Global Order Management: How to Track and Manage Inventory Across Borders
It’s not easy to go global, but any company that wants to expand internationally faces the same obstacles.
Even still, expanding your ecommerce operation internationally can increase your attainable market tenfold.
When you prepare for challenges ahead of time, you can better handle them when they arise.
Keep reading as we uncover companies' most critical challenges when they expand internationally, including some proven best practices for global order management and ecommerce.
Challenges of global order management
Using multiple sales channels can increase complexity exponentially when managing inventory.
With each new supplier, vendor, market, warehouse, sales channel, and employee added to your business, your complexity multiplies.
As your business becomes more complex and intertwined, having a single source of truth becomes even more critical. For example, if you're managing inventory for multiple stores, then an inventory management system (IMS) or warehouse management system (WMS) is essential.
Managing domestic inventory logistics manually is simply not viable—updating Excel spreadsheets, emailing with vendors,... any manual step is another opportunity to introduce errors in your stock count.
Before entering global markets, you need a reliable IMS infrastructure where all employees have access to the same information.
Finding reliable partners
Some countries don't have the same quality standards as the US. Finding reliable international suppliers is one of your first challenges. Once you've narrowed down your search, you should thoroughly vet potential partners to see whether they can meet your needs—and not cause any kinks or delays in your supply chain.
International sales forecasting
International business comes with its own sets of challenges: you’re now having to ship products very long distances—unless you have inventory stored in every geographical region you’re serving.
Having warehouses in several locations requires time and money, two resources ecommerce business owners can't afford to waste. Costly mistakes in domestic stock control can be crippling mistakes on an international scale.
To avoid wasting resources, it is essential to lock down your sales forecasts. With the right technology, you can aggregate your sales data across channels and create more accurate sales projections.
This makes it easier for you to plan and decide when and how much inventory to buy from your suppliers to meet customer demand.
You may think, "We’re talking about expanding to new markets, right? Why would I need historical data from customers in California when I hope to attract future customers in Asia or Europe?"
Historical data is a good place to start, but it will inevitably require some tweaking. As you get more market experience, you'll better understand your international customers' behaviors and needs.
Securing offsite storage
International consumers are just like their American counterparts when it comes to expecting fast delivery times. If you see sufficient interest from international markets, installing a local warehouse or storage facility in that specific country might be necessary.
Sometimes it might be cheaper to store your products abroad rather than domestically. This can be desirable because when you're located near your target audience, you don't need to spend too much time and effort marketing to them.
International shipping comes with many challenges. Consider these topics before deciding whether or not to use an international facility.
- Start with smaller items and if possible begin with countries that are geographically closer
- Research all local laws, taxes, and custom requirements
- Keep an eye on your storage utilization and cost so you don't end up paying for extra space you don't need
Language and cultural barriers to partnerships
Expanding into a market that speaks English (or your business's first language) is easier.
To move into a new market with a different language, you need to consider:
- Translating or localizing your entire website and marketing materials
- Studying the cultural norms of your targeted audience so as not to offend them
- Training and hiring people from your targeted market
This is quite expensive and involved, but can also open the door to huge opportunities. Your product may suddenly become explosively popular in the Chinese market. If there is a lot of traction there, there's also a lot of potential revenue.
Currency conversions, import laws, and taxes
International trade has many legal implications, and each country has its own laws. It isn't rare for businesses to eagerly enter international marketplaces, only to realize later they're losing money on taxes and importing goods.
There's no way around this except by hiring someone specializing in commerce in that region.
An alternative option would be to look at other ecommerce operations in related industries that have already succeeded in breaking into a particular region.
Ask them for advice, offer to buy them lunch if they're local, and ask them questions. Fellow entrepreneurs are usually willing to share their stories and teach others how they can avoid making similar mistakes.
Best practices for global order management
Invest in market research
You should never enter a new marketplace without thorough research into its current and future prospects to ensure a positive ROI for your efforts.
Most small business owners shy away from market research because it sounds complex and expensive. You don't have to hire a research analyst to deliver a 100-page report—you can complete your own market research less formally.
Consider starting a Facebook ad campaign aimed at look-alike customers in specific regions and study the data. Or develop a basic landing page (in a specific language), direct traffic to that page, and analyze the traffic data.
No matter which method you use, extensive market research is necessary before expanding your ecommerce business internationally.
Tap into local expertise
One way to simplify your global expansion is to hire someone with experience in your desired new market.
With the help of the Internet and the gig economy, you can now access a wide range of services from international professionals. Freelancing sites like Upwork and Fiverr are built for this.
Investing in these conversations is important to your market research and global marketing plan. They can help you determine whether a market is a good fit or uncover some tips for maximizing ROI in a particular country or region.
Identify seasonality and holidays
If you’re an ecommerce store selling seasonal items, you’re used to fluctuations in demand. But imagine the boost in business if you could sell seasonal items practically year-round.
Let’s say your best-selling products are designer snow pants. Demand naturally drops when warm weather arrives.
But considering Australia's winter months are June through to August, while your American customers strip to their swim trunks and your snow pants sales wind down in the Northern Hemisphere, Australians are ready to hit the slopes.
You can sell your famous ski pants domestically in the winters, and to Australian customers in the summers—increasing demand year-round.
Entering new international marketplaces can help boost seasonal products into evergreen status, increase your revenues and create more consistent sales periods.
Plan out your supply chain timing
Lead time varies by market. You must be prepared for this to consistently satisfy customer needs and not exceed your budget.
The supply chain of getting ski pants to Australia versus domestic sales will be much different. There will be longer lead times, and potentially higher storage overhead for your international sales.
You must factor this into product reordering and pricing.
Test the international waters
It can feel premature to expand internationally before achieving success domestically. However, international expansion could scale your business faster than at your current location.
The best decision for your business will depend on its specifics. Don't assume you must sell everyone in your hometown or state before moving abroad.
Wrapping up – Integrate tech stack to manage cross-border inventory
Expansion into international markets has obvious advantages: tapping into new markets and revenue sources, growing your business, and boosting your bottom line.
You'll need technology to help you enter foreign markets. Fortunately, today’s marketplace management software works with most third-party ecommerce technologies. You’ll be able to track global inventory automatically, handle order fulfillment with a single workflow for all channels, and report on sales seamlessly.
This is one of the most important factors of successfully scaling your ecommerce operation internationally.
About the Author
This is a guest post from Travis Mariea. Travis is the CEO of Flxpoint, a distributed order management and dropship automation platform built for connected commerce and new ChannelEngine partner. As an advocate of the distributed fulfillment model, Travis is passionate about empowering brands and retailers to compete in the rapidly evolving retail industry. He is an ecommerce and cloud computing leader, previously serving as CEO of Inventory Source and Current Commerce.