Cross-border logistics, the management of moving goods across international borders, is essential for global business expansion. This complex process involves customs clearance, transportation management, and compliance with international regulations– and it impacts the efficiency and speed of product delivery to international markets. Cross-border e-commerce is growing by about 25% annually (World Economic Forum).
As the Vice President of Sales at Veho, I've seen how global trade shifts are reshaping logistics, bringing both challenges and opportunities for brands. From my perspective, US-based shippers must keep a close pulse on this evolving landscape to stay competitive in the global market.
The rise of technology-driven retailers
Brands, take note: the retail landscape is changing. International companies are entering the US market with a distinct approach: they treat retail as a tech-driven arena, implementing advanced logistics solutions that transform how products are delivered across borders. These innovations are establishing new norms for speed and efficiency in global logistics (Harvard Business Review).
Tech-centric retailers like SHEIN and Temu are changing the game by relying on information technology to match consumer demand with dispersed production from a collection of factories in China. This model is a big shift in retail strategy, where companies see themselves as technology players first, leveraging direct-to-consumer shipping strategies that bypass conventional distribution channels. Both platforms have revolutionized the fashion industry by providing trendy, low-priced merchandise directly to consumers.
SHEIN, for instance, uses its platform to connect Chinese factories to global markets, leveraging deep digital marketing tactics to promote fast-fashion merchandise. The company monitors fashion trends and rapidly responds to consumer demand through its large-scale automated test and reorder (LATR) model, which adds thousands of new items daily. A business trade publication estimates that between July and December 2021, SHEIN added 2,000 to 10,000 items per day to its app. Sheng Lu, an associate professor of fashion and apparel studies at the University of Delaware, estimates that LATR generated 20 times as many new items as H&M or Zara in 2021.
Temu follows a similar approach, using the software of its parent company, PDD Holdings, to match China's manufacturing capacity to consumer demand in the US and beyond.
Market dynamics and consumer expectations
These big players, plus current consumer trends, suggest that businesses will need to quickly adapt to evolving expectations. Insights from PwC’s 2023 Biannual Global Consumer Insights Pulse Survey reveal key aspects of consumer behavior:
- Cost-conscious behaviors: With 50% of consumers expressing significant concerns about their personal financial situations, a notable 96% plan to adopt cost-saving behaviors in the upcoming months, indicating heightened price sensitivity.
- High expectations for delivery: With the rise of online shopping, consumers expect fast, reliable, and flexible delivery services.
The importance of delivery quality for US-based shippers
Since consumers are more cost-conscious, every experience matters. One way US-based companies can differentiate is by focusing on delivery quality and speed.
According to a report by Veho and Incisiv, consumer delivery expectations are higher than ever.
- 90% of consumers expect two-to-three day delivery as standard.
- 30% of consumers expect same-day service.
These expectations place a spotlight on optimizing last-mile delivery—a key area where retailers can stand out. Optimizing these operations are shown to drive key business metrics, including:
- An 8.9% increase in cart-to-purchase conversion rates.
- A 10.6% rise in average order values.
- A boost in Net Promoter Score (NPS) by 15.3%, which converts satisfied customers into loyal advocates.
- Cost savings, with 92% of retailers reporting significant operational cost savings from optimized delivery processes.
For US-based brands, strategies should involve investing in technology and processes that streamline the last mile (for example, AI-driven route optimization or direct consumer communication), ensuring that every customer interaction adds value and builds loyalty.
What shippers should know and do to keep up with evolving cross-border logistics
Shippers need to adapt their strategies to stay ahead in the evolving cross-border logistics landscape. Here are some areas to focus on:
- Embrace innovation: Invest in advanced logistics technologies such as automated sorting systems, real-time tracking, AI, and machine learning. These adaptable systems streamline operations, improve accuracy, and reduce costs. Automation increases the capacity and efficiency of logistics operations.
- Optimize last-mile delivery: Focus on improving last-mile delivery, which is crucial for customer satisfaction. Develop flexible delivery options, such as same-day and two-day delivery, to meet consumer expectations. Utilize a robust driver network to scale operations up or down based on demand.
- Expand and diversify carrier networks: Diversify your carrier options to include regional players that offer flexibility and better rates for specific routes. This reduces the risk of over-reliance on a single carrier and provides more options to ensure timely delivery.
- Focus on customer experience: Ensure that the customer is at the center of your logistics strategy. Offer multiple delivery options, transparent pricing, and hassle-free returns. Excellent customer service in logistics drives repeat business and increases customer loyalty.
Conclusion
Cross-border logistics is a dynamic and challenging field. Success for shippers depends on the ability to innovate, adapt, and deliver exceptional service– even amidst the changing landscape.
