Logistics can improve or kill your e-commerce KPIs. In cross-border e-commerce this is the case ten times over! In this article you will learn which e-commerce KPIs are influenced by logistics, and learn how you can improve them.
There's an old saying:
"If you can't measure it, you can't improve it."
In this article we refer to cross border e-commerce KPIs. However, the metrics do not differ from national e-commerce.
We want to explain in detail how and why your e-commerce logistics setup influences your KPIs. We’ll also clarify whether the influence is direct or indirect and whether it is significant.
In order to make the whole thing more tangible, we want to make the background clear using a concrete example of cross-border e-commerce. Let’s assume a cross-border sale from Germany to Switzerland.
Your service as a cross-border e-commerce merchant, i.e. the distribution of a product across a border, consists largely of logistics. In the largest expansion stage, the logistics value chain looks as follows.
The example refers to a sale of goods from Germany to Switzerland:
These 14 logistical elements (we have simplified the customs clearance processes here) in turn have a decisive influence:
In this table you can see on which factors the 14 elements mentioned above have an influence:
Note that we’re not going to go into the details of the value chain described above in this blog post.
To help you develop a deeper understanding of this, we recommend the following article: Factors you should consider in the cross-border e-commerce chain and how to optimise it.
Want to take a shortcut? Our optimiser creates an individual analysis for you and shows you what your optimal e-commerce logistics setup will look like.
An improvement or deterioration of these factors has a positive or negative impact on your e-commerce KPIs. We will explain how these are achieved in the following chapters.
Influence of logistics: Direct
Relevance of logistics: High
Source:https://www.smartinsights.com/E-Commerce/E-Commerce-analytics/E-Commerce-conversion-rates/
The conversion rate is the percentage of users who perform a desired action. For e-commerce, the most important conversion rate is the percentage of website visitors who buy something on the website.
The average conversion rate varies by industry, country, traffic source, season, device, economy, etc. Furthermore, different studies come to different results.
According to Growcode, an international agency specialising in conversion optimisation, the global average e-commerce conversion rate, across all sectors, is 2.27%. This figure is an average of 15 studies and so a fairly good benchmark.
Swiss people buy much more per capita abroad than German shoppers, for example, because of the lower prices and greater availability.
Concerned about the possibility of a negative customer experience, Swiss consumers are typically much more informed about the e-commerce logistics process before purchasing.
If information or gaps in information (e.g. under "Terms of Delivery" or in the General Terms and Conditions) indicate that one of the following four scenarios could occur, the probability of conversion decreases rapidly:
Here you can see an excerpt of a large scale study which underlines the importance of avoiding the above experience.
Source: European Commission; 2019; Development of Cross-border E-commerce through Parcel Delivery Study for the European Commission, Directorate-General for Internal Market, InDustry, Entrepreneurship and SMEs
Use your investment in a customer-friendly logistics setup to increase your conversion rate.
Various touchpoints can be used to proactively point out that your customers can expect a logistics experience that is much better than if they ordered from a neighbouring location 😉.
Here is an example:
We recommend you read the following blog. Here you will find practical examples of how you can market your seamless logistics setup.
Imagine that something negative happens when you as a shopper exceed a certain shopping limit. This is exactly what many retailers impose on their customers without knowing it. We are not talking about the marital dispute because the Christmas money was squandered...
If you know about such consequences as a shopper, you will want to avoid them. So what are the limits that lead to such consequences? That's right, limits.
In Switzerland you have an exemption limit of 200.00 CHF for articles with a VAT rate of 2.5% and an exemption limit of 65.00 CHF for articles with a VAT rate of 7.7%.
Influence of logistics: Direct
Relevance of logistics: High
Unfortunately, sometimes something goes wrong or information is misunderstood. What does the customer do then? It’s likely they’re going to want more information, or complain to your customer service team😟.
Regardless of whether the complaint is received by email, chat or telephone, it incurs costs.
This is particularly the case in cross-border e-commerce. Why? Quite simply - the inconvenience it causes!
Shipments detained by customs, slow delivery times or unexpected charges at the door are a real nuisance to your valued customers.
The result - he picks up the phone.
These high costs don’t need to be incurred by the customer.
If you set up your logistics in such a way that your goods arrive quickly, reliably and without customs, VAT and postal customs clearance fees, as if they were being shipped from a neighbouring town, your Swiss customers will be jumping for joy. As a result, your customer service costs are massively reduced.
Instead of complaints, customers will be calling you wondering why they don’t have to pay at the front door anymore. Furthermore, your repurchase rate is also likely to increase 😉.
Influence of logistics: Direct
Relevance of logistics: High
In online advertising, click-through rate (CTR) is the percentage of people who visit a web page and click on a particular ad on the page. The click rate measures how successful an ad has been in attracting the interest of users.
Would you like to read about the conversion rate again?
You should communicate your quality e-commerce logistics process at different stages of the buyer’s journey, helping to overcome the fear of the consumer. Make it as clear as possible. Instead of explaining the specific logistics process on your website, simply explain they have nothing to worry about! For example: "customs duties and value added tax are already included".
You can display this message at the beginning of the customer journey, which may look like this for a Google Ad:
Influence of logistics: Direct
Relevance of logistics: High
Various studies have investigated the different types and effects of the recommendation rate. In some cases they also come to significantly different results.
However, they have one thing in common: they conclude that recommendations have by far the greatest influence on purchasing behaviour:
The conversion rate for potential new customers is based on an expected experience. Based on the information available to him, the webshop visitor anticipates his customer journey. If his expectation is positive, he buys, if it is vague or negative, he does not.
It's different with the recommendation rate. This KPI is not based on an anticipated customer journey, but on an actual one.
So, if you want to maximise your referral rate, you should make the customer journey simple and smooth for every customer.
Points 1-8 in the chapter:”Logistics and E-Commerce: Background” are crucial for you to create the basis for maximising the number of customers recommending your shop to others.
Influence of logistics: Direct
Relevance of logistics: High
The repurchase rate measures the percentage of your customers who return for another purchase.
In most studies, the average return rate for e-commerce companies is between 20 and 40%. Alex Schultz, VP of Growth at Facebook, says, "When you get 20 to 30% of your customers, they're doing well."
According to Shopify, the repurchase rate of first-time customers is 27%.
Here's the good news: according to Shopify, the probability that a customer will buy again increases to 45% when they return for the second time. The fourth time a customer returns, the probability increases to as much as 56%!
Source: 12 Powerful Strategies to Increase Your Repeat Purchase Rate, by IVAN L, 2022
Just like the recommendation rate, repurchase rate is influenced by a real customer journey. As the name implies, the customer has already purchased a product from your shop, so their decision to buy again is influenced by that original experience.
Therefore, your product should meet or even exceed the expected quality, and you should perform or even overperform their expectations in terms of logistics.
Influence of logistics: Indirect
Relevance of logistics: Less high
The logistic setup only has an indirect influence on your website traffic, but why?
Shoppers who are enthusiastic about your product and service will recommend you. This recommendation can be generated by a simple link. Even better, from the perspective of the cross-border e-commerce merchant, is a positive testimonial on other platforms (including a link to his webshop), which in turn generates traffic.
You saw earlier how long the logistics e-commerce value chain is. If it works perfectly, but the product is defective, the customer journey will not be the best.
If your product is great, but it arrived late or your Swiss customer had to pay expensive customs fees at the front door, there will be recommendation.
Therefore, both your product and your logistics process must meet the expectations of the customer. This is how recommendations you generate more online recommendations and, as a result, more web traffic.
Interested in finding out more? Contact us.
Cross border e-commerce is complex, and this is especially true for destinations relevant for customs clearance, such as Switzerland.
While this may sound strange, these challenges are good news for retailers (who can overcome them😉)!
The expectations of customers in national e-commerce are extremely high. Extremely simple payment options, ever shorter delivery times, ever smaller delivery time windows and, preferably, sustainable delivery options.
In cross-border e-commerce, the demands are not quite as high. In addition, many merchants in cross-border e-commerce are not yet ready due to the complexity. This means you can stand out with an above-average service.
If you manage to set up great logistics, you must not forget to market your efforts profitably.
Based on good customer experiences and efficient marketing you will be able to improve your KPIs sustainably!
Experienced traders can confirm that high-performance logistics leads to positive effects. Here’s a little motivation:
„The only questions that come up in our service center come from customers who cannot believe that all fees are actually paid when they pay for the order.“ - Joana from iHerb
„After the changeover, customers even wrote to us to tell us that the new delivery service would be great" - Alexander from MaKe WeBo AB