With the impact of Brexit starting to be felt in eCommerce circles, changes to the traditional fulfilment model need to be made. Realising the benefits and opportunities of multi-node fulfilment and Brexit may be the answer.
Whilst news of a Brexit trade deal in December 2020 was a sigh of relief for many, the end of the Brexit transition period was not a sign that retailers could lower their guard. On the contrary, the Brexit impact on traditional fulfilment had only just begun, and its result is now being felt at full force by retailers and consumers alike.
As of January 1st, EU consumers buying a product from a UK-based retailer could be subject to additional charges including import duties and courier or postal handling fees following Britain’s exit from the Customs Union and European Single Market. A similar story is also being seen with British customers buying products that have been shipped from the EU, and this is adding as much as a third to the cost of many online purchases, in addition to significant delays.
For many retailers, this has put customer satisfaction in serious peril. Due to the sheer amount of customers refusing to pay unexpected delivery charges, a shocking 30% of all orders are being returned, according to Statista data. Evidently, the traditional fulfillment model can no longer be relied upon. To avoid further chaos and disruption, fulfillment operations need a revamp and retailers must start looking towards the adoption of flexible models, such as multi-node distribution.
How can brands cut through the Brexit red tape?
Brexit red tape has proven to be a key obstacle for businesses relying on shipping between the UK and EU. The sheer number of unaccepted deliveries as a result of the added complexities of border delays, VAT, missing consignment information, import duties and associated paperwork, has seen the majority of retailers struggle. Some have threatened to burn products returned by EU shoppers, rather than bringing them back to the UK.
To overcome the mounting pressure and obstacles presented by Brexit red tape, retailers and brands should be:
- Reviewing their existing data to determine where their customers are located and how inventory should be effectively dispersed across the two zones.
- Making inventory provisions, such as splitting inventory across both the UK and mainland Europe. This solution, known as multi-node fulfilment, enables brands to provide in-region fulfilment in both locales, bypassing custom requirements at the border.
- Creating a seamless omnichannel experience without disrupting store operations. By dramatically reducing processing times, having the ability to pick multiple orders at once, turning “dark stores” into mini distribution centres, easy API integrations, reducing pick errors and finding the best carriers with subsidised rates, challenges can be resolved.
- Implementing an advanced Distributed Order Management (DOM) system. This can ensure your order management system (OMS) can divert orders to the appropriate inventory pool (in stores or to distribution hub), sorting via factors relating to delivery address, product type, etc.
Pre-empting pressure beyond Brexit
Although a key benefit to alleviate the immediate Brexit sticking points, multi-node fulfilment also offers additional benefits longer-term. During periods of peak season volume, additional fulfilment and distribution points with an effective DOM system to route orders, can help to alleviate pressure and spread resource.
By reviewing where customers are located and how inventory should be dispersed across the two regions, retailers and brands improve their chances of getting products where they are most needed. UK and mainland Europe-based retailers should look to third-party fulfilment providers to make split inventory provisions, if the volume of orders is large enough in both locations.
As part of our multi-node fulfillment solution, for example, PFS manages distribution centers in the UK and Belgium. Through our strategically located facilities we are able to provide in-region fulfillment in both locales, bypassing customs requirements at the border. In 2020, PFS expanded our operation in Liège, Belgium, opening a second distribution centre to support increased eCommerce demand generated by COVID, as well as expanding our capacity to support clients better in light of Brexit.
Our RetailConnect technology directs store assistants through pick, pack and ship processes using simple, light-weight hardware that fits in your store stock room and keeps orders organized. Integrating to your eCommerce platform, point-of-sale (POS) and DOM systems, the cloud-based technology systemically drives the fulfillment process. Where your inventory is placed will have a significant impact on your ability to keep orders moving and meet consumer demands. Appointing a fulfillment provider to oversee and manage storage, paperwork and product handling requirements for both UK and EU operations, all with a goal of minimizing the brand’s international tax liability across the supply chain, is perfectly doable.
Brands can also consider the use of pop-up distribution centers (pop-up DCs) or micro-fulfillment centers; infrastructure often implemented for higher volume periods, such as planned promotions throughout the year. Employed to test new markets, these temporary operations are often much cheaper to set up and operate, while providing relief to your primary distribution centre through Brexit.
Moving towards an omnichannel future
Over the past year, PFS’ own research found that 53% of consumers had shopped more online since lockdown began. It seems lockdown has only accelerated an already existing trend, with more than three quarters (77%) of consumers expecting to continue purchasing online more once the lockdown is lifted. As such, even as physical stores begin to open, the importance of an omnichannel approach and broad fulfillment options cannot be overlooked.
COVID-19 and the Brexit impact on traditional fulfillment has shown flexibility as a fundamental resource in maintaining business continuity and customer satisfaction during uncertainty. Further turbulence is, of course, inevitable. Brands should not only be aware of any potential kinks in the fulfillment chain but should be agile enough to respond to upcoming challenges with precision. With this in mind, multi-node fulfillment, along with other alternative fulfillment options, will be crucial to success.
To find out more about the abilities and scope of multi-node fulfillment, as well as our tailored Brexit solution, click here. In addition to this, and for a more holistic view of our end-to-end eCommerce fulfillment offering, click here.