Here are four considerations luxury brand shippers should keep in mind when moving their goods.
With the sales of personal luxury goods hitting a record high of €495 billion last year — up 5% over 2018 — well known luxury brands are all shipping a higher volume of goods worldwide. This puts added pressure on companies that need to select the best possible supply chain strategies and logistics providers for their high-end goods.
“For luxury brands, it’s all about image and client experience,” says Donna Lambert, Global Account Director for DB Schenker’s Retail Fashion Division, “so when it comes to transporting their products, these firms have a unique set of challenges to contend with.”
Four Strategies That Work
Here are four key considerations and Lambert’s advice for overcoming the challenges of shipping luxury brands in the Americas.
- Partner with a logistics firm that can meet the needs of your most demanding customers. Buyers of high-value bags, apparel, and shoes want their goods, and they want them. This creates demanding lead time requirements and viable logistics strategies must be developed in order to meet those market needs. And because most of the goods are shipped via air freight with volumes that fluctuate, there are capacity constraints ready to challenge any luxury goods brand that’s trying to get its products to its retail channels and end users on time. “By partnering with the right logistics firm, luxury companies gain access to buying power and air carrier partnerships,” says Lambert, “and get the best rates and capacity available on the market.” This logistics partner should also have a robust 7 day/week brokerage operation with a pre-clearance process. Experience in clearing luxury product is key as there are many complexities with compliance and challenges with Partner Government Agencies such as Fish & Wildlife and FDA. Utilizing a single service provider for transport and brokerage is definitely an advantage for speed to market.
- Create a robust, flexible logistics plan. Flexibility is key, especially in today’s market. With millennials driving growth in most sectors, luxury brands have to deal with a customer who has a different mindset and purchasing habits. This pushes the envelope in terms of what is being purchased and how it’s being purchased for all generations. Incorporating relevant product while maintaining brand integrity also means a change in the traditional fashion calendar – there can be more collection drops, special launches, collaborations, pop-ups, market tests, and so forth. “Staying ahead of this takes alignment with purchasing and supply chain teams and their logistics partner for better forecasting,” says Lambert, noting that based on these realities, dynamic transport plans can be created with the right capacity allotments, carrier mix and back- up plans. “Actual volumes versus forecasts can continue to be monitored, and then adjustments can be made as needed.”
- Look for ways to reduce the hefty fees associated with importing high-value products. A company that brings in dozens or hundreds of orders into the U.S. is probably paying a lot in per-order air waybill charges. Lambert tells luxury brands to take advantage of the weekly entry program for their shipments at FTZs (foreign trade zones) in order to avoid paying customs fees per-house air waybill. Defined as geographic areas where goods may be landed, handled, manufactured, or reconfigured, and then re-exported with less complex intervention of the customs authorities, FTZs allow manufacturers, distributors, importers, and other entities to defer, reduce, or even completely eliminate duties and fees on imported goods. “The maximum merchandise processing fee is $498 per customs entry,” she points out, “which means the luxury shipper that receives 100 orders per week can avoid the merchandise processing fee (MPF) per-house air waybill associated with their shipments and gain some significant savings as a result.”
- Leverage digitalization’s growing power. This is a shared challenge among luxury brands, where client experience sets these brands apart from one another. “Maintaining this experience through e-commerce sales and offering an omni-channel approach (seamless experience between sales channels) brings many obstacles,” Lambert points out. “Innovation and technology are key and an important component that a logistics partner also bring forward to offset some of the concerns from a logistics perspective, such as ‘last mile’ (the final stretch from the warehouse to the end user) and returns management.”
It’s Time to Challenge Your Supply Chain
Going forward, Lambert sees more road blocks and opportunities ahead for luxury brands that work to overcome the challenges outlined above, leverage e-commerce trends, and get their goods into customers’ hands quickly, seamlessly, and with the best experience possible.
“In this competitive environment, where speed to market and flexibility are musts, challenge your supply chain strategy and aim for the least amount of controlled disruptions to prevent possible revenue losses,” says Lambert. “Embracing e-commerce and m-commerce and linking traditional brick and mortar for a unified experience is a must. More sales channels equals more revenue. That’s the trend, and it’s not going away.”