How we increased our international business 40%
We increased our international business 40% recently. Our international packages, prior to this change, represented approximately 9.6% of all shipments. Since we made this change, they now account for 13.4% of all packages shipped.
We accomplished this by lowering our shipping prices. Duh, right? Well, not so fast. We were able to lower our prices by approximately 50% while maintaining the same level of service and without losing a penny.
UPS offers an international mailing service specifically designed for packages under 4 pounds within their Mail Innovations product line.
The way their service works is becoming very common: They partner with the USPS. You ship your international packages to a UPS sorting facility that prepares each package to be inserted into the USPS system. For doing this work for the post office, UPS is given far cheaper rates than you can get directly from USPS.
What’s fantastic about this service is that the prices are fixed regardless of country of destination. It’s the same per-pound rate if you’re shipping to Australia or if you’re shipping to India. This makes implementation a snap.
What’s even better about this service is that you are billed based upon fractional pounds! This means that if your per-pound rate is $6, you would only be charged $9 for a 1.5 pound package. Typically, UPS rounds a 1.5 pound package up to two pounds. Not with this service. Here’s how it works: UPS weighs all of the packages that you give to them for the day and applies your per-pound rate to the total. They do not apply the per-pound rate to each individual package.
You must send a minimum of 5 pounds or be subjected to a 5-pound minimum charge. No big deal. Just hold on to the packages until you reach 5 pounds. We tell our customers to expect the package to take 15-20 days to arrive. No complaints so far.
Because the package is being sent via USPS First Class Mail International, you shouldn’t expect any tracking visibility. However, for the prices your customers will be paying, this shouldn’t be a hard sell. We haven’t had much trouble with it.
Selling internationally requires a big upfront commitment in terms of learning about duties, taxes, harmonized tariff codes, customs forms, etc. You’ll also be opening yourself up to more incidents of fraud. You’ll probably want to start by limiting the countries to which you’ll ship. You’ll also want to make it abundantly clear to international customers when and if they’ll be subjected to duties and taxes upon delivery. Also, be very clear about your policies regarding lost packages. With USPS methods (such as the one I described above), there is no delivery confirmation. Therefore, you have to decide if you’re going to purchase insurance (there are some great 3rd party providers) or self-insure your packages.
If you sell goods that are fairly lightweight (under 4 pounds), you’ve got a great opportunity to sell to international customers via UPS Mail Innovations.
Please note that I’m fairly certain that FedEx offers a similar solution. There are probably some other mail consolidators / aggregators / zone skippers that offer similar solutions. In our experience, these companies require a much larger minimum (typically 50 packages per day). The UPS minimum is quite low and is easy to setup if you already have a UPS daily pickup.
Steven T. Styles says:
Just curious how you rolled this service out without any API Integration from UPS?
Jamie Salvatori says:
@Steven - All you have to include on the package is an integrated CN22 customs form. You can use an API from USPS to create this label (which also removes the requirement to sign each form!) It took me about 2-3 hours to do this integration with our system. You don't include any UPS labeling (as the package is going via USPS anyway). I'm pretty sure though that you can create the customs forms from within a program like Dazzle (by Endicia) or even via WorldShip. The problem we had with Dazzle is that it cannot print a customs forms without postage in batch mode. You can only do it when printing labels one at a time. When UPS processes your shipment, they add the postage and address label.