SEKO Logistics: It’s time to act to protect cross border e-commerce margins

SEKO Logistics has warned retailers, direct-to-consumer brands and marketplace sellers to “take action now” to protect their cross border e-commerce margins, as global postal rates into the US increase.

“July 1 heralds the first day of the historic agreement between the Universal Postal Union (UPU) and the US, which allows the US to set its own postal rates — a move designed to eliminate economic distortions for the international distribution of goods,” SEKO Logistics highlighted in a statement.

The change in rates comes as millions more buyers turn to online shopping because of Covid-19 restrictions.

SEKO Logistics added that pressure on margins will accelerate further in early 2021 when 191 UPU member countries will be able to set their own rates for foreign parcel services.

SEKO Logistics noted that the cross border e-commerce market is expected to be worth $627 billion by 2022.

Brian Bourke, SEKO Logistics’ chief growth officer, commented: “Cross border e-commerce is one of the most resilient sources of income for retailers, e-tailers and marketplace sellers, and even more so in recent months with the closure of outlets to stem the coronavirus outbreak.

“But, savvy online shoppers know higher postal rates are coming and will vote with their plastic if sellers simply try to pass on these much higher costs.”

Brian Bourke, chief growth officer, SEKO Logistics

The alternative, he said, is for sellers to see this shift as an opportunity to modernise and speed up the delivery experience they offer, offer. He suggested taking advantage of the postal-like service and the postal-like rate alternatives provided by companies such as SEKO, which come with the “added benefits that customers genuinely value”, such as tracking visibility and customer service.

The one thing sellers should not do, Bourke said, is ignore the changes in the global postal market.

Bourke advised sellers to reconsider what they’re trying to accomplish in the US market and to think about how the situation may look in the future. This includes deciding whether to hold inventory in the US to accelerate their delivery timeframes. Meanwhile, companies producing goods in Asia could review if shipping goods into the US is still economical, given the higher duty and taxes on B2B shipments

Bourke added: “In a new world where supply/demand chain resilience is king, companies must decide what’s most important: continuity of supply; or velocity, convenience and cost? Or, do they want it all?

“Whatever they choose, they should be evaluating their carrier mix and profile because if they are reliant on a postal entity of any kind to ship internationally, they will need other options in place before their bottom line is impacted. Selecting a freight-to-post option via multiple gateways in the US to reach customers faster and meet their desired lead times makes a lot of sense. Having the right, scalable ‘tech stack’ solutions to support the quick onboarding of those retailers, e-tailers and marketplace sellers, will be a critical factor in success.”