Offering international shipping in your ecommerce shop can open up worldwide shipping and fulfillment opportunities for your business. This guide defines some commonly used terms and outlines your options to ship cross-border and expand your customer base.
If you’re a US merchant looking for international shipping options for your ecommerce business, you’ve likely come across a wide range of options. From deciding whether to pay duties on behalf of customers upfront (DDP) or simply ensure secure delivery across the border (DDU) to finding a reliable tracking solution, the options may seem endless.
Ahead, we’ll define a few international shipping terms and discuss how merchants of all sizes can offer reliable cross-border delivery to grow their brand’s reach and improve top-line revenue through global ecommerce shipping.
Consumers who regularly shop internationally will be familiar with the duties and taxes required for receiving an international shipment. Sellers have two options for managing these fees: Delivery Duty Unpaid (DDU) and Delivery Duty Paid (DDP).
For DDU shipments, the buyer will be responsible for paying taxes and duties when the item arrives in their country. For DDP shipments, the seller pays the duties upfront before shipping the item. There are benefits and challenges to each option.
The primary benefit of DDU is simplicity for the seller. It’s a relatively hands-off process for the shipper, and doesn’t require any kind of upfront calculation of fees. Some consumers actually prefer DDU as well because it gives them more control over the shipping process, and they will likely know the shipping protocols of their home country better than the seller. The downside is that fees are not calculated until the item arrives in their country, and there is a chance of shoppers being surprised when they get the final bill.
The benefit of DDP for consumers is that merchant pays all fees upfront. For merchants, however, DDP adds an additional step and requires variable prices according to the shopper’s location to make sure enough they are charging enough for duties and taxes to preserve margins on the sale.
Besides DDP vs DDU, there are several other factors you should consider when weighing your international shipping options, including:
Which countries do you want to prioritize?
A large part of moving into new markets is research. If you think it’s time to start offering international shipping, take a look at your site analytics to see which countries are bringing the most international traffic to your site and look at your competitors to see which countries they offer international shipping to.
Ware2Go’s international shipping solution offers shipping into over 135 countries and territories, including the largest markets for American merchants.
Is the service reliable?
Trust is a major consideration for shoppers considering an international purchase. The risk of purchasing from a new brand can feel risky enough, but adding international shipping to the equation can add to consumers’ hesitancy. Choosing an internationally trusted carrier like UPS can give shoppers peace of mind about their purchase.
Reliability not only gives the shopper peace of mind but ensures that your valuable inventory doesn’t get lost in transit, requiring you to send a replacement or refund. Once you’ve chosen a carrier that consumers trust, you should also find a service that you can trust. Some international shipping services actually hand off the package to the local post office for final mile delivery. This extra step and change of hands raises the margin of error. Ideally, you should find an offering that skips the last step and keeps package with the same trusted carrier until it reaches your customer’s doorstep.
What about customs?
An international shipment is passed through many hands and goes through several approvals before it reaches the end customer. There are two main ways that customs processing is handled:
This process involves all invoicing paperwork being printed out and fixed to the package in a clear plastic pocket. As the package goes through customs, responsible parties remove the paperwork from the pocket to verify the necessary information. This process is cumbersome and unreliable, often resulting in errors and lost paperwork.
This process integrates order and shipment processing and transmits commercial invoice data electronically. This process is streamlined to reduce errors, expedite the customs process, and reduce waste for a more sustainable option. It also allows end-to-end visibility for more reliable tracking.
Why International Shipping Matters
As your business expands into new markets and sales channels, you may be wondering what sort of opportunities lie outside the US borders. It may surprise you that cross-border ecommerce growth has outpaced domestic ecommerce growth by 100%.
What’s more, 10-20% of international purchases are considered “high-value”, and the average order value (AOV) of international purchases is 17% higher than domestic. Merchants who currently sell into international markets report that cross-border sales account for 10% of their current sales, indicating an opportunity for a 10% lift in overall sales for merchants not yet selling internationally.
Understanding Your International Customers
With easy to implement international points of sale and payment services like Shopify, Paypal, and Square, you can quickly start making your cross-border sales with little capital investment. However, with any new venture it’s prudent to understand your target customers before you move into this new market and to test and refine your tactic based on early results. The first step is understanding why shoppers make cross border purchases in the first place.
Consumers in mature ecommerce economies like Japan, Germany, Canada, and the UK report that they shop internationally to find a wider variety of products than they can find in their home country. Shoppers in less mature economies report that higher quality goods draw them to shop with international vendors. These insights are valuable for segmenting your marketing campaigns, advertising your diverse selection of products in mature markets and advertising the high quality of your products in less mature markets.
It’s also important to understand why many consumers hesitate to make cross-border purchases in order to win over shoppers who may be on the fence. The most effective levers you can pull to win the trust of your international customers are:
Use an internationally recognized and trusted carrier
Offer reliable and up-to-date delivery tracking
Be upfront about taxes, fees, and duties (DDU vs. DDP)
Your International Customers May Be Closer Than You Think
Many merchants’ first step into international sales is Canada, and for good reason. Canadian shoppers already have strong preferences for American brands like Walmart and Best Buy, making them a bit more trusting of American merchants. In fact a recent survey showed that 40% of Canadian shoppers planned to take advantage of Black Friday deals, and with 90% of Canadians living within 100 miles of the US border, it’s easy to reach these international customers via ground shipping.
International Shipping vs. International Storage
With growing customer expectation for speedy delivery, some merchants may be tempted to store inventory internationally to compete with domestic shipping times, but finding a fulfillment partner that can store your inventory domestically and efficiently ship cross-border often proves to be a more prudent first step into international sales.
Keeping your inventory close to home allows for full flexibility with your inventory in case products don’t move as quickly as expected. As with testing into any new sales channels, you’ll want to keep operations nimble and continue to feed your highest-performing sales channels, which you won’t be able to do if your inventory is stuck across international borders. This approach also allows you to quickly start up your new international sales channel, add as many new countries or regions as you’d like, and quickly halt sales to any market that proves unfruitful.
It’s also important to invest in scalable technology rather than fixed assets when testing into international markets. Partnering with a fulfillment provider with a quality Warehouse Management System (WMS) will allow you to automate processes and integrate with your current storefront or marketplace. When paired with a well-resourced courier, a strong WMS will also streamline calculating shipping costs and filling out customs paperwork streamlined. Allowing an outsourced fulfillment partner with a comprehensive technology platform to do the heavy lifting of testing into international markets lowers risk and raises your chances of success.
A World of Opportunity
As technology evolves to give merchants the ability to meet customers wherever they’re shopping and to meet those customers’ expectations for delivery, the global marketplace grows smaller and merchants’ growth opportunities grow larger. Shipping cross-border and building a base of international customers is now possible for businesses of all sizes at relatively low risk through strategic partnerships and integrated technology.
To learn more about how Ware2Go is helping merchants build their businesses domestically and internationally by simplifying end-to-end supply chain, reach out to one of our fulfillment experts.
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