1、 Definition
Overseas warehouse refers to enterprises exporting goods in bulk to overseas warehouses according to general trade methods. After overseas customers place orders, the goods are delivered from the overseas warehouse to their hands.
2、 Advantages
Shortening delivery time: Goods are stored in local warehouses overseas in advance, and customers can directly ship them from the local area after placing an order, greatly reducing delivery time and improving customer shopping experience. For example, shipping from China to the United States may take around 15 days, while shipping from overseas warehouses in the United States may only take 3-7 days.
Reduce logistics costs: By transporting goods in bulk to overseas warehouses, the transportation cost per unit of goods can be reduced. Compared to sending individual products directly from China to international express delivery, bulk shipping is more cost-effective, and the cost of local delivery is relatively lower.
Improving product exposure: For some e-commerce platforms, if sellers have their own warehouses overseas, local customers are usually more inclined to choose locally shipped products when shopping, which can increase product exposure and thus boost store sales.
Facilitating market expansion: The presence of overseas warehouses enables sellers to respond more quickly to local market demands, accumulate local customer resources, expand product sales areas and online scope, thereby helping sellers better expand overseas markets.
Provide convenience for returns and exchanges: If customers need to return or exchange goods, they can directly return the goods to the overseas warehouse, saving international transportation time and costs, while also improving customer satisfaction and reducing losses for sellers due to returns and exchanges.
3、 Disadvantage
High warehousing costs: After the goods arrive at the overseas warehouse, there will be warehousing fees, usually charged on a daily basis. Moreover, if the inventory turnover is poor and there is a long-term backlog of goods, the warehousing costs will continue to increase.
High inventory pressure: Sellers need to prepare bulk goods in advance for overseas warehouses. If they make mistakes in product selection or have inaccurate market control, resulting in unsold goods and poor sales, a large amount of goods will be piled up in the warehouse, which not only cannot be realized, but also further increases storage costs. Moreover, it is relatively difficult to handle the goods overseas, and sellers may face a dilemma.
Difficulty in capital turnover: Bulk stocking requires a large amount of capital investment, including stocking funds, logistics funds, and warehousing funds. The long capital return cycle can easily lead to inconvenience in the seller's capital turnover, and may even cause a break in the capital chain.
Poor overseas controllability: Overseas warehouses are greatly affected by uncontrollable factors such as local policies, social factors, local customs, and natural factors. For example, goods may be seized during import or confiscated at local warehouses, which can have a significant impact on sellers.
Greatly affected by the operational capabilities of overseas warehouse service providers: If there is a problem in a certain link of the overseas warehouse service provider, such as delayed delivery of goods, warehouse inspection, or confiscation of goods, regardless of which situation occurs, the losses caused to the seller may be irreparable.
The selection requirements for sellers are stricter: products shipped from overseas warehouses need to ensure quality and meet the needs of local buyers. For companies with a wide variety of products, deciding how many SKUs (inventory holding units) to stock in overseas warehouses is a challenge. Improper product selection or market control can cause irreversible losses.
High requirements for monitoring warehouse data of sellers: Sellers need to monitor detailed data of goods entering and leaving the warehouse, loading and unloading in real time, otherwise it is easy to cause loss of goods or mismatch of goods data.