Expanding into Europe - How to win the eCommerce Market With a European Fulfillment Network
The majority of D2C merchants and growing eCommerce companies eventually come to the point where expanding into Europe is the next logical step.
The potential in Europe (750 million Internet users in 2022) even outshines that of North America (349 million Internet users in 2022) according to internetworldstats.com. Wouldn’t it be too good to be true if it was easy to just tap this potential?
That’s right, there are indeed plenty of challenges ahead. And some of the most complex will be related to storage, shipping, and logistics. This article will help you get a better overview of the operational stumbling blocks when expanding your business to Europe and how to overcome them.
Let’s get started!
eCommerce fulfillment in Europe is a decisive factor
One of the major differences between most regions of the world and the European eCommerce market is that the latter is much more fragmented. Consequently, you need to take many factors into consideration if you want to successfully expand to Europe.
Besides obvious aspects like differing language and compliance with rules and regulations, your operational setup can make or break your strategy. Reliable delivery via the most popular parcel delivery company and the right shipping method is key to ensuring satisfied customers.
European online shoppers have high expectations and place great value on a positive post-purchase experience. A localized and positive experience will not only help you build a positive reputation in the new market but will also turn one-time buyers into loyal customers.
For these reasons, finding a proper fulfillment setup in Europe is crucial for building trust, staying competitive, and keeping logistics costs low.
The Amazon Fulfillment Network in Europe and elsewhere
Jeff Bezos was one of the first to realize the immense potential of logistics. Heavily investing in the Amazon fulfillment network in Europe and elsewhere not only gave them the leading role in eCommerce but also changed the whole industry. Customer expectations have been increasing steadily and 2-day shipping is being perceived as a given today.
Naturally, many sellers choose to use the European Amazon fulfillment network. That’s not a bad idea at all. Amazon is well-known by customers in Europe and it has built an extensive number of logistics centers around the EU and the UK - to be more specific, it reached 76 back in 2021.
As mentioned before, when selling via Amazon, you can rely on functional logistics and the trust of online shoppers in the eCommerce giant. The American company is globally known for its data-driven and efficient operations.
Additionally, the prominence of the page is nothing less than impressive. In all of the leading eCommerce markets in Europe, it ranks in the top 8 most visited Internet pages overall, according to similarweb.
While this is great, there are some potentially deal-breaking factors you should consider.
Disadvantages of using Amazon FBA in Europe
While using Amazon’s FBA (fulfilled by Amazon) method to enter new markets makes sense in many cases, it is also worth noting that relying only on Amazon won’t allow you to build your brand in Europe.
With the FBA method, it’s not possible to use branded packaging or highlight your brand's main selling propositions.
As a result, customers make their purchasing decisions mainly on the basis of prices. Most probably you don’t want to be involved in a pricing war with suppliers that do not pay as much attention to quality as you do.
In addition, when Amazon is your sole distribution channel, you run the risk of getting your margins cut by the frequent increases in fees that Amazon has become famous for.
Another headache for Amazon merchants is the loss of contact with their customers. As a merchant, you want to know what your customers think and wish for and how they behave. When selling via Amazon, this is nearly impossible as the eCommerce giant keeps most of the valuable data to itself.
Alternative fulfillment solutions in Europe
If you want to capitalize on the unique quality, sustainable approach, or strong brand of your eCommerce company, using the services of a 3PL (third-party logistics provider) might be an appealing option for you.
Let’s have a quick look at how that can be beneficial to you.
Close partnership with national shipping providers
Did you know that slow and expensive shipping are key driver for cart abandonment in Europe? It’s true, and this makes working with a trusted logistics company all the more important. And guess what, there’s no one fits-all solution in Europe. In fact, in most countries, online buyers put the most trust in national providers. Be it DHL in Germany, Correos in Spain, Poste Italiane in Italy, Royal Mail in the UK, or PostNL in the Netherlands, they all are highly valued in their countries.
A reliable fulfillment partner will enable you to work with trusted carriers across countries, helping you to meet your customers' expectations.
Capitalize on branding
Chances are high that as an eCommerce merchant, you are putting a high value on your brand. Of course, you do. Why do we pay $5 for a Starbucks coffee or $2 for a Red Bull, while production costs for the latter are about $0.08? The answer is branding. As a merchant who puts love, sweat, and tears into your products, you don’t want to compete on price with a low-quality product.
Working with a 3PL will allow you to operate your own online shop, highlight the most important features, and actively influence your real brand personality. All that, while having the opportunity to automate and outsource your logistics.
Use branded packaging and highlight sustainability
Similar to the prior point, the use of branded packaging will help you leverage your efforts. The unboxing experience has become a powerful marketing tool in eCommerce and branded packaging is literally the first touchpoint of your product and your customer. Use the change to stand out against the competition from Amazon and co.
The same is true for sustainable operations. While logistics is still a sector that has a long way to go before being truly sustainable, there are fulfillment companies and logistics providers who are offering climate-neutral shipping options.
Connect with your customers
Especially when growing fast, it’s easy to lose touch with your customers. This is certainly true when only selling on online marketplaces. However, when operating your own store and using the services of a fulfillment company, you and your team can focus on offering a personalized experience for all customers.
They will appreciate it and turn in loyal buyers with a higher customer lifetime value. At the same time, you can stay on top of things, and learn about their desires.
Using a European fulfillment network
Most of the advantages mentioned above are important regardless of the country you want to enter first when you expand to Europe. If you want to sell to not one but multiple European countries, working with a logistics company that operates internationally is key. Location-based fulfillment will allow you to reduce delivery times and costs and to use a more sustainable solution, as you penetrate the European market.
Additionally, storing your stock in various warehouses and locations allows you to be more flexible and resilient. Temporary bottlenecks in one logistics center can be absorbed by shipping from another one. If you decide on a multi-warehouse strategy, make sure to work with a partner that allows you to stay on top of things and provides you with a birds-eye view of inventory at various locations.
If you plan on expanding to Europe, your fulfillment setup is key. Customer preferences in the fragmented European eCommerce market differ greatly. Working with a partner that allows you to focus on your key strengths while enabling you to offer flexible and tailored shipping options for your customers will get you much closer to successfully tapping into the huge potential of the European market.
byrd is one of the leading fulfillment companies in Europe and has numerous logistics centers in all major eCommerce markets in the EU and the UK. Their strong European logistics network, helps 350+ brands like Durex, YourSuper, or Rituals to fulfill their potential.
Phillip Pitsch joined byrd in 2019 and is heading its passionate content and SEO team. He tries to help other merchants by sharing his experience with operational challenges and opportunities in eCommerce that he faced while building his own online brand.