As the pandemic continues to wreak havoc across global economies, U.S. retailers with a global footprint have felt the pinch, with demand for products continuing to fluctuate. Logistics services have also been affected, with freight forwarders like the U.S. Postal Service (USPS) stopping delivery services across more than 100 international markets.
Thousands of businesses that depended on USPS for its international deliveries were left stranded, as they rushed to find alternatives for pushing shipments into their desired markets. In this context of trying to make sense of the logistics chaos, two conflicting perspectives have cropped up.
One faction believes that it is time for American businesses to concentrate on domestic demand, rather than arranging alternate freight-forwarding options to international markets. The other faction points out that the current situation is suitable to expand a company’s global presence, as most of the businesses are on the backfoot.
FreightWaves spoke with Jeffery Eckhaus, the head of business development at FlavorCloud, an e-commerce logistics startup, about how companies can leverage a bad economic situation to scale up their business overseas.
Eckhaus pointed out that customers had issues with USPS service levels before the outbreak but continued to work with them as their logistics costs were relatively low. However, several USPS customers started seeking alternatives as USPS cost them a lot of money and time in answering customer service calls, said Eckhaus.
One of the issues with retail businesses in the U.S. is that some of them do not realize their site has international traffic. “There are different levels of sophistication in online merchants. Some are tracking all their site visits by country and IP address and setting up retargeting campaigns. And some don’t even realize they have international customers,” said Eckhaus.
For such businesses, targeting international markets would be about realizing where their products get shipped before looking out for alternative logistics forwarders. Eckhaus mentioned that a technology solution like FlavorCloud can help by automating the customs documentation process. In addition, users get their rates upfront at checkout, which is guaranteed by FlavorCloud.
With unemployment levels hitting a peak and still registering millions every week for jobless benefits, the U.S. market is expected to see a dip in retail spending. A decrease in demand might be financially stifling for businesses that have heavily banked on the domestic market. Venturing into foreign markets would not just expand their footprint, but also help connect with consumers in markets that have controlled the pandemic and are on the path to economic recovery.
Eckhaus contended that retail businesses made a mistake during the 2008 crisis by not looking to sell across international markets. With a steady decline in sales, retailers across the country were forced to offer heavy discounts, averaging 30%-50% in certain stores. While this strategy could help move goods off the shelves, it did nothing to improve the bottom line.
“Going international is especially critical for merchants operating physical retail stores, as foot traffic has drastically gone down and may never fully recover. Now is the time to push more resources into their online presence and look for additional markets to sell,” said Eckhaus. “The good news is that selling online is not resource-intensive, and companies can set up an online shop and sell internationally, all within a day.”