Supply chain is already a complicated process to do – and international distribution will add more problems when traders do not possess the right knowledge on how to do it right.
Generally, shipping products across the world is an exciting prospect as it does not only generate more profits but also signify an actual trust between your business and international customers. The catch is, however, international distribution is not always plain sailing activity. There are numerous challenges compared to local distribution.
For example, when delivering your product locally, the products can be monitored easily and the regulation is not complicated, or at least you have been familiar with them. Meanwhile, shipping internationally should follow some complicated procedures that often involve arduous bureaucracy and taxes. Moreover, not only procedures, there are a lot more issues to acknowledge if you are an international trader. Here are five common problems you should pay attention to and its practical solutions to help you.
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In each country, there are different legal support when it comes to regulations. International company will be treated differently from a local enterprise which could become a disadvantage as an international trader. If you have no experience handling problem regarding regulations, your goods can be dumped into waiting list and even never arrive in the end customer.
Solution: You must stay up-to-date on regulatory issues. You should also be alerted with taxes and legal regulations. Commonly, a country will constantly change their policy when it comes to taxes and international shipping. So, be sure to pay close attention to the specific requirements around different products, especially “fragile products” such as weapons, alcohol, drugs, etc.
Time and returns
For businesses that do a cross-border trade, they need to ship and distribute their goods in the right locations in a timely manner. If your company fails to understand the complex process in shipping, there are chances that your products cannot be shipped on time. As a result, there will be customer complaint or worse, they want their money back.
If you cannot handle the complex process in shipping, the return of an unwanted product or cash will also become a headache. This will particularly hard for e-commerce.
Solution: You should first understand certain countries’ unique requirements regarding international delivery such as if you ship bicycles, what document should you prepare? How much taxes should be paid? And how long does it require to completely finish all the regulations? Additionally, you should decide who will pay the taxes and regulation payment to avoid hidden shipping cost.
Imagine if your customers want to order products in a big number to be shipped in more than 5,000 stores across Asia at one time. Monitoring each shipping will be tiring and if there is a problem, it will be hard to detect. Moreover, the customers want visibility and streamlined communication for competitiveness and consistent price. Albeit there is technology like blockchain to support you, it is still daunting to get such an order.
Solution: You can reckon 3PL to manage each freight across Asia. Ask their advice for which freight is better to be used to ship your products to different countries. You can also consider doing proper scanning in-store to move your product in a timely manner. According to FedEx solution, these tips can boost 99.8 percent on-time delivery to thousands of stores worldwide.
The fluctuation exchange rates that somehow unpredictable can be a double razor for a company. It can turn a particular product selling as a particular price from being extremely profitable to a total loss and vice versa. Thusly, traders should be extra careful when it comes to prediction.
Solution: If you do an international distribution, you can mitigate the risk of fluctuation with three strategies.
- Speculative strategy by betting on a single scenario with often spectacular results if the scenario is realised, and dismal one if it is not.
- Hedge strategy where the supply chain is designed in such a way that any losses in part of the chain will be offset by gains in another part.
- Flexible strategy in which supply chain with multiple suppliers and excess manufacturing capacity in different countries so products can be moved at a minimal cost from region to region as economic conditions demand.
The unpredictable events
This is a major challenge for all international trades, unpredictable problems such as political chaos, natural disasters, or even wars. All of these can have dramatic effects on your supply chain process, resulting in low productivity and hampering performance. The distribution will also be obstructed.
Solution: In this case, second or third plan will be helpful. In addition, communication between organisations and customers would also be helpful. You need to inform your customers that you are not able to ship any good at the moment due to war, for example. Your supply chain, however, should also advise the customers in an honest approach that progress is on its way to retain your valuable consumers.
Read also: Why Do Freight Rates Keep Fluctuating?