In today’s market, eCommerce stores are having to go the extra mile to impress their customers – often, literally!
We’re talking about global logistics and supply chains. More and more SMEs are starting to reap the benefits of embracing global markets to grow their business and become more profitable.
Want to know more about the advantages and disadvantages involved in global logistics? Take a look at our guide…
What is a Global Supply Chain?
The phrase ‘global supply chain’ means a company is utilising a network of suppliers, manufacturers or service providers to source their goods.
A part of this is global logistics. This is the process of moving goods from one country to another.
What are the Advantages of Global Logistics?
Adding global logistics to your supply and fulfilment chain is no easy task! It takes a lot of research, planning and communication to be a success for your business.
So, what are the advantages of global logistics that make it worthwhile?
It goes without saying that some of the world’s biggest eCommerce businesses have been relying on global logistics and supply chains for many years. This is because, despite additional transportation costs, they can still manufacture goods for less abroad.
The result is an extremely competitive landscape, with those who have the cheapest supplies available in the largest volumes dominating the markets. With low costs and high revenue, they often sweeten the deal for customers by offering extras such as free delivery and expedited shipping options.
This sometimes leaves the small to medium sized eCommerce stores struggling to keep up. If your competitors are sourcing products from overseas at a cheaper cost than you, there is only so much you can do to win over price-focussed customers.
So, if you can benefit from mastering global logistics, it could be your key to staying competitive.
Wider product ranges
However, if you are finding that your domestic market is actually getting swamped by similar products, it might not be worth getting drawn into a war of competitive pricing. Rather, a global supply chain can help you bring more innovative products to the market.
There are plenty of niches that eCommerce stores can explore. If you fulfil beauty and cosmetics orders, it could be that you make the most of the popularity of Asian skincare products that are unique to the UK market.
Or, if you sell craft beers for example, you could look at importing lesser-heard of brews to your market.
See our guide on what to consider when importing goods to the UK for more about this.
Fulfil larger scale orders
Another advantage of global logistics is that it opens up the ability to fulfil a larger volume of orders.
This could be the case for your eCommerce business if you often struggle to fulfil orders due to stock issues. If supply seems to be scarce in your own country, it’s worth seeing if you can source more abroad. There’s a chance it could cost more, but if demand is high enough, it might still be worth your while.
Reach new marketplaces
Global logistics isn’t just about your supply chain, either. Selling your products internationally can be a clear benefit to going global, allowing you to tap into a whole new audience.
Of course, you need to do plenty of research first, as this could be a costly experiment if it goes wrong. There are also a few different strategies you could adopt – whether you ship orders out internationally from your own warehouse, or invest in an overseas warehouse in your new market.
And What are the Disadvantages of a Global Supply Chain?
When executed well, a global supply chain can lower production costs and give you a real competitive advantage.
But, as with most things, there can be downsides too. Consider some of the disadvantages global logistics could pose to your business…
Time and resources
Global logistics take time to manage properly. Take your eye off the ball, and costs could begin to spiral and communication can break down – ultimately leading to a failure to fulfil your orders.
If you don’t have someone to take ownership of your global supply chain, consider working with a third party logistics provider who can give you the support you need. Whether you need help with international freight forwarding or finding the best value couriers to fulfil overseas orders, choose one that suits your needs best.
We have a guide on how to choose the right order fulfilment partner with some helpful advice.
Impact of global events
One of the biggest disadvantages of a global supply chain is the impact global events can have on your fulfilment process.
Never has this been more evident than during the Covid-19 pandemic. Where a factory closed in one country, eCommerce businesses across the globe felt the impact as their supply chain dried up almost overnight.
You can always evaluate the risk factors present in every country in your supply chain, but unexpected events can still occur, such as sudden natural disasters or economic crashes.
For this reason, it has been predicted that businesses will be looking to diversify their global supply chain into multiple countries to help protect their eCommerce business from these kinds of issues.
Technology has made communication easier than ever before. Emails and video calls are now standard, reducing the problems that were once caused by different time zones and languages.
But, even in today’s age, communication can still be a major problem when it comes to global logistics. One missed email or a misunderstanding on a call and serious problems or delays can happen. It can be difficult to nurture working relationships in this way.
In addition, the distance between yourself and your manufacturer or supplier might make you feel slightly out of the loop when it comes to the details and quality control. A visit to the factory becomes costlier and more time consuming with a global supply chain. Plus, if any goods arrive faulty, you will have a longer wait on your hands to receive any replacements.
Finally, it is worth considering the effect your global supply chain might have on your reputation. While some customers value getting their orders fast and cheap, others want to know they are ethically or sustainably sourced with a low carbon footprint.
You will also need to ensure the manufacturers in your global supply chain meet your standards – both in the quality they offer and how they offer it. Be confident that the working conditions and wages they pay are fair and don’t break any laws.
Make sure you have a good understanding of your customer base and what it is they value about your business before making any decisions that could damage your reputation with them.
How Do You Go About Establishing Your Own Global Logistics?
As we’ve already mentioned, a lot goes into successful global supply chain management.
So, if you are new to international markets, it can be a good idea to employ the help of a 3PL provider.
As they have a wide network of carriers to help your supply chain move smoothly. Along with being able to negotiate lower shipping costs, they also often have the expertise to ensure your goods are packaged, transported and stored in the most suitable and efficient way.
P.S – Are you thinking about adding global logistics to your supply chain? Have a chat with 3PL to see how our freight forwarding services and eCommerce fulfilment solutions can help.
More eCommerce fulfilment advice from the 3PL blog…