Recent events, such as Brexit and Covid-19, have highlighted both the opportunities and challenges of cross-border eCommerce.
As the UK begins to form its own free-trade agreements, merchants in countries, such as Australia and the Asia-Pacific region, stand to gain access to a whole new group of customers. But the increased cost of freight, due to the disruption of global supply chains during the pandemic, could be a barrier to this.
While offering international shipping remains a great way to increase sales and minimise reliance on a single market, the decision shouldn’t be taken lightly; getting it wrong might lead to delivery delays, unexpected charges and unhappy customers.
The cornerstone of any successful growth strategy is market research. Before you take the (virtual) leap overseas you need to be confident that your product will appeal to international buyers, ensure the price point will resonate and conduct extensive competitor research.
If all the signs point to success, then you’re ready to consider these overseas shipping fundamentals.
1. Duties and taxes
Calculating duties and taxes are vital to ensuring your international shipping rates cover the full cost that’ll apply to each product you ship, you should account for them within your price point, or set your shipping policy appropriately.
Duties are calculated before your product is released from customs in the destination country, and are based on factors such as product value, trade agreements, country of manufacture and use of the product. We’ll admit; this is one of the more complicated aspects of shipping internationally, as each country has different rules and regulations around the duties and taxes it applies.
These fees can either be paid by your customer, or covered by your business, but more on that in the next point.
The good news is, there’s a certain value below which goods can be shipped before duties and taxes apply. Check the destination country’s de minimis threshold to work out what will apply to the products you are planning to ship overseas.
Depending where you’re based and what you sell, you may be able to ship your goods to the destination country without incurring any import duty at all. Australia has a number of free trade agreements in place, such as the Australia and USA agreement (AUSFTA), which makes allowances for Australia-made products. The Department of Foreign Affairs and Trade website has all the info.
Meanwhile, some countries in the Asia-Pacific region, such as Singapore and Vietnam, have free trade agreements with the UK and EU, which have removed or reduced tariffs on imports from these places. The UK and EU are actively seeking free trade agreements with other countries in the region, such as Thailand and Indonesia.
2. Incoterms and shipping policies
International Commercial Terms or ‘Incoterms’ are a set of rules which define who is responsible for what during international transactions. Put simply, they will make trade between your business and international buyers and wholesalers a whole lot easier.
Also known as shipping policies, you’ll need to display your incoterms on your website, and ensure they are clearly communicated with your buyers, to avoid costly misunderstandings and poor customer experience.
One of the most common incoterms is delivery duty unpaid (DDU), in which the customer is responsible for paying all duty on the product they are buying. In this case, it’s crucial to ensure your customer is aware of any potential import duties and taxes before shipping, this will avoid shipments being delayed at the border, awaiting payment.
The alternative (and arguably more customer experience-friendly approach) is delivery duty paid (DDP), in which the responsibility of duties and taxes falls to you, the seller. If you have the means to offer DDP for your customer, their experience will be much richer than DDU.
Some products come with restrictions and require import permits to allow them into the destination country, and these can be more unusual than you’d think.
For example, did you know that the commercial sale of international calendars is restricted in Vietnam? There is a common shortlist of prohibited items that’s definitely worth checking out. The destination country’s customs websites should be your first port of call when working out if restrictions apply to your products and how to apply for the permits.
If you find that some of your products carry restrictions to certain countries, it may be worthwhile ensuring customers from those countries do not see web pages for the products in question. This can be done by setting up customer groups, and as a further note, customer groups can also be set up to segment customers by price point – great if you’re planning to communicate country-specific discounts and offers, or display prices in the destination country’s currency.
4. Size and weight
Size does matter when it comes to international shipping rates, shipping costs are usually charged at the greater cubic and gross weight, so it’s important to ensure goods are well packed and the volumetric weight is kept to a minimum.
In order to calculate roughly how much it’ll cost to ship items, you could focus on getting product weights and dimensions for the heaviest or largest 20% and smallest or lightest 20%, as these will have the biggest effect on the rates and could allow you to offer flat rates for specific regions (i.e Asia-Pacific, or North America) based on your findings.
Or, the alternative option for calculating international shipping costs is to obtain live rates in real-time, as and when orders come in and notifying your buyer based on their shopping cart. This is the best way to ensure you’re getting the cheapest international shipping option for your customers.
Packaging your product appropriately for transit is vital. Breakages, leakages, and perishables should not be part of the unboxing experience, so take time to consider how you’ll pack your goods, before offering to ship long-distance.
As an online retailer, the expansion into international markets is an easy transition, after all, that’s why they call it the world wide web. And with a potential global market of 3 billion, offering international shipping is an exciting prospect and one that opens the doors to a whole world of new opportunities.
If you’re unsure which market to enter first, you may want to start by analysing your own website traffic to see whether you have any existing international customers and where they are from. Or, you can use Google Search data to see where there is high demand for the products you sell. You don’t necessarily need to limit yourself to places that speak the same language or are geographically close. Anywhere with access to high-speed internet and surplus money to spend is well worth considering.
- Carefully consider which products to offer to overseas buyers – restrictions, packaging and de minimis thresholds could hold the key to which will work and which won’t
- Good shipping policies are crucial to customer satisfaction, even if you think it’s obvious, spell it out on your website anyway and always be transparent about all associated costs and shipping times
- Personalise your website to ensure international visitors only see products they can buy, in the currency they will pay in, and receive marketing comms that’ll convert