DP-DHL looks to cross-border investment for e-commerce growth

DHL 767ERF with wingletsOne would be hard-pressed to name a market expanding more rapidly than cross-border e-commerce, and today Deutsche Post DHL Group’s Post – eCommerce- Parcel unit has unveiled its strategy to construct six new distribution centers and expand two existing centers in the United States to leverage this growing market. By 2020, the value of cross-border transactions is expected to more than double, from US$400 billion in 2015 to $1 trillion by 2020.

By then, DP DHL’s Post – eCommerce – Parcel unit will invest $137 million to upgrade existing fulfillment centers in Los Angeles and Columbus, and to add six new centers in New Jersey and other cities throughout the United States to complement its 18 existing distribution centers. Given DHL Express no longer operates a domestic delivery network in the United States, the Post unit partners closely with the U.S. Postal Service (USPS) for last-mile delivery. DHL Post’s eCommerce distribution centers therefore specialize in pre-sorting inbound cross-border shipments and handing them over to the USPS and vice-versa for outbound shipments.

The United States should remain as the largest single market for both cross-border e-commerce imports and exports, DHL said, as consumers demand cheap imports and as emerging markets bolster demand for American-made exports. “It is expected that 1 billion people will shop online and across borders by 2020, with the U.S. being the most popular origin for 25 percent of consumers worldwide,” said Charles Brewer, CEO of DHL eCommerce. A 28 percent annual growth rate for cross-border e-commerce transactions in emerging markets also ensures that demand for products made outside of Asia will remain high.

By 2022, however, the Asia-Pacific region is expected to overtake the U.S. to become the largest single market for cross-border e-commerce purchases, with 48 percent of the total volume. DHL estimated that “the biggest share of these cross-border purchases will revert back to U.S. e-commerce businesses, among other reasons because consumers covet products tagged with the ‘Made in the U.S.’ label.”

DHL’s cross-border strategy varies from that of other integrators, such as FedEx, in that its solutions focus primarily on logistics and still necessitate a vendor to handle the transaction. FedEx’s CrossBorder, meanwhile, facilitates cross-border transactions with IT solutions that integrate with e-tailers’ existing sales platforms. According to Fedex, CrossBorder provides “a seamless, localized experience for consumers, automatically displaying the checkout page in their language, accepting their preferred payment methods, and showing prices in their local currency. Additionally, we offer e-tailers the ability to display a total landed cost, which leads to price transparency during checkout.”

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