1. Inventory control
Merchants who have been doing overseas warehouses for many years have a pain point, that is, the products that sell well are often out of stock, and the products that sell poorly are unsalable and cannot be processed for a long time. In terms of the handling of goods, the biggest difference between domestic and overseas is the way to deal with tail goods. Domestic inventory can be quickly turned over by negotiating returns and exchanges with suppliers, or by distributing them through friends; if the goods in overseas warehouses are unsalable, you can only find a way to deal with them through local channels, because returning them to China requires paying high freight and tariffs, which is not worth the loss. Therefore, when controlling the inventory of overseas warehouses, you must first ensure that the timeliness of your own logistics first-leg channel is controllable. In this link, you cannot simply compare prices, but you need to make a comprehensive assessment of the service provider in terms of timeliness and customs clearance. After determining the timeliness, you also need to prepare three batches of inventory, namely one batch of overseas inventory, one batch in transit, and one batch of factory production.
Usually, the turnover rate of overseas warehouse inventory needs to reach more than 60% (air transport). Merchants who can operate overseas warehouses healthily often have higher profits and growth rates than direct mail merchants, but whether they can control sales, inventory, and first-leg timeliness will be a big problem.
2. Product quality
As mentioned above, the processing of overseas warehouse products can only be localized, so when products have problems in batches, the impact on merchants is catastrophic. For products in overseas warehouses, random inspections or full inspections must be carried out before entering and leaving the warehouse. It is also recommended that merchants choose products in their familiar fields to try overseas warehouses.
3. Service timeliness
For Wish’s WE project, there are relevant requirements for service timeliness.
Therefore, merchants in the WE project cannot simply hand over the goods to the service provider and sit back and relax. They need to monitor the delivery rate (last-mile channel selection), effective tracking ratio (overseas ordinary mail is not recommended), delivery time (last-mile channel selection), delayed arrival rate (last-mile service provider situation), and pre-fulfillment cancellation rate (inventory management situation) on a daily basis.
4. Product selection
The WE project has just started, and there is a lot of room for future development. However, not every product is suitable for overseas warehouse operations. For products with low value and light weight, the overseas warehouse pricing includes the first leg, the last leg, and the cost of cargo loss that must be considered. The other costs of the first leg are much higher than the value of the goods. The direct mail pricing will be much lower than the overseas warehouse pricing. For a product weighing 100 grams, for example, without calculating tariffs and warehouse rent, the overseas warehouse pricing will be nearly 3 times that of the domestic warehouse. For such products, it is not recommended that you focus on overseas warehouses.
5. Customs clearance and taxation
With the development of cross-border e-commerce, countries have increasingly stringent requirements for tariffs and value-added tax for e-commerce companies. In the direct mail model, merchants do not feel the impact of such regulations on business development, but when the goods are in the destination country, various policies will have a real impact on the operation of merchants. Therefore, before setting up overseas warehouses, merchants are advised to read in detail or consult a professional logistics service team regarding the destination country’s requirements for customs clearance, patents, VAT, etc. Every overseas warehouse merchant suffers heavy losses from these matters every year, and there are many tragic cases where they cannot continue to operate. Therefore, merchants are advised not to ignore these hidden dangers in pursuit of rapid development, and not to handle these matters with a fluke mentality, otherwise the losses will be far greater than the gains.