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Logistics and delivery

With a relatively small population of only 8.42m people, Switzerland might seem at first glance to be less attractive than other markets.

However, Swiss shoppers each spend €2,150 a year online, and are 2nd only to the UK in European rankings. This demand is increasing with parcel volumes estimated to be growing at over 12% per annum and with almost 2/3 of online purchases coming from cross-border retailers. Switzerland’s central position also makes it easily accessible and for non-Swiss retailers.

Yet, there are logistical challenges to be considered when delivering to Switzerland, partly because it is not part of the European Union, nor the European Economic Area. Instead, it’s a founding member of the European Free Trade Association, and part of the Schengen Area, so has particular regulations and customs processes that must be followed.

In a recent IPC study, as many as 21% of Swiss respondents reported that they had to pay duty on their most recent purchase, and 61% of them were made aware of this only after their order. It is therefore important to ensure visibility of all costs, including transport, duties and taxes.

This means making sure that the necessary ‘master’ data is available for Swiss orders, including the ability to add net weights, tariff number, country of origin, and the value of the order (for tax calculation), and to be able to cover each stage of the order acceptance and fulfilment process.

For retailers with any reasonable volume to move into Switzerland, a forwarding operation using local expertise is likely to be the best option, and the generic process used by local experts Seven Senders and MS Direct, producing a 3-day delivery service, is described below.

Customer Order - Online orders go through into the retailer’s ERP (Enterprise Resource Planning) system or that of their fulfilment service provider.

Pick & Pack - Orders are picked, packed and prepared for dispatch. The ERP system generates a file with all the necessary information for the Swiss market and sends it to an FTP (File Transfer Protocol) server for import into Switzerland. The file contains the “must have” fields and the EU, and Swiss tariff number is inserted.

Collective Shipment / Dispatch - The selected forwarder receives the orders and creates the necessary documents (T2 document and printed invoice/bill collection, and possibly EUR1) for import into Switzerland. By example, Seven Senders can accept consolidated orders at pallet level by 14:00 for next day arrival in Switzerland.

Export / Import - Customs clearance must be provided by the Directorate General of Customs (DGC). By example; MS Direct AG facilitate this by submitting declarations electronically up to 24 hours before the arrival of the goods, including any adjustments of tariff codes, countries of origin or other necessary revisions.

Delivery - Parcels are then taken to the local distribution hub where the data file is updated with customs receipt numbers at item level and reported back to the retailer.

Customer - The carrier delivers to the end customer.

And similarly, with returns

Returns rates in Switzerland can be high – up to 40% for fashion and although cross-border return rates tend to be lower, they are increasing and almost doubled between 2015 and 2016 to 7%, according to IPC (International

Post Corporation).

To effectively compete with a “Swiss” shop on returns, means to having at least a sub-address in Switzerland and to optimise costs, it helps to consolidate and send returns together.

The process used by MS Direct and Seven Senders producing a 3 – 4 day returns service, is described here.

Customer returns - The Swiss shopper returns the item to a local sub-address of the retailer.

Return processing – This is where the local agent can undertake a number of key tasks before the goods are physically sent back. By example, subject to the guidelines of the client retailer; MS Direct can perform the following processes.

Consolidated returns can be weekly or monthly as specified but this timing can be changed. Data is prepared and managed in a similar way to the import process including the allocation of the customs receipt number. This is compared with the import data to ensure the duty drawback (refund of import duties paid).

Collection of returns – The retailer can ask their forwarder to collect the returns from the local processing point. In the case of MS Direct the forwarder will be Seven Senders for whom MS Direct prepares the necessary documents (collective invoices, export bill, transit document). Accurate documentation is important because when consolidated returns are sent to a central warehouse it is possible to recover the import duty on behalf of the retailer. This is significant, especially for fashion.

Re-import process for EU - The forwarder re-imports bringing the goods back to the retailers designated returns centre for further processing, return to stock or disposal. This can be done without any re-import charges provided the digital customs clearance process, as offered by MS Direct and Seven Senders, can show that the initial order originated somewhere within the EU.

Other Cross-Border Logistics Choices

If not using a forwarding operation, retailers do have other choices.

Post

Using Swiss Post as the final delivery agent, the retailer’s own domestic postal company can provide services to Switzerland. By way of example – via Royal Mail / Parcelforce (UK) options range from 1 day guaranteed (tracked) to 5 days (untracked).

However, the postal option is not particularly scalable in Switzerland, in part because of the different document requirements.

Country of origin carriers

Many domestic carriers in the country of origin will accept online retail orders and ship them to Switzerland through local service partners, perhaps using the forwarding option described above. Service times will vary depending on the service partner chosen. Retailers seeking a service contract with a domestic carrier should start by finding out what options they provide as a benchmark.

Global Carriers

For retailers wishing to keep their orders within a single network throughout, the major global carriers all provide collection and line haul services to Switzerland from most places in the world. Transit times and service parameters will depend on the country of origin and product but as an example, the services available to UK retailers are summarised below:

• UPS – From next day by 09:00 to 4 working days

• FedEx / TNT – From next working day to 3 working days

• DHL Express – From next working day by 09:00 to 3 working days

• DPD – From 2 working days to 5 working days

As with postal services, additional documentation and tolls required for Switzerland can be an issue when scaling up through this route.

Parcel brokers

Retailers with smaller cross-border volumes may initially be restricted to postal or public rate card prices because most contracts will require a minimum volume.

Parcel brokers provide a way of accessing better precontract rates through global and domestic carriers and, in the UK for example, companies such as Parcel2Go and Parcel Monkey provide this channel.

Integrators

Retailers with a reasonable volume of orders may wish to consider the additional option of service integrators who can provide immediate integration with a wide range of service providers delivering in the Swiss market. These will include most of the options above (excluding parcel brokers).

The retailer will typically need to have a direct contract with the service provider(s) and then the integrator provides the ability to: allocate orders to the most appropriate service using agreed business rules, print labels and customs documentation, provide tracking and help to manage returns. For smaller retailers, some integrators also offer a parcel broker option that can help obtain better rates.

For the Swiss market MS Direct; in cooperation with Seven Senders, aim to put cross-border retailers on the same footing as local Swiss retailers by offering.

• Consultation regarding local conditions

• Support in dealing with the authorities

• Digital export and import duties (EU and Switzerland) with advance accounting services for customs & excise and VAT and automatic reimbursement of customs duties

• Coordination of carrier management with strategic partners (transport/customs clearance) with full freight forwarding and shipping and integration/ interface connection

• Pricing of merchandise range with EU and Swiss customs tariff numbers

• Returns processing at a Swiss location

• Data consolidation/distribution

Delivery in Switzerland

Any retailer entering the Swiss market will naturally be competing with local Swiss shops, so it is important to understand the services offered by these domestic merchants. In Switzerland, by far the biggest service provider of parcel delivery services is Swiss Post, and in 2017 two thirds of Swiss retailers made use of their services.

In 2016, Swiss Post delivered around 122 million parcels, and if this represents 44% market share, we can estimate the total Swiss parcels market in the region of 275 – 300 million parcels per annum.

Local Services

Given that Swiss Post has such a large share of the domestic market, it makes sense to benchmark against its service levels to see what Swiss shoppers expect. The two main Swiss Post services are:

• Two working days — PostPac Economy option – 97.2% on-time delivery

• Next working day — PostPac Priority option – 98.1% on-time delivery

• Evening and Saturday option

• Both services carry parcels up to 30 kilos and provide full track and trace, 2 delivery attempts and in-transit liability cover of CHF 500

Other premium services are provided as:

• Swiss Express — before 09:00, Monday to Saturday

• Same Day — drop off between 10:00 and 13:00 for delivery between 14:00 and 17:00 or 17:00 and 20:00 within a specific same day area

• Direct with Evening – designed for retailers to deliver local customers. Swiss Post provide delivery containers which the retailer can pack orders into, drop off at their local centre and have delivered the same evening. Empty containers are collected from the customer.

Overall, same day delivery is still a niche service, especially when extra cost is involved but as well as Swiss Post, DPD, DHL and smaller courier innovators like notime are trying to develop this market with time slot and same day services.

For cross-border orders into Switzerland, Seven Senders confirms that its most used service is the Economy solution provided by Swiss Post, but this may need to change as leading domestic retailers are increasing their use of Priority (note: Amazon launched in Switzerland in November 2017 and offers next day delivery for orders fulfilled in Switzerland, as standard). Research by VSV of its members dispatches through Swiss Post provides evidence showing that leading Swiss retailers now send up to 40% of their volume by next day delivery*.
(*Source: VSV – Swiss Distance Selling Association – March 2017)

However, there is still an opportunity for cross-border retailers to compete by offering faster delivery as there may be some way to go before next-day delivery is fully available from Swiss domestic retailers as this small sample suggests.

Source: Statista – survey of 50 Swiss online retailers

There’s further encouragement in the fact that cross-border sales are growing steadily and stronger than the “normal” online growth, according to VSV* which estimates that approximately 1/6th of Swiss consumers now shop cross-border. (*Source: Online- und Versandhandelsmarkt Schweiz 2016)

Given the evolution in the use of delivery services in Switzerland, as well as the services offered by Swiss Post, cross-border retailers must also be aware of those offered by its main competitors:

• DPD:

   • DPD Comfort – Next day signed for

   • DPD Home – Next day not signed for – safe place or letterbox delivery

   • DPD Precise – Same day, next day or Saturday – 2 hour booked time slot

• DHL Express

   • DHL Same Day – Sprintline

   • DHL Express – Domestic next day delivery - 10:30, 12:00 and 18:00 options

Of course, using dynamic carrier management solutions such as provided by Seven Senders, it is possible to create a virtual carrier network and switch between services and carriers to deliver an optimum service.

Click and collect

For non-Swiss retailers without store networks of their own, 3rd party click and collect offers an opportunity to provide an alternative delivery option. Swiss consumers are active users of click and collect so it is worth including this option. A recent snap shot sample* of 6 leading Swiss retailers covering 4 million orders showed that about 10% were fulfilled through click and collect, although it wasn’t clear whether this was from the store or a third-party network. This is not inconsistent with the market share data shared earlier.

(*Source: VSV – Swiss Distance Selling Association – March 2017)

Third Party Click and Collect

Swiss Post operates two parallel click and collect services:

• PickPost, through 2,300 access points

• MyPost 24 through 80 locker box terminals providing 24 hour pick up / drop off facilities

To use these services the customer has to register with Swiss Post but can then use their chosen PickPost or MyPost24 address to have parcels delivered to them. The parcel must go through the Swiss Post network so the delivery provider chosen must have an arrangement with Swiss Post.

Other click and collect networks in Switzerland are provided by:

• DPD Shop providing a network of 600 pick-up locations

• notimePICK - Manned ‘same day’ locker locations at various train stations across Switzerland

• Swiss Paket (www.swiss-paket.de) allows Swiss shoppers to have an order sent to a German address and pick it up in Switzerland (in the area close to the border).

• Swiss Post is now (January 2018) testing an extension of its network using major Swiss retailers (Migros, COOP, Denner, Aldi) - currently available in pilot stores.

Swiss shoppers delivery requirements

When a retailer is deciding on the delivery offer to provide it is important to consider the needs and wants of Swiss online shoppers and to recognise that it is competing with domestic retailers.

Trust is important to Swiss consumers and across such a compact population recommendation is a powerful tool. Strategically logistics is an area where retailers try to differentiate themselves by offering more reliability, flexibility, choice, and faster service options. The Swiss market is not as price-sensitive as many and there is a strong demand for quality and good service, for which shoppers will pay. It is therefore important to get the delivery offer right.

High quality does not necessarily mean high speed, however. Despite the rise in next-day delivery, most Swiss shoppers value reliable and predictable service over speed, and prefer delivery to home. ‘Safe place’ delivery* is common and Swiss Post and DPD both offer consumer opt in services to allow shoppers to manage their delivery preferences. (*Source: Delivery to home – where the parcel is left without signature)

Swiss Post My Consignment

My Consignment allows the subscriber to specify a neighbour, a designated safe place, an alternative address or specified delivery day. It is largely free to use, unless options such as delivery in the evening, early morning or to an upper floor are required.

As soon as Swiss Post get a parcel or registered letter for that person they send an email or SMS advising the sender/origin, the estimated day of delivery and time window, whether a signature is required and any cash-on-delivery due.

DPD Follow My Parcel

Follow My Parcel allows live tracking of an expected parcel — notified by the sender, from a delivery card or by DPD Precise (pre-delivery SMS or email alert service). The customer can sign up to Follow My Parcel or use DPD Precise to redirect or change their delivery preference up to 15 minutes before delivery:

• Authorise delivery without signature to a specified safe place

• Arrange delivery to a new address including a specified neighbour

• Arrange a new delivery date

• Have the parcel sent to a DPD pick up location – DPD Shop

It is worth investing in the delivery offer because, as well as being high annual spenders, Swiss shoppers also spend more than average on each purchase, so supporting a higher cost of delivery. A recent study of crossborder shoppers across 26 countries by the International Post Corporation (IPC) showed that 29% of the Swiss respondents bought an item worth 100 CHF or more, compared with only 18% on average. The most common product value was 100-199 CHF, which accounted for 18% of their most recent cross-border purchases. However, value for money is still important as shown by the fact that 75% of shoppers said they have shopped cross-border more over recent years because of better prices than they could obtain at home*. (*Source: Swiss e-commerce consumer behaviour, 2016, Netcomm Suisse/Contact Lab)

Free delivery is not yet fully established in Switzerland* so there is still opportunity to charge for it, but this is likely to change. Despite the underlying increase in next-day delivery, 90% of consumers will generally accept a free 2-day delivery when offered by a Swiss retailer, rather than pay for a next day service and, increasingly some consumers will wait up to a week for free delivery. (*Source: Recent IPC research suggests that 50% of deliveries attract a delivery charge)

However, Amazon launched in Switzerland in November 2017, and offers next-day delivery for orders fulfilled in Switzerland, as standard. It is therefore possible that Swiss shoppers’ expectations could change in the short term. Swiss retailers use the temptation of free delivery to get shoppers to increase their basket value, and the average free delivery basket value by sector is shown here.

Source: de.statista.com/statistik/daten/studie/568368/umfrage/mindestbestellwert-fuer-kostenfreie-lieferungder-schweizer-online-shops/

Returns Requirements

It is important to make returns as easy as possible and returns can be facilitated through Swiss Post or often by the carrier chosen to deliver the initial order. Some of these also provide drop off networks such DPD Shop with 600 drop off points third party drop off networks can also handle returns such as Päckli Punkt with 1,000 drop off locations.

Optimising customer experience

Swiss shoppers are very used to shopping cross-border. Traditionally this has involved making a car journey to a neighbouring country, probably on a monthly basis, to stock up on groceries and other requirements. A key motivation has been the comparatively lower prices in France and Germany. For much of the population, this would have been impractical, so the advent of online trading has been welcomed.

International merchants are advised not to take the apparent wealth of Swiss shoppers for granted though. Yes, they might on average have a higher level of disposable income but with the highest savings rates of many Western economies, they also have a history of keeping hold of their money. The value proposition is key. That doesn’t necessarily mean the cheapest offering, but the best value by choice, availability and localisation. Swiss shoppers will pay more for a quality, reliable service.

Keys to success in the Swiss market include:

1. Choice — offer something that isn’t already available in the Swiss market or at the very least, make it more accessible and available.

2. Localisation:

   a. Language — offer your site and customer support in at least one of the official languages and use native speakers for translation;

   b. Currency — unless you can always offer a better deal due to foreign exchange benefits, the Swiss Franc (CHF) currently trades strongly against Sterling (GBP) the Euro and US Dollar, then    offer prices in CHF;

    c. Clarity on pricing — legislation and consumer sentiment require that it is easy for consumers to understand exactly what they are paying; many international brands don’t display the final price until after the shopping basket is completed. Taxation requirements changed in 2018 so ensure your business is up to date on the requirements;

   d. Delivery — match local delivery offers. 2 working day is normal. Next day and Click & Collect are growing in popularity. Choose partners with local expertise and service offering;

   e. Payment options — Payment-on-Delivery and payment via invoice are popular with Swiss Post able to take door-step card payments. Online though, cards aren’t popular.

3. Marketing — For online businesses digital marketing is the obvious first step. This isn’t wrong, but the Swiss market still responds well to other marketing channels, such as print.

4. Mobile — high levels of smartphone usage and domestic merchants’ mobile-optimised websites

suggest that an international merchant should at least be able to match that

5. Infrastructure — the overall market potential might not warrant big investment ‘on the ground’. Choose local partners with experts to deliver cost-effective services to domestic requirements.

eCommerce in Switzerland is growing rapidly to fill a need, and cross-border is no exception. The overall market size might suggest modest aspirations, but shoppers’ appetite is there for merchants who deliver the appropriate proposition.

A stable economy and government, consumer demand for value, and an openness to trading internationally suggest that for businesses who get it right, Switzerland will be one of the safer international expansion projects.

 

 

 

Demographics

Political and socio-economic environment

Online and mobile usage

Online shopping behaviours

Marketing and branding

Finance and payment

Legal framework and regulation

References

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