Want to cash in on demand for British products from overseas? Make sure you can deliver on your promises.
Logistics and the supply chain might not represent the glossy side of the fashion industry, but nevertheless are integral functions - especially at a time when retailers and brands are expanding overseas.
As confidence in the economy intensifies and news of British brands successfully cracking new markets abounds, fashion businesses are increasingly looking further afield. Before taking that first leap across the Channel, retailers and brands must fine-tune the task of moving product from one place to another, whether that be fulfilling online orders or distributing to international stores.
Stuart Hill, chief executive of international logistics firm WnDirect, says a common assumption is that the global stage can be treated as one market: “Businesses think of their international expansion as a single project. However, a successful overseas expansion strategy requires far more planning and knowledge than simply a desire to sell your wares to foreign customers. The one-size-fits-all approach rarely works.”
‘A lack of understanding of local regulations can make the difference between a successful service and failure’ Stuart Hill, founder, WnDirect
Nauman Ahmed, head of strategy at sports etailer Kitbag, agrees. Dealing with a foreign language can affect a company’s IT systems, especially if this involves handling Japanese or Chinese characters. The operational systems, ecommerce systems and all the labelling need to accommodate the different alphabet.
“That can be complicated, and many of the big international delivery and logistics firms just can’t handle it,” he says.
Emma Rowlands, UK sales director of Kerry Logistics, advises clients not to roll out the same business model in new markets - shoppers in many European countries don’t expect free returns, for example. Next-day delivery is often not necessary, especially in countries like Australia where the distances involved are much greater than in the UK.
Payment can also be problematic. Online shoppers in China, Russia and Italy often expect to pay cash on receipt of an item, which means delivery vans must be secure as they could be asked to carry large amounts of money. Even delivering direct to stores can be complex.
“Retailers in the US, for example, expect product to be shop-floor ready,” says Rowlands. She says garments have to be hung on the right hangers with the correct store labelling and micro-chipped so items can go from the delivery van directly to the shop floor. Supplier’s manuals can be 50 or 60 pages long. She adds: “We are doing much more than just delivering goods from A to B. We really help retailers tailor their model for each country.”
Delivering to markets with a warmer climate also has implications on production schedules. Jermyn Street luxury shirtmaker Hawes & Curtis is planning to roll out 26 stores across the Middle East over the next two years. Head of brand and operations Edward Smith says it will need to have short-sleeved shirts and lighter fabrics available throughout the year instead of just the summer.
“We know our own market very well, but understanding what a new country needs can be difficult,” he says. For this reason, it is extracting as much information as possible - such as the effect of religious restrictions on what women buy - out of franchise partner Korath Holding, with which it will open in Abu Dhabi and Dubai before expanding further.
“People often think the logistics side of things is a lot easier than it actually is. We thought we would be up and running [in the Middle East] within eight months, but it has taken us a year,” Smith explains.
Understanding how to deliver the best customer service is as important overseas as it is in the UK. Shoppers worldwide want to know when their product will arrive, which means tracked delivery is becoming more common. Logistics company Hermes - which delivers to 19 European countries and offers procurement, warehousing, order processing, shipping and returns handling - has tracking on all its parcels as standard.
Its marketing director Jonathan Bennett says returns also need to be considered carefully: “Shoppers are more nervous about returns in Europe. The key is to ensure the service customers get when they buy something is the same when they return it.” Using parcel shops for picking up and returning items is commonplace in Europe and Scandinavia but may not be an option in other markets.
The growth of ecommerce has made it much easier for British brands such as Asos and Cath Kidston to accelerate their growth in new markets, but there are common pitfalls to avoid. Businesses tend to think of the internet as a virtual space that blurs geographic boundaries, yet each country is different.
Ahmed explains: “In the UK we expect pages to be structured like the John Lewis website - three or four clicks later, you have bought the item. In China, every page is littered with product. Chinese customers want to see every single option and variation of the specific product so they can make a choice.”
An alternative to tailoring online platforms for each country is to look at being featured on local shopping websites such as Tmall, owned by Chinese ecommerce giant Alibaba. Tmall has a reputation
for being a trusted marketplace with high-quality, authentic branded goods.
For maternity brand Séraphine, which has focused on France and the US for its overseas forays, creating a dedicated website for each market was crucial, chief executive Cecile Reinaud says. It relies heavily on celebrity endorsement, so it has tailored its marketing to be relevant to American and French shoppers by writing about local celebrities and fashion trends. It has also created a French-language website and set up a French-speaking customer service team.
The movement of products, even over the internet, also still requires country laws to be abided by. Hill says in Brazil all parcels must be declared for duty, in the US it is illegal to split orders to ensure they fall under the $200 [£117] threshold, and any parcels sent to Russia and China require pre-clearance.
“A lack of understanding of local regulations can make the difference between a successful service or one that fails,” he says.
Ensuring you have paid your duty when delivering to the US, for instance, is important as otherwise it could be the customer that has to pick up the bill. Reinaud says: “Many shoppers would refuse to pay and may decide not to shop with us again, so it is best avoided - even if it means paying a little extra.”
She urges retailers to make sure their average transaction values are high enough to cover additional costs such as import duties, otherwise the margins could be too thin and it might not be worth even attempting to target that country. She says the average amount Séraphine’s customers spend is more than £100.
Despite the challenges of expanding overseas, logistics firms are unanimous about the potential for UK fashion businesses as interest in British brands escalates. Around 65% of overseas consumers shopping over the internet have looked for British goods online, according to Bennett. Hill has also noticed an increase in demand for overseas support, specifically in the US, Europe, Australia, Russia and China.
It seems the opportunity is there, for those who get the logistics right.
For more supply chain features and opinion, go to www.drapersonline.com/insight/supply-chain