping experience, including getting to know the people behind the products and services they use. This is one of Etsy's competitive advantages. Smaller businesses and individual sellers can offer unique selection and personal curation of products; they can offer a personal touch.

Demandware Solutions Marketing Lead Gary Lombardo: In 2013, same day shipping will become the norm, with providers such as eBay Now, TaskRabbit and others leading the way.

Retailers will leverage these services as well as provide their own same day shipping services through their web shopping experiences, perhaps leveraging these third party services.

DYMO Endicia General Manager Amine Khechfe: Four companies have announced tests of same day delivery. We are involved in a test with the Postal Service in the San Francisco market, and we've worked extremely closely with them on strategic initiative.

We are working with a marketplace and two customers in San Francisco to help them with same day delivery using Endicia software. We are using the USPS Metro Post for same day delivery.

It does not mean that Metro Post is exclusive to us. Just like we are a postal partner, in this sense, we are doing same day using Metro Post in our partnership with the Postal Service to empower a couple of customers in the San Francisco area. We're pretty excited about it.

I don't think it's going to be 50 percent of the packages. I think it's going to be less than that, but it will be a differentiator.

Another way to look at same day delivery is, it could be less expensive than driving or parking in the metro area. That puts it in a different perspective, where you're not competing with shipping. I can pick up something today, I can order it while I'm in the office, and when I get home tonight, it'll be there. That changed my psychology because before that I was comparing it to regular shipping.

I don't think it's going to go everywhere. It's really difficult to imagine same day delivery in a non-metro area. That's what we are going to learn during those tests. That's when pricing will be finalized and you'll start seeing, are you going to go for density, are you going to go for ease of driving, on a farm, twenty miles from any post office or regional airport? I don't think so.

But if I'm in a place that has 26 zip codes within a ten mile radius - San Francisco is probably 26 or 30 zip codes - I can see that. Already on some of the marketplaces, you can order something at 6 in the morning and it will arrive by 5 o'clock at night if you're close to a distribution center.

I think it will also be verticals - older people who need their medicine and it's a chore to drive. It might be convenience, or products that are very local. I'm intrigued by it. I think it's going to be an option like everything else.

One Million by One Million Founder Sramana Mitra: Messy. Amazon may get there, but not easily.

ShopRunner Chief Strategy Officer Fiona Dias: Same day delivery is incredibly hard to pull off - no one has found an economical way to do it yet. If a driver can drop off 15 packages at 15 households in one run, it makes much more economic sense. That's much harder to accomplish with same-day deliveries.

Shipping companies need time to plan routes. When there's little time, shipping companies struggle to get packages to customers. It becomes a same-day "maybe," not a same-day guarantee. Any time you're dealing with compressed timeframes, it puts more pressure on the entire supply chain, from retailers to couriers.

There's a lot of excitement in the press about same-day shipping, but I think if you asked someone at Wal-Mart if they think same-day shipping will be a primary delivery method in a few years, they'll say no. I don't think anyone thinks this is how it's going to work in a few years.

TIAS.com CEO Phillip Davies: The larger players such as Amazon will offer this in 2013, but it won't work for small sellers with limited resources unless it becomes a shipping option with USPS, UPS and FedEx.

What Do You Think?
Future installments of this series will tackle the issues of mobile shopping and social networking, legal and regulatory issues facing online sellers, and where merchants should be focusing in terms of getting traffic.

If you'd like to comment on these experts' answers or if you have your own thoughts about the challenges you face this year, let us know by participating in the discussion thread on the EcommerceBytes Blog.

Parts 3 and 4 are now available:

Mobile Shopping and Social Networking Impact on Sellers

Legal Issues and Boosting Traffic

Comment on the EcommerceBytes Blog.

About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

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