One Click and a Global Trip: Reverse Logistics in Cross-Border Ecommerce

Cross-border e-commerce makes up 20% of online shopping and is growing at double the rate of domestic buying with Brazil, Australia, and Canada leading the charge for out-of-country purchases. Having a global reach can present substantial opportunity for online retailers, but as Peter Parker’s uncle said, “With great power comes great responsibility,” and with great opportunity comes the challenge of cross-border returns and exchanges. Let’s take a look at three common challenges related to international reverse logistics and how online businesses can best navigate the pitfalls:

Challenge #1: High Return Rates

Items purchased online are returned 3x as much as products bought in store; shoes and clothing are sent back at a return rate of up to 40%. Here in the United States, reverse logistics cost retailers a whopping $381 million in 2017, and some experts are expecting this total to reach $550 billion over the next three years. That’s a staggering increase, but not entirely surprising given the rise in e-commerce and its high return rates, and the fact that 41% of online shoppers “bracket” their purchases—meaning, they buy multiple sizes and colors of a single item, knowing they’ll keep only the one that fits best.

Challenge #2: Logistical Unknowns & Variables

Managing domestic reverse logistics is a pain point for any retailer, but the issues are only amplified when you begin to handle cross-border e-commerce and returns, since guidelines for returns can vary by region or country. In the European Union, for example, consumers have up to 14 days to send back or exchange purchased goods before incurring charges. In China, online shoppers have only seven days to decide whether or not to keep their items.

Challenge #3: Cross-Border Shipping Costs, Taxes & Fees

Yes, the price of international shipping is significantly higher than domestic but, more than that, online retailers also need to consider the additional costs of labor and restocking fees that go into putting items back on the shelf. Additionally, processing cross-border returns is more expensive than the original outbound shipping cost because, upon re-entering the U.S., the goods are now considered an import and subject to applicable taxes and duties.

Solution: A Healthy Secondary Marketplace

The majority of online shoppers—nearly 96%—say they’d shop with an e-commerce retailer again if the returns process is quick and easy, and more than two-thirds of consumers are discouraged from buying from a company if they have to pay for return shipping. So, free and no-questions-asked returns really are good for business. However, even after returned items make it back to the retailer, only half are resold at full price. Many products can’t even go back on primary shelves, which amounts to considerable revenue loss over time.

Given the costs and headaches associated with cross-border returns, retailers must have a secondary marketplace where they can offload excess inventory. B-Stock provides such a solution with our online auction platform, where companies can sell bulk returned, excess, or liquidation inventory directly to a base of vetted business buyers.

Our flexible and scalable marketplace accommodates high volumes of merchandise across all categories and conditions and can be up and running within 30 days—no IT investment required. By making their “B” stock available to the secondary marketplace, retailers help offset maximum loss from cross-border returns and move inventory off the shelf, making space for new and more profitable products. Learn how you can leverage our B2B marketplace for your inventory by requesting a demo!