Should Your Retail Business Expand Into Europe?
By Fred Daix
Sr. Director, Product Delivery, Radial
For many North American retailers, the question isn’t if they should expand into European markets, but when. If you’re a retailer looking at European expansion and the potential benefits it may hold for your customers and revenue, then there are some important factors to consider before you make that strategic move. In my work with Radial and its Belgium parent company, bpostgroup, I’ve assisted numerous ecommerce brands in venturing into the European/UK market. The journey is unique for each one, but the benefits are significant. Here’s what you need to know.
Why Expand into Europe?
The European market comprises the European Union and the United Kingdom. The EU as a whole is a single free market with one common currency and unified import/export regulations. In 2024, Germany will have the third largest gross domestic product globally, while the UK ranks as 6th, followed by France (7th) and Italy (8th). This is a huge opportunity for American retailers, particularly as their products are highly sought after, more trusted, and are perceived as a way to embrace American culture and lifestyles.
Retailers can navigate moving into these new markets on their own, or they can work with a partner, like Radial and its European brands, that have local expertise, global fulfillment infrastructure, a robust transportation and logistics network, and the capacity to help determine whether a retailer should start small or go big. We can help you determine the best path forward and then if you choose, work with you to make it happen.
How American Retailers Can Sell Into Europe
There are two primary ways for a North American retailer to enter the European/UK market:
- Keep operations in North America and ship orders directly to European/UK customers. The advantage of this is that it doesn’t require any change to operations. However, it will incur higher shipping costs, lengthy 7-15 day delivery times, import duties and taxes on every shipment, and it can create a less than ideal customer experience.
Depending on the retailer’s choice (and technology) at checkout, customers will either pay for duties and taxes when they order (called delivery duties paid or DDP), or they will not be collected then (delivery at place or DAP), in which case, the parcel will only be delivered when all import duty fees, taxes, and customs clearance fees are paid by the buyer, which can be a clumsy customer experience. Moreover, you face the risk of losing the shipment because the buyer may not want to pay import duties.
- Partner with a third-party logistics company to house inventory in European/UK hubs and fulfill locally.
The advantage of this option is that it affords nearly the same customer experience as your North American customers would have. Shipping and transportation costs are lower, and delivery times are generally 2-4 days. Retailers pay import duties/taxes once upon the shipment into the EU or UK, and then from there orders can be delivered to any EU country/UK with no further duties incurred. It also makes returns easy. This option keeps things simple and makes it easy to enter a new country very quickly. The other benefit is that Radial can support you domestically in North America while also handling your European fulfillment, enabling you to work with one primary vendor that has a global footprint and expertise.
Which way is right for you? That will depend on many factors unique to your company. For retailers that want to start by testing a few SKUs in limited markets, bpostgroup has a subsidiary in Europe that is specifically designed to handle smaller order volumes and fewer SKUs. Should a retailer choose to later scale, Radial Europe can assume order fulfillment for large volumes. Whichever way you go, I highly recommend you evaluate the benefits of working with a 3PL partner that knows European/UK markets and can advise you on the best strategy that will best position you for success.
How Radial Supports European Order Fulfillment
When I consult with retailers looking to expand into European markets, we discuss the following ways that Radial North America and Radial Europe can support them:
Reduced Shipping Costs
Radial offers significantly lower shipping costs compared to shipping goods individually from the United States. The Radial EU branch can provide cost-effective shipping solutions within Europe as we are integrated with more than 240 carriers with 2-3 day delivery timeframes. Lower shipping costs contribute to overall cost savings.
Faster Delivery Times
Having inventory located in Europe allows for quicker fulfillment and delivery to European customers. This can result in shorter transit times, improved customer satisfaction, and potentially increased sales due to faster order fulfillment. Radial has operations in Germany, the UK, The Netherlands, Italy, Poland, and Belgium.
Localization and Market Penetration
Radial can help North American retailers establish a local presence. By having inventory in Europe, the retailer can respond more effectively to local market demands, preferences, and seasonal trends. This localization can enhance competitiveness and increase market share.
Mitigate Customs and Import Challenges
Storing inventory in Europe can help retailers mitigate customs and import challenges. It reduces the complexity associated with international shipping, customs clearance, and compliance with EU and UK regulations. This leads to smoother logistics operations.
Efficient Returns Processing
By being locally present, Radial facilitates an efficient returns process within Europe. This is particularly important as a seamless returns process contributes to customer satisfaction and can positively impact the retailer’s reputation in the European market.
Access to Local Expertise
Working with Radial in Europe and the UK provides North American retailers with access to local expertise. This includes knowledge of regional logistics, regulations, and market dynamics.
Scalability and Flexibility
One of Radial’s strengths is the ability to scale and offer flexibility in response to changes in demand. Retailers can adjust inventory levels based on market trends without the need for significant capital investment in additional storage facilities.
These are the primary benefits to partnering with an experienced 3PL. Radial optimizes its services for each client to ensure they receive the tailored services that most benefit their operations and customer experience.
Getting Started
If you’re a retailer looking to expand into European markets, get in touch with Radial, we can help you explore the best strategy for you and what your most cost-effective options are to grow your business globally.
Fred Daix, Sr. Director, Product Delivery, Radial
Talk to us today.
