Optimised logistics: For e-commerce retailers and shoppers

How you can optimize your e-commerce logistics process

Many retailers see logistics as a necessary evil, especially in cross-border e-commerce; anyone who wants to profit from the attractive Swiss market will be confronted with the customs border.

When exporting to Switzerland, it is absolutely essential to invest in reliable e-commerce logistics, and it would be a mistake to think you can save money in this area.

In this blog, we will tell you why Switzerland is a very interesting e-commerce market.

When consumers purchase products from your online store they expect convenience, and Swiss customers are no different. An optimal e-commerce logistics set-up provides clear added value for your Swiss shoppers and saves a lot of money—for you and your customers.

In cross border e-commerce a shipment consists of several steps.

We use a sending journey as an example to show you in a practical and comprehensible way. Each part of the journey is a separate, clear chapter.

If you are only interested in individual sections of the journey, simply click on the relevant place in the table of contents on the left.

We will now show you what is important for logistics in cross-border e-commerce.

We have divided the whole thing up in such a way that you can use this logistics value chain to look for appropriate suppliers. Because each component is a single cost component in your cross-border e-commerce logistics.

Did you know that sustainable e-commerce also works? Read more about it in our blog.

On our shipment journey, we explain the most important things to you briefly so as not to try your patience - and your time - unnecessarily.

When we go into logistical details in the individual sections, we have linked them to our specialist blog articles. This way you have the opportunity to read everything that interests you in depth.

Ready to go? Then let's pack our bags and get going!

You don't like to read? We have summarised everything you need to know about exporting to Switzerland. Everything about the opportunities, logistics, customs regulations or returns handling when exporting to Switzerland in one paper. 

Fulfilment - the start of every shipment's journey

Fulfilment is our introductory chapter. Before we start texting you with prose about this topic, we will focus on showing you how the geographical location of the chosen fulfilment service provider influences the rest of the logistics chain.

Let's do a quick comparison between national e-commerce and cross-border e-commerce:

In national e-commerce, the choice of your fulfillment location has a much smaller impact on the supply chain than in cross-border e-commerce. Why?

The right location for your cross-border e-commerce fulfillment center

Let’s assume that you only want to sell your products within Germany.

There are hundreds of fulfilment centres in Germany. In addition, there are hundreds of logistics centres from different providers for last mile delivery.

This means that no matter which logistics centre you choose, the goods can be delivered to a logistics centre of your delivery company on the same day.

Of course, when optimising e-commerce logistics it is preferable to choose a fulfillment centre that is as close as possible to the logistics centre. Time is money, and you will quickly save half an hour or more in cut-off time for next day delivery.

With cross-border e-commerce, say e-commerce in Switzerland, things look a little different. Let’s continue to assume that your fulfillment centre is located somewhere in Germany directly next to a selected provider for the last mile.

Now there are four additional factors that lead to a longer delivery time or to an earlier cut-off time if the products are to be delivered to another country.

Before we come to these points, we would like to briefly explain two technical terms:

• Cut-off time: time by which webshop orders can be received, so that the products can be handed over to the deliverer in time for the fastest delivery date.
• Latest arrival time (LAT): time by which the shipments must be delivered to the delivery agent so that they can still be processed for next-day delivery. For many national deliverers, the LAT is 6 p.m. so that priority shipments can be delivered nationwide the next day.

4 factors that influence a longer delivery time:

• Distance: it plays the biggest role, even though most logistics networks in a country like Germany are very efficient. But if a parcel that is handed over to the shipping service provider in Munich is in Hamburg the next day, this does not mean the parcel can also be delivered to Switzerland by the same delivery service provider. The effect of distance on delivery time is usually underestimated. A distance of 200 kilometres requires almost three hours more transport time.
  
  
• Network transfer: it may well be that your provider does not have its own network in the destination country for the last mile, and therefore transfers your orders to a service partner. The worldwide postal system, for example, is structured like this. No postal service in the world has its own delivery infrastructure in another country, but all the postal companies in the world work together, and the parcels are delivered by the respective domestic postal service. The transfer to another network takes time, which means the delivery takes longer or the cut-off time is earlier.
  
  
• Customs clearance: this is the highest hurdle in international e-commerce in general and for e-commerce logistics and bears the greatest risk that your customers will have to wait a long time for their ordered goods. The further away you are from the customs of the destination country, the less you have control over the respective import processes. For example, the waiting time at customs in Germany can be several hours and vary greatly depending on the workload. When goods are imported but at smaller border crossings, there are typically much shorter waiting times.
  
  
• Legal restrictions: they quickly thwart e-commerce merchants when it comes to delivery time. For example, if you want to export goods from Germany, the goods will be blocked for 24 hours after the customs declaration. This law alone is responsible for extending the delivery time from Germany by a whole day! You can find the corresponding law in the glossary of s-ge (only available in German, French and Italian).

Joana from iHerb tells you why it is important to adhere to the quality of the delivery and ordering modalities.

So what do these four points mean in concrete terms? All these factors have a direct influence on the delivery time and, as a result, if you have a standard fulfilment setup from Germany to Switzerland, your customers’ orders cannot be fulfilled in less than 48 hours.

The catch-up - Here you can optimize your logistics costs

In order for you to understand this subject, we will briefly show you the three most important points of a preliminary consultation:

• Fulfillment: this is where your goods are stored. From here they head for their destination.
  
  
• Cross-docking point: this is where your export shipments are reloaded if necessary, for example a shipping company. Goods are picked up from a vehicle at the customer's premises and then transferred to a larger vehicle. This then transports larger volumes (consolidated shipments from several customers together) to their destination, for example to the airport. There they are finally transferred to a plane.
  
  
• Destination: here your goods are fed into the logistics network of your delivery service provider.

Of course, there are also important points here that have a significant influence on the costs of the preliminary collection:

• Distance: the geographical distance between fulfillment and destination country is a decisive factor. The greater the distance that the logistics provider has to cover, the more personnel, energy and wear and tear on the means of transport cost. As a result, the cost per parcel (for the same volume) increases. The choice of fulfillment in cross-border e-commerce should therefore not be underestimated.
  
  
• Volume: your unit transport costs are highly dependent on the volume you send (a note: volume here refers to the number of e-commerce shipments). The fixed costs per transport (driver, vehicle depreciation or simply energy costs and wear and tear) are the same whether you want to send one euro-pallet or six. This is why unit transport costs increase massively with lower volumes. Conversely, the cost per shipment decreases as the volume increases.
  
  
• Payload vs. direct transport: if you transport your goods by individual transport, a means of transport is used exclusively for your e-commerce shipments. In summary, direct transport has these advantages and disadvantages:

Direct transport is a fast means of transport because neither detours nor reloading processes have to be taken into account.

If the volume is so large that the means of transport can be fully utilised, direct transport is the most cost-effective option for your e-commerce logistics.

If the volume is rather small, the direct transport per shipment will be expensive, because the complete costs for one trip have to be allocated to fewer shipments.

In the case of a payload, various customers share the transport capacity for the pre-carriage to Switzerland. Therefore, the unit cost per transported consignment decreases. There are two variants for the payload:

1. The consolidated transport passes by your fulfillment (point A), collects your shipments and brings them to point C.

2. You transport your shipments with a smaller vehicle or by courier to another location (point B). From there, the goods are taken by a forwarding agent to point C.

The right choice of delivery for your online business

Depending on the geographical distance and desired delivery time, you can choose between air transport or land transport. The transport by air is significantly more expensive than a land transport. For export to Switzerland from Germany or Austria, land transport is of course the best option.

Delivery service: with most last mile delivery companies you can choose between priority services and economy services:

• Priority service: once your goods have arrived in the destination country, they will be delivered the next day.
• Economy service: your customers usually have to wait one day longer for delivery.

The procedure is interesting! Here you have two options at your disposal:

Option 1: a postal/courier pre-collection. This means that you feed your goods in your country of origin directly into the system of the delivery service provider. He takes care of the customs clearance for you. Advantage:

• No major additional effort. Interesting especially for smaller e-commerce merchants who do not yet import large volumes into Switzerland. They can use it to keep the initial outlay (IT, for example) low.

Option 2: a commercial pre-collection. This means that you first transport your goods to the destination
country by truck or plane. You or your forwarding agent takes care of the export customs clearance and
the import customs clearance into Switzerland. The advantages of this e-commerce logistics option are:

• For larger volumes, the unit costs are much lower than for option 1.
• Faster transport.
• Swiss shoppers benefit from better service through commercial customs clearance as they do not have to pay customs duties, value added tax and customs clearance fees at the front door. This factor has a major impact on your KPIs (specifically the conversion rate, referral rate and repeat purchase rate).

Discover our white paper for practical tips and tricks for environmentally conscious shipping. We show you the impact of your packaging on sustainability and how you can implement sustainable logistics with our measures. Be part of the sustainability movement and get our whitepaper for a greener future now!

Import customs clearance - crucial for logistics in e-commerce

This is probably the most important point of the mailing journey. From a customer experience point of view and therefore also for your KPIs! Most foreign suppliers are not aware of this down to the last detail.

In another article you can read how MaKeWeBo was able to cushion the import restrictions with the right customs clearance solution.

Especially European traders who primarily sell within the EU. Because there are no customs barriers here. You want to know everything about the customs regulations in Switzerland? Then you've come to the right place with our article, Switzerland's e-commerce customs regulations.

Take a quick look at this IPC study. It shows that most Swiss customers had to pay these costs, be it during dispatch, receipt or even afterwards. Both of these two scenarios are commonplace:

• The Swiss customer receives an SMS with the payment request and a link. Through this he pays customs duties, value added tax and customs clearance fees. See below:
• 
• The Swiss customer pays customs duties, value-added tax and customs clearance fees at the front door upon receipt of the shipment. This procedure is called Cash on Delivery (COD).

Neither method will lead to a happy customer.

They have a direct impact on your referral rate and customer satisfaction.

Unfortunately, these are still regular occurrences for Swiss customers. It’s therefore unsurprising the Swiss consumers frequently complain that they have had bad experiences when shopping internationally.

We’re now going to take a look at two customs clearance options: the postal customs clearance and the commercial customs clearance.

Postal customs clearance in online trade

The name says it all: In postal customs clearance, your e-commerce shipment is cleared by Swiss Post. This option comes into play if you also collect the items by post, i.e. if you post the items at the German or Austrian Post Office.

Here’s a summary of the process:

• You have to put a CN22 on your broadcasts. All information relevant for customs clearance is stored here.
• All consignments of goods are sent by the Swiss Post
• For shipments with an import turnover tax or customs value of more than 5 CHF, the Swiss recipient will be charged a customs fee of 11.50 CHF plus 3% of the value of the goods.
• Your Swiss customer has to pay the customs duty at the front door upon receipt of the shipment.
• If the recipient is not at home, the shipment will not be delivered, and he gets a notification for pick-up.

Postal customs clearance is the worst option for sending parcels to Switzerland because it leads to a negative customer experience.

Everything about VAT and its regulations as well as different solutions for delivery processing can be found in our article about fiscal representation.

The premium variant in cross-border e-commerce - commercial payment

With this option, your goods are imported into Switzerland by a customs clearance service provider, usually a forwarding agent. This is always associated with commercial reclaiming.

Commercial customs clearance is very customer-friendly, and as an e-commerce retailer you can offer your Swiss customers a unique premium cross-border e-commerce experience.

Commercial customs clearance allows you to bypass the customer-unfriendly customs clearance and delivery processes of postal customs clearance.

As a retailer, you handle customs duties and import VAT, and your customers don't have to struggle with an annoying payment of the fees at the door. You can have your customers pay these costs in advance at check-out, and the matter is settled.

Commercial customs clearance is divided into two variants:

• Individual customs clearance: here each individual shipment is cleared separately. The customs clearance costs per shipment are relatively high compared to collective customs clearance for larger volumes. However, separate customs clearance means that duty-free limits can be used where necessary to minimise customs duties for the customer.
• Collective customs clearance: here all shipments of a delivery are collectively cleared through customs. This variant is cheaper in comparison with individual customs clearance per shipment. However, no customs savings can be made with this type of customs clearance.

Customs clearance is one of the key elements for ensuring successful exports to Switzerland. Take a look at this blog post for more information on the subject:

• Blog DDP vs DAP
• The e-commerce customs regulations of Switzerland

Delivery on the last mile - tips that pay off

It is worth taking a closer look at this step. That's why we're dedicating various subchapters to it. Aha effects are guaranteed!

Save costs: with a clever format and the right channel

This part of e-commerce logistics can quickly become expensive, but it’s also easy to save money here. The share of logistics unit costs in the e-commerce industry is said to be over 50%, but the effective costs vary considerably depending on the variant.

Format: The heavier and/or bulkier your shipments are, the more expensive the delivery.

Through which shipping channels can you send the order?

• Letter Channel: this one is the cheapest. Did you know, for example, that you can send about 80% of international mail through the letter channel? This includes international shipments up to 2kg in weight and of dimensions (length, width, height) up to 90cm. As an example, this means you could easily send two pairs of trainers.
• Packet channel: you can send goods weighing up to 30kg, with the maximum dimensions of 100x60x60 cm.
• Courier channel: with the courier channel you can send shipments of the same weight and size as in the packet channel, but you also benefit from superior service and faster delivery.

Provider: compare the prices and conditions of the different providers to cut costs of e-commerce logistics.

Delivery speed: a faster delivery usually costs more. A distinction is usually made between Priority and Economy Service.

Additional services: insurance and Saturday delivery are examples of additional services for high value shipments.

With a clever set-up, the retailer sends all mail channel-compatible items (as already mentioned, everything weighing up to 2 kg and fitting into a box with the maximum dimensions height+width+length <= 90 cm) in the much cheaper mail channel.

Only what is larger and heavier is sent by parcel channel. Especially traders who have a large share of small shipments benefit from the mail channel.

Example: Experience shows that 80 to 90% of all orders in the fashion sector fit into the mail channel. More information on Mailbox Plus. With Mailbox Plus you can save up to 60% on costs.

You would like to export to Switzerland, but the costs are a thorn in your side? In our white paper, we show you in 6 steps how you can save costs efficiently - simply and easily!

Delivery time: This is what distinguishes you from the competition

Here, too, first a study: very revealing what Swiss shoppers expect in terms of delivery speed and country.

Source: IPC Shopper Survey 2018 - Country Report Switzerland

In summary:

• If a Swiss consumer orders from a neighbouring country, a delivery time of 2 to 5 days is expected.
• If the order comes from a more distant country within the EU, 4 to 7 days are expected.
• Products purchased outside of continental Europe have an expected delivery time of 10 to 15 days.

So what happens if you exceed standards? Simple. You increase recommendations and the number of new customers. You can even promote your excellent e-commerce logistics in your marketing ads and on your website and tune up your conversion rate. Text suggestion: "We deliver Next Day!" ;)

Close Border Fulfillment can help you here. We help you to build up a set-up where you can deliver from the EU at favourable prices with a cut-off time of 2 p.m. the next day throughout Switzerland!

• Pro tip:
  Many companies already meet the expected delivery times. If you want to delight your customers who share their positive experiences with others, you have to offer more.

Offer e-commerce logistics tracking

If you’re selling products into the Swiss market, it’s essential for you to use a tracked logistics product. The figures speak for themselves: 94% of Swiss shoppers track their cross-border shipments either some of the time or all of the time.

Tracking activity can be divided into two areas depending on the section of the shipment:

1. Your Swiss customers want to know that the ordered goods are really on their way to them.
2. Swiss customers track shortly before the expected arrival of the parcel to inquire about the exact delivery date. By the way, it makes sense to announce the exact arrival of the delivery for shipments that are not DDP (i.e. including taxes and customs duties). Finally, the buyer must be at home to pay taxes, duties and fees.

Source: IPC Shopper Survey 2018 - Country Report Switzerland

Additional options for e-commerce logistics: important on the last mile

You can offer your customer different delivery locations:

Source: IPC Shopper Survey 2018 - Country Report Switzerland

The first delivery rate is generally very high, and the theft rate is exceptionally low. This is why Swiss customers prefer home delivery. The low demand for signature products is also exceptional.

Source: IPC Shopper Survey 2018 - Country Report Switzerland

As in most countries, Switzerland offers countless additional options and service levels:

Source: IPC Shopper Survey 2018 - Country Report Switzerland 

It is noticeable here that factors indirectly related to customs clearance are of great importance to Swiss customers. It is more important to them to know whether and to what extent customs duties and taxes are incurred than to want Sunday delivery.

Returns management in cross-border e-commerce

The First Mile is the starting point of the return journey of your shipment. In this case, "return trip" is a nicer word for return - and no retailer likes that.

In cross-border e-commerce, returns are even more unpopular than in domestic e-commerce, but still they are a part of e-commerce logistics. Clearly, the costs are much higher, and the administrative effort can quickly escalate if the wrong returns setup is in place.

In addition, if the return is poorly organised from a fiscal and administrative point of view, it may lead to the loss of customs duties paid on importation.

Find out how you can lower your returns rate in our blog post.

Below are the two options available for international returns.

The international return shipment - the customer-unfriendly solution

In the case of international returns, your Swiss customer posts the item with the selected service provider. This person makes sure that the shipments are sent directly back to your warehouse in the country of origin. Your Swiss customer will have to take care of:

• Re-packaging
• Stamping the return
• Customs declaration via CN22 labelling (see figure ). The following information has to be included on the CN22: Contents of goods, value of goods, weight.
• Organise pick-up or drop-off at a location of your service provider.

After the international return has been shipped, it must be stored again in the country of origin. As an alternative, you could not have the returned goods sent back to the country of origin, but instead send them directly to a specialized service provider who will recondition them.

Let's stick briefly to the fashion example: this service provider would then iron the clothes back on. This solution is particularly suitable for traders with large volumes. They usually prefer a national returns solution because the e-commerce logistics costs are much lower.

By the way, all information for fashion retailers who want to export to Switzerland can be found here.

The First Mile in Switzerland - part of a customer-friendly returns solution

What does "First Mile" actually mean?

The first mile is the route of your return from the place of collection (e.g. at your customer's home) or from the place of dispatch of the return (e.g. at the post office) to a national return address. This can be your warehouse or a returns centre of a service provider.

For your Swiss customer it doesn't matter whether he’s returning products from a Swiss online shop or an international one—both are equally convenient for him.

But in terms of costs and customer convenience, it makes a big difference for you.

Your Swiss customer will have to take care of:

• Re-packaging
• Stamping the return (approx. one third of an international return)
• Organise pick-up or drop-off at a drop-off point of your service provider

• Pro tip:
  Do not underestimate your customers! Swiss shoppers in particular, who shop abroad more often than other nationalities, are more critical with regard to the logistical set-up before checking out. They also examine much more closely how they can return the goods. They know that for them, the effort involved in sending it back is greater than with Local Heroes - and they stop shopping. The result is poor conversion rates.

Let's assume that the Swiss shopper does not inform himself about the return solution offered by the shop or he does not know the consequences.

He buys the goods, but wants to return them after receipt.

He is now forced to make a disproportionate effort. His Customer Journey is therefore likely to be quite bad - will this customer buy something in this shop again or recommend it? I don't think so.

We recommend this blog on the subject: Optimised processes for your returns.

Returns management - fast, flexible and local

Returns are as important to online trading as the ‘Amen’ is to a prayer. For example, depending on the category, a return rate of up to 60% can be expected in the fashion sector in Switzerland.

As we explained to you in step 5, there are two basic options:

• You have returns from Swiss shoppers sent directly back to Germany or Austria, so your returns management is in the country of origin.
• You allow returns from Swiss shoppers directly to a Swiss returns centre.

It is obvious that the second option is best from the customer's perspective, and it has an immediate impact on your KPIs!

You can find out more about KPIs and how they can be increased in our blog. If you want to know how logistics influence your online shop, then we recommend this blog.

Exclusively returns management in the country of origin? Not an optimal solution

This variant is actually no different from the returns management of a national e-commerce return:

• The returns are registered.
• Content Check (which articles have been returned, what condition are they in?).
• The goods are stored or destroyed.
• After 4 to 5 days the refund for the returned items will be initiated.

Advantage of this variant:

• There is only one returns centre.

Disadvantage:

• The logistics costs per return.
• It’s not very convenient for your Swiss customers (they have to fill out the customs form).
• Swiss customs duties cannot be claimed back.
• The repayment will only be triggered after 4 to 5 days.

Swiss returns center - The more optimal returns solution

We would like to present this variant to you in more detail. A brief overview of the advantages and disadvantages.

Advantages:

• The logistics costs per return are moderate because only national dispatch costs are incurred.
• It’s much more convenient for your Swiss customers as there is no need to fill out customs form CN22.
• The national return address, far from standard, is ideal for increasing your conversion rate.
• Swiss customs duties can be reclaimed.
• Repayment is triggered after only one day.

Disadvantage:

• Administration effort for two returns handling processes: once in the Swiss returns centre and a second time in the German or Austrian returns centre.

Check-in, content check and case management

Think of this process within your e-commerce logistics as an inventory of the returned goods. These questions must be answered:

• When were the goods checked in at the returns centre?
• Which of the items originally shipped were checked in?
• In what condition are these articles? Here, most traders specify criteria that are to be checked by the service provider, for example any damage to the shipment.
• What special details did the shopper provide? This is where most retailers pass on shoppers' message options. For example, whether he wants a particular item of clothing in a different size.

Individual clarifications are part of case management. For example, if an employee feels that there is a fraud case, he or she takes a photo and has the case investigated more closely by the merchant.

This is simply about information and, if possible, automated forwarding of daily reports to the trader, so you know the current state of affairs and can quickly transfer your money back to Swiss shoppers.

Consolidation lowers costs for return transport

For retailers with very large volumes, for example several hundred returns per day, it can make sense to return shipments daily from the Swiss returns centre in order to optimise e-commerce logistics. If there are fewer, it makes sense to consolidate the goods for cost reasons. Consolidation limits can be defined over a specific date (for example, return every two weeks) or over a quantity (for example, after eight euro pallets). Intelligent consolidation reduces return transport costs massively.

Return shipment

For very small quantities, it’s worthwhile returning them in an outer carton. In most cases, however, several euro pallets are returned.

Consolidation helps to achieve optimum utilisation of the transport vehicle.

A good and efficient solution for this is the forwarding agent who will also bring your shipments to Switzerland.

Export customs clearance

Export customs clearance ensures that your returns leave Switzerland in accordance with the law. For the export customs clearance and the issuing of the transit certificate (T2) you need a customs agent who will take over the handling for you at a charge.

Back customs clearance

Clearance back makes sense for traders who have paid correspondingly high import duties. This only applies to traders who have sent the goods to Switzerland by DDP, i.e. who have borne the customs duties themselves.

These duties may be repeated on exportation. In our fashion example: this amounts to between 2 CHF and 4.70 CHF per kilogram of their duty paid shipments (the gross weight is decisive, i.e. goods including packaging). This administrative process should also be handled by your service provider.

• Pro tip:
  The return journey of your shipments consists of different travel sections. Every single section requires professionals - you must be able to rely completely on your service provider.

The whole returns management process is extremely data-heavy (especially point 6.2.1) and your service provider must have modern and dynamic IT tools. This is the only way to ensure that the service provider can adapt the data collection and reporting to your needs. And therefore help to make international e-commerce logistics easier.

In general, data is very important in logistics. Learn how you can reduce your costs in e-commerce with structured data in our blog.

Swiss Post has developed the Dynamic Return Platform (DRP) for this purpose. This enables us to configure individual customer set-ups, collect all the desired data and communicate it in a simple format.

End of trip - or conclusion

No trip is like any other: It depends on your product portfolio, returns management, set-up and your individual requirements and needs.

Thus, the trip can become long and complex in different ways. In other words: a short city trip or an organisationally complex trip around the world in individual stages. Each individual travel segment has an impact on the customer experience. This is especially true for Destination Switzerland!

To keep the focus on the data at all times, it makes sense to work with a specialist in cross-border e-commerce for Switzerland. You want to ship to Switzerland, but you still lack the facts? Our Switzerland E-Commerce Report provides you with the information you need.

At Swiss Post we are the Swiss cross-border e-commerce professionals and our services and IT products are designed to meet these needs.

By becoming a careful travel planner you can fine tune and optimise your e-commerce KPIs.

The differences between possible set-ups in terms of costs and customer experience are huge!

Have a look at our Optimizer for exporting to Switzerland. There you will find a lot more interesting information and an individual set-up tailored to your needs.