Scary Parts of International Markets

By Rosemary Coates, President of Blue Silk Consulting
January 13, 2014 - SCMR Editorial

I just finished a consulting project for a major international brand that wants to enter the eCommerce market in Russia.  Although not new to eCommerce, my client was looking for a more in depth review of the possibilities and capabilities.

My own experience in visiting Russia in October was quite sobering.  I was warned repeatedly by the hotel and my other contacts, not to take a taxi anywhere unless the driver had registered and been sanctioned by the hotel. This is because taxi drivers can be criminals who will extort money from foreigners and leave them stranded in some unknown part of town. The Moscow subway was difficult to navigate because stations have multiple names. Apparently crime is high in Moscow and foreigners have to be particularly careful.

Among the many challenges with logistics in Russia, some are unique requirements that don’t exist in other places.  For example, when customers order fashion items over the Internet or via a call center, they expect overnight delivery to locations in Moscow and St. Petersburg.  But this overnight delivery also includes a specific appointment time and a fashion consultant who delivers the goods to the customer’s door and then waits while the items are tried on.  I suspect they also provide feedback…“That makes you look fat”  etc…

Russian customers are among the most demanding anywhere in the world.  But there are other factors at work here, too.  In order to deal with significant petty theft, packages would never be left on someone’s doorstep. They must be delivered and signed for in person.  Credit cards are not widely used via the Internet or over the phone in Russia, so the majority of transactions are done COD.  Russian Post is often slow and unacceptable for customers of eCommerce. Call centers are expected to follow up with every customer to assure satisfaction with their purchase.

The logistics challenges in the Russian market are significant.  The overall supply chain has to be flexible enough to accommodate creative solutions to inventory stocking levels, security, customs clearance and currency exchange.  Returns are very high because customers will often order multiple sizes and reject the unwanted merchandise which then must be returned to the fulfilment center and restocked expeditiously.

To address these issues in Russia, some eCommerce companies have developed fully integrated end-to-end eCommerce businesses including: web store development, web site and shopping cart management, call centers, fulfillment centers, delivery services and fashion consultants. Necessity is the mother of invention.

eCommerce can be a challenge in any country, particularly the Third World where delivery capabilities are underdeveloped. But there is no stopping the double-digit growth of on-line shopping around the world.  The unique requirements of B2C business are yet another avenue for which Supply Chain professionals must gain competence.



About the Author

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Rosemary Coates
President of Blue Silk Consulting
Ms. Coates is the President of Blue Silk Consulting, a Global Supply Chain consulting firm and the author of: 42 Rules for Sourcing and Manufacturing in China. (an amazon.com Top Seller) and 42 Rules for Superior Field Service. Ms. Coates lives in Silicon Valley and has worked with over 80 clients worldwide. She is also an Expert Witness for legal cases involving global supply chain matters.

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