Practical Ecommerce

Please start shipping internationally

Our international orders represent approximately 15 to 20 percent of our total sales. That’s huge. We achieved this level of success through a variety of simple tactics, which I’ll outline below.

But before I delve into those details, it’s important to understand why you should tackle the complexities of international shipping.

Namely, niche sites have an inherent advantage in most international markets because most shopping-savvy countries have smaller populations than the U.S. This means that you have less competition within those countries.

Niche sites “work” online because of access to the large customer base in the U.S. For instance, my novelty gift store couldn’t work as a brick-and-mortar shop because we wouldn’t have access to enough customers. But it works online because we have access to the entire U.S. population.

Niche sites don’t fare as well in smaller countries because there simply aren’t enough customers, thereby reducing the amount of distributors willing to carry the products they wish to resell. Importing directly can be prohibitively costly when working with small volumes. And a store based in Australia, for instance, is going to have a hard time selling to customers in the U.S. unless its products are entirely unique and exclusive.

The point is that a U.S.-based niche website may not have much competition in these countries. Therefore, if you sell an interesting and niche product mix, you should strongly consider offering your products for international delivery. There’s a good chance you’re one of very few companies offering your products to that country.

If I can do it, you can do it. It isn’t as difficult as you think. It simply requires learning a few things about international shipping and properly informing your customers of shipping expectations.

Harmonized Tariff Schedule Codes

You will need to obtain the harmonized tariff schedule (HTS) codes for every product you sell. This classification systems alerts customs agents as to what is in the box and allows them to assess proper duties and taxes. Don’t think for one minute that you can get away shipping all of your packages as “gifts” in order to avoid your customers paying duties and taxes.

In order to obtain HTS codes, you can try to figure them out yourself (hard) or simply ask your vendors to supply them for you (easy). This conversation usually ends in one of three ways. They either give you the code, they say they have no idea, or they tell you that you can’t ship their products internationally for some reason.

If they don’t know the HTS codes, tell them to find out. You’re going to increase their sales by selling their item globally, so it’s their responsibility to figure it out. U.S.-based manufacturers can contact their local U.S. Department of Commerce for help in determining their HTS codes.

International Shipping Carriers

You have two options: private carrier or postal carrier.

Using a postal carrier (either the USPS or a freight expeditor or consolidator) typically provides the cheapest cost. However, it rarely offers tracking. These packages are typically delivered to the postal authority in the destination country that performs final delivery. So, the rate of lost packages can be quite high in some countries. Also, don’t expect packages to arrive faster than 15-20 days (sometimes it can take 45 days).

Therefore, you must purchase insurance for these packages. I recommend U-PIC. I also suggest that you make it extremely clear to your customers that this shipping method is not trackable. You should also explain to them the process they’ll have to go through should the package not arrive. Namely, they’ll have to fill out an affidavit form (usually a short one-pager) from your insurance carrier in order to obtain a refund or replacement shipment.

In the end, you have little recourse should the customer file a credit card chargeback. However, your insurance company will cover the cost of the goods and the shipping fee in the case of lost or stolen packages. You’ll only be out the chargeback fee. It’s a risk worth taking.

Your other shipping option is to use a private carrier such as FedEx, UPS, or DHL. DHL provides the lowest rates and best service. That’s not opinion; that’s fact. DHL is amazing when it comes to international delivery. It’s that company’s bread and butter. FedEx and UPS are very expensive, but all of these carriers guarantee arrival and provide detailed tracking.

We offer both options to our customers and let them choose.

Inform, Inform, Inform

Your customers are not experts on international shipping. They just want to plug their orders into the website and receive your awesome products. However, you have to be extremely clear regarding tracking, estimated delivery times, and the additional duties and taxes they’ll have to pay upon delivery.

I strongly recommend that you do not cover the cost of duties and taxes yourself. You could open yourself up to tremendous financial burden that is difficult to determine at time of purchase. Basically, you can’t just add 15 percent to the cost of the order for duties and taxes. It changes depending on the HTS code of the item, the destination country, and the overall value of the order.

So, be extremely clear that the fees are assessed by the customs authority in the customer’s country and you cannot estimate these costs in advance.

Fraud

Offering international shipping will open you up to more fraud. Unfortunately, we’ve yet to find a per-transaction fraud scoring company that can provide useful guidance internationally. Perhaps one will see this blog post and prove me wrong.

So, what we do is manually look at all international orders. When we find a suspicious order, we contact the customer directly and ask for additional information. One option is to ask the customer to provide photographs of the credit card in question (especially the back of the card). This provides the telephone number for the issuing bank. Oftentimes, you can have some luck calling the issuing bank to determine if the card has been compromised.

The reality is that the fraudsters often use fake email addresses and never respond to your requests for more information. Or, they’ll send you obviously Photoshop-altered or fake images. Sometimes, we ask for a photo or a scan of a government-issued ID that shows the same address as the billing address they entered on their order.

Eventually, you’ll just get a “feel” for what’s legitimate.

International delivery can feel overwhelming at first, but don’t let these issues scare you away from expanding your business internationally. You can do it! The effort will be worth it.


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Comments ( 12 )

  1. S Emerson January 17, 2014 Reply

    This really would help small and large businesses recover from the slump we are trying to recover from.

    Business slow? Great time to look at new opportunities to expand your business while you have the time to do the proper research. It might take some time to see the ROI but in the long run it will be worth it. You only have to figure out the customs stuff once. Make yourself a template to recycle.

  2. R Stubbings January 18, 2014 Reply

    It is a good idea to expand your market and sell internationally. It would be better however if you investigated it properly.

    First and foremost, read up about the laws of the country you want to sell to. Make sure you do not sell something that is illegal there, not licensed there, or has some import restrictions. Check the consumer regulations and return warranties that the local customers will expect you to adhere to.

    Secondly consider translating your web site into the language of your target country. This will considerably improve your chance of getting customers.

    Thirdly, never underestimate the local competition. In the vast majority of markets, most customers will prefer to buy from a local retailer rather than an international one. Even if you are cheaper.

  3. M Sweeney January 23, 2014 Reply

    Great article Jamie.
    I would add a few more complexities to the list:
    - Preparing the correct customs documents and declarations for each order (correct format, language, etc)
    - Telling customers exactly how much the duties & taxes are going to be (and allowing them to pay them in advance), rather than telling them they will be responsible to pay an unknown amount
    - Offering multiple payment methods popular in different countries (not just Visa/MC/Amex)
    - Offering multiple transaction currencies: let customers know how much they’re paying
    - Dealing with currency fluctuation (not knowing exactly what you’re going to receive in your own currency)
    - International returns
    - Equipping your customer service to be able to handle international customers

    There are several solutions out there that tackle each of these issues separately, and there are some, like SwipeZoom, who address all of them via a single relationship in one go.

  4. John Goodwin January 23, 2014 Reply

    Great article. One area I overlooked when first branching out internationally was the problems that come with validating customer’s international addresses. We’ve been using Postcode Anywhere’s services on our website which has really helped give us the confidence that we are delivering to the right address.

  5. R Ardito January 23, 2014 Reply

    We are a niche business. Our business has a relatively low average order, about $45.00. I’d be interested to know your take on whether this is a consideration; it’s not something you mentioned in your post.

    • Jamie Salvatori January 23, 2014 Reply

      I think that average order value is fine.

  6. sunil vulli January 25, 2014 Reply

    Great article, but still more questions

    “I strongly recommend that you do not cover the cost of duties and taxes yourself.”

    How do you authorize the payments for the unknown duties/tax on your ecommerce site? If you do not charge the tax, then how does the customer pay for taxes/duties?

    Can you expand on your experiance?

    • Jamie Salvatori January 26, 2014 Reply

      The recipient will pay these fees upon delivery to the company that makes the delivery. This can be frustrating if the purchaser is sending a gift which is why it is so important to make it clear to the purchaser that these fees will be due upon delivery.

      • Ryan February 2, 2014 Reply

        This is actually incorrect.

        Editor’s Note: The commenter is with DHL.

  7. Ryan February 2, 2014 Reply

    Jamie,

    Enjoyed reading your thoughts on international shipping for SME’s and I like your enthusiasm.

  8. ashley March 11, 2014 Reply

    It’s great knowing that you genuinely want to help your customers. It can be quite nerve-racking if you can’t track a package.

    Check out another great shipping company: http://www.iluvmoving.com/

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