Shipping is one of the pillars of e-commerce, and getting it right increases both business and customer satisfaction. And while selling outside of your home country adds extra considerations to the process, opening your business to potential new customers can be profitable.
According to an international ecommerce study by Pitney Bowes in 2014, more than 40% of consumers have purchased something online from another country. The largest cross-border growth is currently between the U.S. and Canada since shipping is relatively less expensive compared to overseas markets. There is still overseas demand though, especially for lower-value goods. Almost two thirds of Australians are likely to buy products online from retailers outside their own country while over half of Canada and Russia’s consumers are likely to do so.
The study shows the biggest barrier to cross-border fulfillment is high shipping costs, followed closely by fees at time of delivery, such as duties and taxes. Product delivery taking too long was the third largest barrier to completing an online purchase. Both the U.K. and Australia are strong markets for U.S. and Canadian retailers due to a lack of local supply, making it more economical and practical to buy products online even with shipping costs factored in.
So while expanding into international markets does have its challenges, there are still many opportunities to grow beyond just your domestic business. If you’re considering fulfilling to clients outside your country, you will want to keep the following points in mind.
Be clear about Delivery Times
Delivery times are never exact, but you want to set reasonable expectations for your customers to avoid disappointment for longer shipping times.
Consider Landed Costs
These include your shipping costs, taxes, and duties or customs fees. Almost every shipment that crosses international borders will have duties and taxes assessed on it by the destination country. However, every country has an exemption value limit, which allows products under a certain value to enter the country duty and tax free. This exemption varies by country. In 2016, Canada had an exemption value limit of CAN$20, while Australia’s limit is a very generous AU$1,000.These limits can and do change over time, and may also vary based on what type of product you ship.
Duties and taxes are based on information provided on the shipping label, the Commercial Invoice and other relevant documents. A shipment’s duty and tax amount varies by country and may be based on:
- Product value
- Description and use of the product
- Country of manufacture
- Trade agreements
- The product’s Harmonized System (HS) code.
Ensure your pricing and shipping charges cover all your costs
Before you finalize your pricing and strategy for your ecommerce store you should map out all your costs associated with getting your products into your customers’ hands. These include:
- Cost of the product
- Reshipping lost or damaged packages
- Customs Duties and Taxes
- Credit card fees
- Profit Margin