According to
eMarketer’s latest forecasts, worldwide business to consumer ecommerce sales
will increase 20.1% this year. Growth
will be driven by the online and mobile user bases in emerging countries, with
Asia-Pacific surpassing North America for the first time as the world’s largest
regional ecommerce market. As ecommerce
continues to grow around the world, selling internationally represents a major
opportunity for most online retailers.
Along with the opportunity come challenges. Beyond issues such as international
marketing, web site localization, local regulations and foreign currency
issues, online retailers need to properly package a product, affix a proper
address label and required documentation and select a cost-effective and
reliable delivery option for delivering their products to customers around the
world. With online retailers facing such
issues, we thought we would share five tips for online retailers to help them
with their international shipping.
Start Slow and Focus on Specific Countries
Countries have vastly
different rules and regulations with respect to the importation of
products. To start, online retailers may
wish to focus on countries where FTA’s (see below) are in place, language is
not a barrier and they have large and growing communities of online
shoppers. With respect to language and
FTA’s, Canada and Australia may be logical choices. Add in the U.K. as English speaking and
online retailer may start with three relatively easy countries that represent a
significant percentage of global ecommerce buyers. In addition, these countries have better
developed infrastructure and more reliable delivery systems thereby increasing
the probability of a successful delivery.
Know Your Fully Landed Costs
In addition to
shipping costs, duties and taxes are applied by the destination country for all
goods shipped into a country. Product
and shipping costs along with duties and taxes are often referred to as the
total landed cost for a product and online retailers will want to know this
number prior to marketing products in a target country. Duties and taxes are calculated based upon
five factors, product value, trade agreements, country of manufacture, use of
the product and the product’s Harmonized System (HS) code. The United States has 14 free trade
agreements (FTA’s) in force with 20 countries.
FTA’s are in place with countries such as Canada, Mexico, Chile, Peru,
Australia and Singapore. Targeting
countries with FTA’s may be a good marketing strategy as buyers pay less duty
for goods made in the U.S. compared with similar goods from countries without
FTA’s. The government maintains a very
good web site that provides exporters with much information on duties and taxes
and related information. http://export.gov/logistics/eg_main_018130.asp.
One other important
aspect of shipping internationally is that some carriers collect duties and
taxes upfront while others collect duties and taxes upon delivery. In general, postal carrier deliveries collect
duties and taxes upon delivery (DDU-delivery duty unpaid at entry). Various other carriers and services calculate
duties and taxes upfront and allow the buyer to see the fully landed cost prior
to purchasing. In this case, the buyer
prepays the duties and taxes (DDP-delivery duty paid prior to entry). In the ecommerce marketplace, there is much
discussion and debate these days as to the pros and cons of DDU vs. DDP
deliveries.
Choose the Right Products
In general, smaller,
lighter weight and easier to ship products make the most sense for online
retailers and international shipping.
Higher value products may warrant extra insurance and a higher caliber
delivery service that provides better tracking and a higher probability of a
successful delivery.
Get the Label Right and Include Proper Documentation
Once the product is
packaged, it is critical to get the proper address label on the package. One simple tip that greatly increases the
chances of a successful delivery is to spell the destination country name in
all capital letters. This helps increase
the accuracy of proper routing when the package leaves the origin country. International addressing tips may be found at
https://www.usps.com/send/international-addressing-tips.htm.
In addition, in order
to reduce the costs of return postage for refused or undeliverable packages,
online retailers can place an endorsement on the label that surrenders the
merchandise to the local carrier rather than transporting the shipment back to
the origin. The product is to be
destroyed. Obviously, forfeiting the
product only makes economic sense for lower value merchandise where the cost of
return postage and reprocessing outweighs the value of the merchandise.
While there are
certainly a number of international address verification software solutions,
the market is still emerging and developing.
Leading USPS postage vendors such as Endicia.com have yet to incorporate
international address verification into their software platforms.
Choose the Right Carrier and Track It
When it comes to
international shipping, there are many carrier options and a multitude of
different services available to online retailers. A shipper’s needs are largely going to
dictate the carrier selection. If the
value of the value merchandise being shipped is low, an online merchant may
seek a low cost international shipping solution so as to lower the total landed
cost. If a shipper is experiencing a
large number of returns, they may wish to explore a DDP shipping solution as a
means to lower return rates. For high
dollar merchandise or in the case of extensive fraud, a shipper may wish to
utilize a carrier that provides enhanced tracking and insurance.
As a general rule, the
USPS offers a greater range of international shipping solutions. Products range from a 1-3 day guaranteed
service with Global Express Guaranteed to First Class Package International and
First Class Mail International. Delivery
times vary by destination country. The
USPS and postal agencies from most other countries maintain inter-country
postal agreements that facilitate the movement of mail between countries. The USPS ships to over 180 countries around
the world.
About the Author
Mich Bayley is the Founder, President, and CEO of SP Express. Mr.
Bayley has over 20 years experience in operating, building and investing in
rapidly growing companies across multiple industries. Prior to founding SP
Express, Mr. Bayley was co-founder and CFO of PrimeSource Healthcare, a leading
manufacturer and distributor of specialty medical products in the United
States. At PrimeSource, Mr. Bayley successfully completed numerous debt and
equity offerings and negotiated, acquired and integrated eleven strategic
acquisitions including a reverse merger with a public company. Prior to PrimeSource,
Mr. Bayley was a Vice President in corporate finance with Chase Manhattan Bank
in New York City. He spent a number of years in Chase’s Merchant Banking and
Private Equity Investment Division where he helped manage several of the bank’s
portfolio companies.
Mr. Bayley was born
and raised in Dayton, Ohio and graduated with honors from the University of Arizona
with a bachelor’s degree in geological engineering. He earned his MBA from the Fuqua School of Business at Duke University.
