With all the turmoil and upheaval, the global supply chain has endured since 2020, the impact of changes the EU is initiating stands to throw more disruptions and issues at shippers. Managing cloud-based e-commerce platforms and global shipping logistics is a vital part of the process of overcoming cross-border challenges for online retailers.
According to the industry experts at Whistl, “The EU’s e-commerce industry has been experiencing a lot of positive growth over the past few years. A new report from the industry association E-commerce Europe found that there was a 15% growth in 2016 and the industry is predicted to be worth €602 billion by the end of 2017. That would represent a further 14% year-over-year growth.” (Whistl, 2017). This level of growth and value highlights the challenges of e-commerce and the need for strong cross-border e-commerce logistics and operations.
The growth seen within e-commerce and online transportation are indicative of changing market trends and consumer purchasing habits. As businesses open and people start returning to some semblance of normalcy in their day-to-day habits, the demand for fast and reliable shipping service remains as important as ever. Consumers have gotten used to the benefits of cross-border e-commerce and shipping and are unlikely to go back to accepting slower shipping options for many of their shopping demands (Yun Express, 2022).
Increasing e-commerce shipping, services, and sales along with advances to VAT and import/export services have all helped achieve this and create such projections. Cloud-based e-commerce platforms with the right merchant of record (MOR) pay model is crucial in helping companies in Europe be prepared for a number of challenges that face the e-commerce and online store shipping industry.
The Importance of E-Commerce Shipping and Logistics in EU Transportation
Many of the most commonly cited challenges of e-commerce within the EU are those that impact logistics, shipping, and customer service. Companies dealing with the transportation of goods, whether importing or reporting, must be mindful of advanced e-commerce shipping advancements.
With improved digitalization and automation, cloud-based e-commerce platforms become much more influential and impactful. According to Ecommerce Europe, “Western Europe is, by far, the strongest region in terms of B2C e-commerce turnover, holding 63% of the total turnover for 2021. Southern Europe follows in second place with just 16% of total turnover, while Central Europe and Northern Europe come in third and fourth (10% and 9% respectively), and Eastern Europe (2%) in last place” (E-commerce Europe, 2022). E-commerce services can be a major factor that plays into EU services.
The continued focus on cross-border e-commerce and having the right MOR) is critical for continued growth and recovery within the B2C commerce industry. Dealing with the top challenges of e-commerce often relates to one of the following cloud-based e-commerce platform issues or cross-border e-commerce concerns.
Delivery Speed and Accuracy Falling Below Acceptable Levels
Issues with the speed and accuracy of deliveries remain the most reported problem for e-commerce businesses in the EU and many other countries as well. Customers who experience delivery failures, delays, and problems are unlikely to give shipping companies a second chance.
Despite the close transport networks and links that connect many European countries, due to issues such as weather anomalies, local and global politics, environmental factors, and cloud-based e-commerce platform problems, delivery issues continue to be an issue.
The findings from the “Tomorrow’s Supply Chain: Disruption Around Every Corner” report by SAP highlight that “since the start of the pandemic, supply chain issues have been disastrous for organisations in the UK. 66% of businesses have experienced delays in the production of goods/delivery of services, 64% have seen revenues decrease and 58% have experienced a loss of customers. Given this outlook, it perhaps comes as little to no surprise that almost a quarter (23%) of businesses expect supply chain issues to last until Summer 2023.” (System Analysis Program Development)
The ultimate cause for these issues with speed and accuracy comes down to poor management within the supply chain in the UK and with other EU countries. Without access to cloud-based e-commerce platforms and the delay in embracing cross-boder e-commerce solutions the bottlenecks and delays continue to impact speed and accuracy with EU deliveries.
Technical Supply Chain Issues Within the EU Network
Technical failures within cloud-based e-commerce platforms are another risk for e-commerce service providers within the EU. Cyber-attacks and hackings have been on the rise, with reports showing nearly half of all businesses experienced at least one cybersecurity breach or attack over the last year. The latest innovations in supply chain tech and cyber security keep companies protected but they must be properly applied, onboarded, and embraces in order to be successful, something many companies have been slow to understand.
Many supply chain networks and companies in the EU today struggle in this area due to poor management of current tech trends and a reliance on outdated data and processes. Tech Monitor noted in a report last year that, “Taking a look across our supply chains, the current system remains highly fragmented, often paper-based, with limited interoperability, sporadic collaboration, and poor information flow… Organisations have a colossal amount of data at their fingertips, but the majority are either not gleaning the right insights from this data, or are failing to share meaningful information with key stakeholders.” (Tech Monitor, 2021)
For businesses dealing with cross-border e-commerce this is obviously a serious problem. Digital companies stand to be impacted more than more traditional companies as the majority of their activities are based online and rely on omnichannel supply chains.
Political Landscape and Cross-Border Regulatory Change
There are a number of issues that have impacted cross-border e-commerce in Europe, some of the most well-known being the Brexit vote and changes to VAT processes. Challenges of e-commerce become all the more complicated when political factors come into play. More expensive trading costs and new regulations are expected to impact e-commerce companies in the coming years.
However, ongoing Brexit negotiations, VAT regulations, and other changes also will come into play for international shipping providers. This was highlighted in a 2022 report from nShift that noted even before Brexit, UK consumers were often hesitant about dealing with cross-border e-commerce and ordering from abroad. This recent survey asked 1000 UK residents why they avoided buying products from overseas. The major issues, with each earning more than 50% response, included concerns about returns, returns, high delivery costs, and the delivery process itself (nShift 2022).
Another concern for B2C and B2B e-commerce shippers in the EU is that the existing policies and regulations are changing and updating at a rapid pace. The European cloud-based e-commerce platforms that play a role in e-commerce shipping services are always in a state of fluctuation. New regulations and changes to EU shipping processes and requirements will make it all the more vital that importers and exporters have a single source of information and service. From financing to merchant services, a single point of contact will be much easier to manage and track as political uncertainty continues to plague EU cross-border e-commerce businesses.
Purchasing Power
Ongoing global factors including war and other supply chain disruptions are proving to be major consequences on the European economy overall and the cross-border e-commerce industry as well. A number of companies within the transportation industry have reported declines in consumer purchasing power and confidence.
Cloud-based e-commerce platforms can be influential in improving customer experience, services, and purchasing power. All of this change in purchase power is mostly due to high energy prices, inflation, shipping costs, supply chain issues, and overall uncertainty. AJ Todd of Flock Freight noted that “3PL’s are skilled at finding areas for extra cost savings, such as more efficient routing or carrier selection. Plus, by placing it in the hands of experts, you no longer have to focus on day-to-day oversight of your transportation supply chain” (Flock Freight, 2019).
Working with a 3PL provides management with greater access to data and provides them with greater bargaining power with carriers, shippers, and forwarders. It can significantly improve cross-border e-commerce processes from start to finish. EU businesses that work with a 3PL can often see consistent benefits that include a reduction in rates for transportation and stronger logistics services.
Overcome the E-Commerce Shipping Challenges With ModusLink
Although the EU’s e-commerce industry has seen growth in many sectors over the last few years, there are still many effects from COVID-related shutdowns being felt today. European e-commerce solutions providers and medium to small businesses should still be prepared for a number of challenges that face the industry.
These common challenges of e-commerce cannot be completely avoided but they can be mitigated and largely avoided by having a merchant of record (MOR) and the right approach to e-commerce shipping within Europe.
Contact ModusLink today to learn more about how our cloud-based e-commerce platform and unique approach to cross-border e-commerce and MoR payment services can impact EU E-commerce.
Bibliography
AJ Todd (2/4/19). 5 Benefits of Working With a 3PL. Flock Freight. Accessed 10/31/2022
From https://www.flockfreight.com/blog/5-benefits-of-working-with-a-3pl/
Delivery Management (7/3/22). How might Brexit impact delivery and cross border shipping? nShift. Accessed 10/31/2022 From https://nshift.com/blog/brexit-impact-delivery-cross-border-shipping
Jeremy Silver (8/23/21). The future of the UK economy depends on supply chain innovation. Tech Monitor. Accessed 10/31/2022 From https://techmonitor.ai/leadership/innovation/future-of-uk-economy-depends-on-supply-chain-innovation
Press Release (6/8/22). Supply Chain Crisis: Over 85% Of UK Businesses Plan To Move From ‘Just In Time’ To ‘Just In Case’ Model And Prioritise UK-Based Solutions To Overcome Challenges. SAP. Accessed 10/31/2022 From https://news.sap.com/uk/2022/06/supply-chain-crisis-over-85-of-uk-businesses-plan-to-move-from-just-in-time-to-just-in-case-model-and-prioritise-uk-based-solutions-to-overcome-challenges/
Luca Cassetti (6/28/22). European e-commerce still growing but new global challenges lie ahead. Ecommerce Europe. Accessed 10/31/2022 From https://ecommerce-europe.eu/press-item/european-e-commerce-still-growing-but-new-global-challenges-lie-ahead/
Whistl (7/1/2017). Main Challenges Facing European E-commerce Businesses. Whistl. Accessed 10/31/2022 From https://www.whistl.co.uk/news/main-challenges-facing-european-e-commerce-businesses
Yun Express (3/15/2022). Top Three Challenges to Mind for Your E-commerce Logistics across Europe. Yun Express. Accessed 10/31/2022 From https://www.yunexpresseu.com/blog/top-three-challenges-to-mind-for-your-e-commerce-logistics-across-europe/
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