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Inventory & Shipping
Don’t Let Selling Internationally Scare You
With research, persistence, courage, it’s do-able
By: Rachel Coleman
Comments: 7
Matt Alper launched Copshoes.com three years ago from his living room in San Antonio, Texas. His idea was to sell specialized shoes and boots to police, firemen and security personnel. Now, three years later, he’s moved into his own warehouse, he has 11 employees and 10 percent of his total sales come from outside of the U.S.
“We’ve learned many lessons about selling internationally,” said Alper. “The two primary issues are credit-card fraud and shipping. Any U.S.-based ecommerce business that sells internationally deals with them. It’s not just us.”
Credit Card Pro Offers Fraud Prevention Steps
John Waldron is co-owner of e-onlinedata, inc., a credit-card merchant-account provider. e-onlinedata assists thousands of ecommerce merchants with domestic and overseas credit-card transactions, and he offers the following advice for merchants who wish accept credit-card payments from international customers.
1. Ask customer for fax verification. For suspect orders or large orders, ask the customer to fax the front and back of his credit card as well as a form of identification. This is better than a phone call.
2. Call your credit-card processor. Your credit-card processor has a staff to assist you with questionable orders. Rely on their expertise.
3. Analyze the order, and be skeptical. Why would a customer purchase, for example, 10 routers? Likewise, why would an overseas customer request overnight shipping?
4. Overseas banks are different. Many overseas banks don’t support the card-code verification system, and they can’t verify billing addresses. Be aware, therefore, that these fraud-prevention steps may not help you with cards that have been issued from such banks.
5. Do a BIN look-up. The first six digits of a credit card are called the bank identification number, or BIN. They tell you which bank has issued the credit card. Go to http://all-nettools.com/toolbox,financial, and enter these six digits. If the issuing bank is located in a country that is different from where the order is originating, you should investigate further.
6. Purchase fraud-detection tools. Many credit-card banks and payment gateways offer effective fraud detection tools that are incredibly inexpensive. Use these tools.
Credit-card fraud occurs when a thief steals a credit-card number (or, purchases a stolen credit-card number) and uses that number to buy legitimate goods and services from an unsuspecting merchant. The merchant will not get paid for the merchandise, but he’ll have to pay the credit card fees and he’ll lose the merchandise because he’s shipped it to the thief. This type of fraud happens every day, and everyone agrees ecommerce merchants selling products internationally are especially vulnerable. That’s because many developing and Third-World countries do not and cannot properly police these thieves and, moreover, the market for buying and selling stolen credit-card numbers is largely outside of U.S. boundaries.
U.S.-based ecommerce merchants who sell products internationally quickly learn these lessons and take appropriate precautions. Ben Boxall is president of VR3 Wholesale, a Los Angeles-based importer, wholesaler and retailer of aftermarket automotive products. Boxall’s company sells its products through several ecommerce sites (vr-3.com, vr3wholesale.com and roadmasterusa.com) it owns and operates.
“We export roughly 1,200 orders a week outside of the U.S.,” says Boxall. “And we’ve learned many credit-card fraud precautions. For one, there are certain countries that we simply will not ship orders to because we’ve received too many fraudulent cards from them. These countries include Latvia, Nigeria, Czech Republic and many others.”
“Second, we individually review each order over $250. We call every customer who placed that order unless it’s a repeat customer who’s previously been approved by us. For our company, we’ve found that fraudulent orders are generally greater than $250 each.”
Boxall continues, “We have other checks, too. We never ship to a post office box. We always compare the credit card billing address to the shipping address. And, we have what I call our ‘too-good-to-be-true rule.’ That is, if an order arrives that’s too good or simply doesn’t look right, we’ll refund the credit-card charge and reject the order. That probably cost us some legitimate business, but it also prevents us from losing money from stolen credit cards.”
Copshoes.com’s Alper will not ship to Venezuela, Indonesia or Nigeria, among other countries. “I once shipped goods to Indonesia that were, as it turns out, purchased with a stolen credit card,” says Alper. “I got so angry that I called the Indonesian embassy in Washington, D.C. It was unbelievable. They told me they couldn’t help because the Indonesian national broke no Indonesian law since it was a stolen American card. So I learned a lesson there.”
Alper agrees with Boxall that an experienced merchant can frequently detect fraudulent orders. Alper says that sudden orders from a single country will raise concerns, as will large purchase amounts and orders with multiple quantities of the same product.
Shipping Hurdles
But credit-card fraud is not the only concern for merchants who sell internationally. How to ship the products, many experienced merchants say, is the other primary issue.
Mark Romero is co-owner of Siamese Dream, a California-based retailer of clothing and gift items. Romero launched the business in 1998 as a brick-and-mortar operation, and he created Siamese-dream.com, its ecommerce site, in 1999. The business has five employees in addition to Romero, and roughly 7 percent of overall sales are outside of the U.S.
“We’ve shipped products to 19 different countries,” says Romero. “We’ve found that sending these via the United States Postal Service works best. It’s far cheaper for us than using, say, UPS or FedEx. And, we’ve found the shipments seem to clear the overseas customs process better using USPS than the other carriers.”
Many merchants agree USPS is less expensive for smaller international packages than private carriers such as UPS and FedEx. But, these merchants say, there are drawbacks. For one, merchants cannot track an international package using USPS, but they can track it using private carriers. Second, the USPS coordinates its international shipments with the postal services of recipient countries and, depending on the country, the local postal service may be unreliable.
“You learn,” says Copshoes.com’s Alper, “which countries have good postal services and which do not. Canada, England, Greece and others are quite good. But China’s postal service, for example, is terrible.”
“Lots of international customers don’t understand how expensive shipping can be,” said Romero. “It can be a material portion of the purchase and we are careful to find the least expensive shipping option for them.”
Alper has installed a shipping calculator on his site to assist his international customers determine the shipping cost. He uses the USPS for his international shipments. “The USPS is by far the cheapest, but the lack of tracking can be a problem. Also, if a package is lost, you are frequently dealing with local, overseas postal services. That can be a real hassle.”
VR3’s Boxall agrees that, for smaller packages, the USPS is the cheapest. But for cartons and pallets of goods, Boxall says that he uses UPS. “The UPS provides very helpful information for international shipments,” said Boxall. “I’d encourage merchants to visit both the UPS website and the USPS site. They have lots of advice to help with overseas shipments.”
Boxall also relies on his order-management software to help manage international shipments. Says Boxall, “We use Interapptive’s ShipWorks software to manage all of our orders, including international ones. It’s incredibly helpful. It sorts between domestic and international orders and it automatically prints shipping labels and customs forms — saves us tons of time.”
For ecommerce merchants who ship with the USPS, Boxall offers this advice. “You can negotiate volume discounts with the postal service for certain types of shipments. Many folks don’t realize that. Also, we use boxes and forms supplied by the postal service, which reduces our costs. Because of our volume, the postal service has even agreed to customize boxes for us with our VR3 logo for no additional cost. “
All three merchants have learned valuable lessons about international sales in addition to credit-card fraud and shipping matters. “Toll free numbers don’t work overseas,” says Copshoes.com’s Alper. “Selling products in local currencies can increase your profit margin,” says VR3’s Boxall. “Make sure the customer realizes he’s responsible for import tariffs and customs’ fees,” says Siamese Dream’s Romero.
The three merchants also agree that, in the end, the extra effort is worth it. “It’s far too big of a market to ignore,” said Matt Alper. “It’s profitable business for us, international customers tend to be repeat buyers, and it’s a segment of our business that we hope to grow.”
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Published on Wednesday, January 31, 2007
Comments:
I would love to sell internationally in my small business but my entry-level shopping cart with GoDaddy won't allow foreign addresses...even though I only sell an ebook online and don't need an address! Very frustrating. (My merchant account has no problem accepting international addresses...it's strictly my cart that can't deal.) I've spoken to GD about this and it doesn't even seem like they're working on this issue. :-(
Posted by: Lori Feldman
Thursday, February 01, 2007
Is there any site that lists countries that are more "trustable" or those that are "risky" This article mentioned a few- I was wondering about Australia in particular.
Posted by: Mike Batson
Wednesday, February 07, 2007
I was surprised that Ms. Coleman did not mention in her article “Don’t Let International Sales Scare You” geolocation as a simple solution for preventing fraud and complying with local laws for ecommerce sites doing international business.
Many ecommerce sites are turning to a web geography technology called geolocation, which immediately determines the real-world geographic location of a website visitor - from country of origin down to city-level accuracy if desired - at the instant he clicks into the site.
My company, Quova, does this by mapping the 1.4 billion Internet Protocol addresses on the web with a worldwide data collection network, proprietary mathematical algorithms and expert human research. The online visitor’s location is identified through data gathered from the Internet infrastructure itself, not the user’s machine, so personal privacy is never endangered. At country level, the user’s location can be determined with 99.9% accuracy.
The impact of this capability is profound. The enforcement and jurisdiction of virtually all real-world laws and regulations are, in some form, based on geography - the borders and boundaries visible on any map. By superimposing those borders on the Internet, geolocation enables the online enforcement of many of the same laws that govern conduct - and commerce - in the offline world.
For example, many online casinos are incorporating geolocation into an integrated solution that one provider refers to as a “compliance engine.” A customer clicking into an online casino site would immediately be pinpointed geographically, then passed through a succession of modules designed to confirm age, identity and financial data. If any red flags were raised, the customer would be ejected from the automatic process and confirmed (or blocked from betting) manually.
But, the regulatory issues addressed by geolocation go far beyond the Internet casino. Providers of digital content - live sporting events, downloadable software and online movies and music - also have compelling reasons to assure regulatory compliance. US software vendors, for example, are forbidden by law to do business with nations known to sponsor terrorism (Iran, Syria, North Korea). Knowing a customer’s location before permitting a software download can prevent severe legal consequences.
Perhaps the most compelling application of geolocation technology, however, is in crime prevention. With online fraud losses soaring, ecommerce and financial services companies find themselves in urgent need of new fraud prevention solutions.
Geolocation is one such solution, because the geographic location of a proposed transaction can be a significant indicator of potential fraud, particularly when that location doesn’t match the address provided by the customer. In the real world, a bank credit card application listing a US home address that arrives in an envelope with a Ukraine postmark would undoubtedly cause concern in the credit office. An attempted online purchase presenting a similar contradiction should raise a similar alarm - Experian research has determined that when a customer provides a registration address in one US state but actually places the order from another, the transaction turns out to be fraudulent a stunning 68.1 percent of the time.
Transactions across national borders raise the red flag higher yet - international transactions represent nearly half of all credit-card chargebacks, and a short list of nations (Russia, Yugoslavia, Nigeria and Romania among them) produce some 60 percent of all fraudulent transactions.
Knowing the level of risk, ecommerce companies can use geolocation to flag suspect transactions and address them individually. Where the risk from a particular location is extreme, that location can be blocked to all access - a step most enterprises hesitate to take because of the risk of blocking legitimate customers. But in light of the highly-publicized losses suffered by some online financial providers, the effort to address fraud risk serves not only to protect the enterprise’s bottom line, but to build trust among customers that account information is being protected to the fullest extent possible.
If you would like more information please contact info@quova.com
Kerry Langstaff
Vice President, Marketing
Quova, Inc.
650-528-3715
Posted by: Kerry Langstaff
Wednesday, February 21, 2007
Last month, I was looking to buy a credit card processor. But I was not sure about the things I should look for before making the final decision. Then I came to know about an e-book. It helped to buy the credit card processor online. I thought it might be helpful for you therefore wanted to share that you can get the e-book at http://www.merchant-accounts.com/e-book.pdf
May be it will help your time to make final decision before making an order to buy credit card processor.
Posted by: Jude Pickrell
Tuesday, April 03, 2007
This is a great article. I have a couple short comments.
1) Mike posted a question above about a list of countries that shouldn't be trusted. Look to the insurance carriers and what countries they exclude. http://www.DSIinsurance.com is a one that is trusted by ebay. Shipwire has a list of excluded countries on their website too here: http://help.shipwire.com/outbound-insurance/
2) The weak dollar may mean that more international buyers are shopping from U.S. merchants. So, if you start to see more international buyers that could be a reason why.
3) Another solution to shipping internationally is geographically diversifying your inventory. As an example, I'm a manufacturer and seller of travel bags. I have them made in China and I import them into the U.S. I sell 60% of my inventory in the U.S., 20% to Canadian buyers and the other 20% worldwide.
Why not make it easier for Canadian buyers to purchase for me. If I ship from the U.S. I'm making it hard for them to buy as each order needs to clear customs, The shipping charges internationally can be large and the time to fulfill is longer.
My example seller could move 10-20% of his inventory in bulk to a Canadian warehouse, clear customs once and then use the Royal mail to ship from there.
Good idea your saying...but how easy is it. Simple now.
Outsourced order fulfillment companies like http://www.shipwire.com can be plugged into the back of your webstore, offer U.S. and international warehouse s (toronto Canada is one), and have up front pricing, no contracts and no commitments.
I work at Shipwire and you can call us or visit us online to find out how to do this. http://www.shipwire.com
Nate G
888-Shipwire
Posted by: nate
Tuesday, December 11, 2007
In response to Mike Batson, Australia (where I live) and New Zealand (its little next-door neighbour) are very trustworthy countries to receive orders from.
I use Australia Post's Express Post satchels which mail my products overnight to capital cities and within 3 days to New Zealand. I haven't sold to the US yet but intend to. However first I'll have to sort out the currency converter on my website and get a foreign currency bank account so Americans can buy with $US rather than $AUD.
Elizabeth Ball
Posted by: Elizabeth Ball
Thursday, February 28, 2008
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This article was very informative. Thank you!
Posted by: Fidjiti
Thursday, February 01, 2007