Logistics, shipping rates and the need to assess full landed cost are among the challenges that shippers face in the modern-day world of e-commerce, says Hagar Valiano Rips, CEO and co-founder of Ladingo.
SCB: What do you consider to be the big challenges in cross-border commerce, especially in the e-commerce seller world?
Rips: International e-commerce is a pretty big market — we're talking about trillions of dollars every year. And today, this market is ignoring larger items. They're not being addressed in the right way. When someone from outside a certain country wants to buy a large item, they’ll usually be told by the seller that it doesn’t ship internationally, or that the shipping would be be way too expensive.
SCB: Give me an example of the type of large item you’re talking about.
Rips: Furniture. If I'm in Israel and I want to buy a sofa from the U.S., I would not be able to do that at a good price or in a good way. The same goes for if I'm in Canada and want to buy from the U.S. Or someone from England who want to buy from another country. Large items aren’t being sold internationally by e-commerce because it's logistically complicated.
SCB: Maybe it's a case of not understanding the fully landed costs of such transactions. There are a lot of factors that go into that, right?
Rips: Right. When someone from Canada wants to buy a sofa from the U.S., they’ll get the shipping price, but it won’t include the duties and the taxes in their country. And when the item arrives at their door, they’ll be asked to pay extra. It’s not a good buyer experience.
SCB: Are there also challenges with the shipping of smaller items?
Rips: The world of logistics today is well-aligned with e-commerce, so those are pretty much solved. Fully landed costs sometimes aren’t generated or don’t appear on e-commerce platforms. This is sometimes acceptable to the buyers, because it’s a low amount and the prices aren’t that high. But when we talk about buying furniture for $2,000, I have to pay the taxes, which are relative to the price of the product, so it will be a pretty high amount. And when it turns up as a surprise charge at my door, many times I’ll refuse to accept that as a buyer.
SCB: What kind of customs issues are there?
Rips: This is a big issue. Tariffs and regulations are changing all the time. The best way to track it today is through technology, which can go way ahead of customs brokers all over the world and allow them to monitor those rules 24/7. I think the world of logistics in e-commerce should embrace automation in that sense, and also when it comes to customs documentation.
SCB: Isn’t there still a lot of paper involved?
Rips: Unfortunately, yes. A lot of documentation that you have to file manually. You have to type it, and you get a lot of errors.
SCB: What other kinds of solutions do you see out there to address these cost problems? What about sharing capacity among small shippers?
Rips: This is a trend that’s growing right now. It's like UberPool. When we share a ride, we can do the same for containers and trucks. In the world of logistics, it can reduce costs for end consumers.
SCB: Domestically, we have the concept of less than truckload (LTL), where a single trailer will hold the shipments of multiple shippers. Are you proposing the same approach for individual e-commerce sellers?
Rips: Exactly. It's like end-consumer consolidation; it would have to be automated. Otherwise, it won't work. It would be a mess. If you want to handle 100 or 200 different people in one container, you have to do things automatically.
SCB: I assume that air cargo is too expensive for most of these items?
Rips: Right. It's not for end consumers specifically. Also, when businesses want to transfer large shipments or large products, it would not make sense to do it via air freight. It’s much more economical to use the ocean and ground options.
SCB: So you're optimistic that automation is the answer?
Rips: Technology can solve just so many of those problems and issues. I think it will grow in the world of e-commerce. The air freight world is pretty aligned with e-commerce, but it’s going to happen as well also for ocean, road and rail.
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