E-business is undergoing rapid development. Many individuals and SME’s try to find their place in this highly competitive market. Before you get your feet wet in this new market, we encourage you to prepare yourself by doing relevant homework which we’d be delighted to help you with.
Today let's discuss the role of logistics in e-business.
Logistics are a crucial part of virtually all e-sales transactions. There is much uncertainty during the delivery process. When will the goods arrive? Will the goods arrive in good condition? Will the lengthy delivery upset your clients?
As an e-seller you can choose from the following delivery methods. Consider the pros and cons of each option.
There are four major delivery channels available to e-sellers.
1. Direct Mail
You may opt to deliver your goods via mail from your home country to your clients abroad. However, the reliability of delivery via regular mail can vary depending on the countries where you and your clients are located. Moreover, it is not uncommon for the goods to sustain damage while being shipped via direct mail. These concerns could be partly addressed by using dedicated courier services like DHL and FedEx. However the cost of using the courier services might be too high to be viable, especially for less expensive goods. In general, direct mail is a viable option for smaller individual e-sellers who store the goods themselves and do not yet have many items to sell.
2. Export via an appointed 3rd Party Overseas Warehouse
First, pre-deliver your goods to this overseas warehouse. After clients place their orders, you send out the goods locally from the warehouse to your clients. This ensures a smoother and usually faster delivery. The warehouse's service charge typically includes the first delivery fee, tax, handling fee, and the second delivery fee. Overall the cost of delivery via this option is lower, especially for active e-sellers. However, this method requires a fairly accurate estimate and tracking of supply and demand. Otherwise it results in the unnecessary costs associated with goods seating in the warehouse for extended periods of time.
3. FBA (Fulfilment by Amazon)
If you are mainly active in e-selling on Amazon, you may consider using the FBA. You will still need to take care of delivering your goods to the Amazon warehouse. You would also need to hire a third party to label the goods and clear the goods for export in the country of origin. Once Amazon receives the goods, they take full control of the items and will manage the storage as well as delivery of these goods to the buyers. By using the FBA, clients can also enjoy the professional after-sales service of Amazon. Moreover, the goods would have a higher chance of appearing on the front page within an Amazon search result.
4. Warehousing in “Tax-free/-protected” Zones
The e-sellers who import the goods can use this method to lower the cost of customs clearance and delivery. China and various other countries offer preferential/free duty schemes for goods stored and cleared in certain tax-free/-protected zones. E-sellers could import their goods and store them at warehouse in these special zones thus lowering the costs associated with import duties/taxes. However, e-sellers should be aware that the tax schemes for the special zones tend to change from time to time depending on changes in government policies. For example, in 2016 there were significant changes in Chinese preferential duty schemes for the tax-protected zones.
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