Consultant Insight: UPS partnerships aim to increase cross-border e-commerce revenue

UPS appears to have shifted from an acquisition strategy to a partnership approach to growing its e-commerce revenue more quickly, which is perhaps a smarter strategy for Big Brown. [caption id="attachment_69752" align="alignright" width="298"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo World columnist[/caption] One such deal can be seen in the late March announcement that UPS and ESW, the direct-to-consumer (DTC) e-commerce company, are partnering to expand cross-border e-commerce services. In what appears to be a new addition to UPS' Digital Access Program (DAP), UPS will provide international e-commerce and shipping capabilities. In contrast, ESW will provide omnichannel solutions, buy online, pick up in store (BOPIS)/click and collect, returns management, localized pricing and payments, duty, taxes and more to DTC brands looking to expand overseas. ESW is a subsidiary of Asendia, a cross-border solution from French postal service provider La Poste and Switzerland's postal service provider, Swiss Post. The joint venture launched in 2012. According to ESW's Global Voices 2022 survey, which measured trends among 14,000 consumers in 14 countries, cross-border DTC business increased between December 2020 and July 2021, with shoppers in the United Arab Emirates (53%), China (50%) and India (41%) leading the way with more than 40% of shoppers registering 11 or more purchases outside of their home country. However, despite the rise in cross-border shopping trends, ESW's survey also found that 27% of shoppers were discouraged from these purchases due to longer shipping times and higher transit costs associated with international vendors. "This agreement leverages our entire logistics and payments ecosystem as well as UPS' extensive global transportation network to remove barriers and alleviate the friction that often impedes brands and retailers from selling directly to consumers regardless of where they live in the world," said Patrick Bousquet-Chavanne, ESW’s president and CEO, Americas. UPS’ Digital Access Program The ESW partnership seems to be a new addition to UPS’ DAP. Launched in 2019, DAP is a group of strategic alliances and agreements intended to integrate UPS services more closely with e-commerce platforms and retailers. Stamps.com, EasyPost, Shopify and BigCommerce are among the companies involved. In 2020, UPS established a similar partnership with trade and e-commerce consultancy Global Brand to help small and medium-sized businesses (SMBs) in Japan reach more overseas customers via the world's leading online marketplaces. Global Brand supports Japanese businesses looking to expand to international marketplaces by advising them on product development and marketing to overseas customers. It also offers a proprietary international shipping platform specialized in cross-border e-commerce. "By partnering with UPS, we can help remove some of the perceived barriers to entry into the world of global e-commerce and demonstrate to SMBs in Japan that cross-border business can offer both a simple and potentially lucrative new revenue stream," said Takahiro Yamada, CEO of Global Brand. In 2021, DAP generated $1.3 billion in revenue. "Looking ahead, we expect DAP to reach more than $2 billion in 2022 as we add new partners and expand to additional countries,” UPS CEO Carol Tome told analysts in early February. “SMB opportunities outside of the U.S. are tremendous. And in the fourth quarter, our international SMB revenue growth rate was 18%. As we expand DAP, grow with SMBs across Europe and introduce new partnerships, we expect to gain overall SMB revenue share faster than the market growth.” Just today, UPS announced a partnership with Jumia, the African e-commerce platform, giving UPS access to Jumia’s last-mile capabilities and infrastructure in Africa. Meanwhile, the partnership expands African SMBs’ cross-border connectivity through UPS’ global network. A new strategy The partnership approach may offer UPS more positive long-term results compared with its former acquisition strategy. For example, in 2014, UPS acquired i-parcel. At the time, i-parcel global e-commerce merchants claimed to connect to more than 100 million global shoppers with an integrated platform providing a localized look and feel on merchants’ websites, as well as low-cost deferred international transportation. However, today, i-parcel appears to be a ghost of what it once was and instead looks to be more of a global tracking app. There have been other acquisitions to grow cross-border services, but UPS’ partnerships with various platforms appear to attract SMBs at rates more acceptable to them.

Consultant Insight: UPS partnerships aim to increase cross-border e-commerce revenue

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