Understanding Global Logistics, Supply Chain, Warehousing and eCommerce Shipments from India.

Updated: Sep 7, 2020

eCommerce is an industry that is seeing a double digit growth year on year. Estimates suggest the growth will continue to be between 25-30% CAGR till 2030. As transaction increases so does the demand for delivery of goods sold.

More than 5 Billion Cross Border eCommerce shipments took place in 2019 annually. Thus you would see most of the traditional freight forwarding companies and 3PLs are evolving themselves to equip with eCommerce or Courier shipments.

Global eCommerce also provides good opportunity for Air Cargo to get their aircraft belly always full. There are massive infrastructural developments happening in special economic zones only for eCommerce shipments.

We have also seen spurge of several supply chain and logistics startups mushrooming in this space. Few of them have really grown big and giving tough competitions to established firms in the same space. These startups leveraged on the eCommerce shipments majorly and gained the momentum fast which led the traditional 3PLs (3rd party logistics) to explore eCommerce shipments.

Apart from regular 3 Pls, we have seen tremendous technology upgradation in this space. There are logistics aggregator softwares, drones, AI driven carriage ways being used to optimise the supply chain experience and boost efficiency of overall logistics process.

The new love for all Shipping ecosystem partners is Cross Border eCommerce. Let us understand through this article about shipping eCommerce parcels to different parts of the globe from India.

Latest visit from Jeff Bezos to India made it clear that Amazon wants to ship Indian products to the world and aiming at $1 Billion in GMV from eCommerce exports in Amazon alone. Other growth will be fulled up Ebay and other international online marketplaces apart from sellers in D2C space directly through performance marketing of their web-stores and social media channels.

However, no matter which channel brings in the sales, you need delivery partners to fulfil the orders. This is the main reason we see huge investments in eCommerce Supply Chain sector.

There are major 4 Key channels of sales while selling your products online to an international audience.

  1. International online marketplaces.

  2. Sell through your own eCommerce web-store.

  3. Fulfil through Social Media Channels

  4. Through Online Distributors in the country of destination.

Now, let us understand the order fulfilment for each of these Sales Channels. If you are a seller and selling in your own country and especially through online marketplaces, the logistics is not much of a challenge these days. For example if you are selling on India or, you may use the logistics carriers that are associated with these marketplaces for your last mile order fulfilment.

Or you may use logistics aggregators who has good pre negotiated rates with logistics carriers. The advantage of using aggregators is that you could see the best rates from multiple carriers with respect to a particular pin code (zip code) with delivery timelines. As per your choice you may choose the cheapest or best 3PL carrier to fulfil the order in that pin code. These are fixed rates and do not fluctuate much (local, regional and national).

Usually selling within a country it is advisable to use the logistics of the Marketplaces if are selling through Online Marketplaces and to use logistics aggregators to fulfil your orders from your own online web-store or from your social media channels.

However, you might have to think twice when you are trying to ship your product as an eCommerce shipment to a different country.

Let us quickly understand few things that should come to your mind while shipping your products outside India.

  1. Import Export Code (IEC code)

  2. Sign up with logistics carrier for international shipping

  3. DDP or DDU type shipment (Delivery duty paid/unpaid)

  4. Any international taxes in the country of destination

  5. Bulk Consignment or Single Courier Shipments

  6. CIF & FOB break up and cost

  7. Reverse Logistics and import duty

  8. CSB V document to show your sale of good is legal and not sample or gifts

  9. Good to understand the incoterms

  10. Customs Regulations in destination and origin

  11. What are dangerous goods classes and lists (HAZMAT)

  12. Medicines, OTC goods, healthcare, food, beauty, cosmetics would need special documents like COA ( certificate of Analysis), FSSAI, BSI etc.

  13. Invoice value

  14. Terms like first mile, last mile, fulfilment etc

  15. International warehousing, eFulfilment, sortation centre etc.

That's OK. You need not know them all. But it is good to at least read them once and get a brief understanding of what them mean.

You may also consult 4PL logistics strategic consultants (EximScouts) to guide you through international shipping.

Having said that let us also understand what are the types of logistics carriers that you will be using for your international order fulfilment from India. There are majorly 3 types of shipping carriers that you need to consider, namely:

  1. Express Logistics Services

  2. Postal Aggregators

  3. Registered Mail or Postal Delivery

Express logistics is the best for click to delivery model. That means from the time buyer pays for the goods, they receive the product within 72 hours anywhere in the world. Express Logistics charges are generally higher. Few examples of express carriers are,

Postal aggregators use the deep network of postal services world wide. They are cheaper than express services. Time for international delivery is around 7-9 days. Examples would be Speed Post, DHL eCommerce and others.

Registered Mail or Postal delivery is the cheapest form of delivery. Usually it take longest time to deliver also there are several tracking issues also. Time taken for deliver is usually 9-15 days.

I am sure you might think to use on the first two but as of 2019, 60% of total cross border eCommerce shipments from India were fulfilled by India Post. Hence, India Post is an important carrier specially when it comes to international courier shipping.

Also we have seen in several cases, that Postal services are usually higher beyond a certain weigh and in few categories. Hence it is advisable to build a ready reckoner to refer your rates with respect to geography, carrier and weight.

There was always an issue with courier shipments earlier from India. Usually via courier you need to ship samples and gifts. You cannot charge someone by sending goods through courier. Any international remittance needs to be associated by a Shipping Bill given by Customs. In courier shipments there are no shipping bill. Thus RBI is supposed to question the seller from where is he getting international payments and there could be scrutiny too. This stopped several local eCommerce sellers to sell international.

In 2017, there was a notification by DGFT (Director general of foreign trade India) as they introduced CSB V as a bill which is equivalent to a Shipping Bill given by Customs department. Thus every eCommerce shipment has to be tagged with the CSB V bill ( courier shipping bill V) to show them as exports in books.

Remember, logistics eats up a lot of margin in your product pricing, so you need to optimise based on priority.

When you consider warehousing in an international location, it brings the unit cost of your product down and thus you might become competitive in that market with others selling similar products. You also may consider Amazon FBA to send your products in Bulk and do your last mile delivery from Amazon warehouse. You can fulfil orders from multiple channels from Amazon FBA. Recently Shopify also came up with warehousing solutions in USA and a seller might use them as well for multi channel eCommerce order fulfilment.

There is a definite advantage of Amazon FBA as you get the prime tag associated with your products, but you cannot just depend only on Amazon as a sales channel. You must consider multiple channels. However warehousing can make your product price lower also the cost of delivery will also be cheaper than Drop Shipping. But in case your inventory doesn't sell and the stock piles up, it would become difficult to bring back your inventory back to India. There are several challenges. It is advisable to liquidate your warehouse stocks in case it doesn't sell for 3-6 months.

Where we feel warehousing has no doubt advantages, it is advisable to drop ship your products if you are very new to international eCommerce sales. This will give you and idea of what works in international market before venturing with more structured and complex fulfilment strategies.

It will be nice to hear for comments with queries or questions that you may have. I will be happy to answer them. Wish you success with international shipping.

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