5 Tips for International Shipping

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.