Christopher Moore — February 9, 2017 Follow @cjmooreWith the increase in worldwide eCommerce, more merchants are realizing that global product sales can offer immense potential for business growth.
It’s estimated that global online trade crossed the $ 1 trillion mark in 2015, with cross-border eCommerce accounting for around 20% of that number.
Despite this opportunity, some merchants are still reluctant to join the global marketplace.
Strict cross-border regulations, the complexity of doing business overseas, the language barrier all make pursuing global e-commerce, a challenge for many smaller merchants.
While successful global eCommerce requires multiple parties working in tandem, it can be done profitably.
The challenges that face international sellers can be divided into:
- regulatory issues
- payment processing
- creating a streamlined logistics process
By doing their due diligence, merchants can prepare for and overcome all the challenges.
In a client poll, we unearthed eight concerns of eCommerce merchants that want to go global. We’ve outlined them below with our suggested action items to resolve each one.
Identifying Restricted Items
Every country has a unique set rules about what can be sold and even to whom.
In some countries, the law could be an outright prohibition, like the ban on certain dog collars in New Zealand. Other countries impose restrictions on some goods to protect their domestic industries.
To import some goods into some countries, specific requirements have to be met. When unmet, the importer can be held liable for not meeting those requirements.
With certain foods, many countries mandate that the labels must display ingredients, nutritional values, manufacturing date, and expiration date. Failure to comply may lead to Customs restricting its passage indefinitely, plus a potential fine for violation.
Action Item:
Use Tools like UPS TradeAbility and DHL’s global trade map to research the import compliance laws of countries you hope to do business in. If you are just getting starting and really want to advance quickly and trade confidently, courses from experienced international traders, Import Dojo for example, can get you up to speed quickly.
Know the Customs, Duties, and Taxes
Speaking of Customs, every product imported into any country must clear Customs, before its delivery can be allowed. The check is to make sure the product is allowed into the country and to see if all country-specific taxes & duties have been correctly paid.
As this fee depends on the value of the product and the country it’s being shipped to, an eCommerce store can have some trouble keeping up with the Custom fees of different countries.
Therefore many merchants tend to pass this fee on to buyers in countries that charge VAT (Value Added Tax).
Action Item:
Don’t let this come as a nasty surprise to the customer. Update your site with a notice for international customers.
Dealing with Overseas Suppliers
A favorable exchange rate may mean you source products exclusively from overseas, but dealing with overseas suppliers can present some difficulty.
There may be a language barrier, then there’s the possibility of doing business with people that have a different culture and set of values from you.
All of this creates a situation with a potential for misunderstanding and miscommunication.
Action Item:
To get around this, educate yourself about doing business in that country. The best way to do this is to find other eCommerce merchants who are currently importing from, or exporting to, the country concerned. You can also contact the company directly for a list of references. A reliable overseas supplier should have a list of customers they have worked with, who can vouch for their reliability.
Beware the Inaccurate Addresses
A report by E-Commerce Times states that failed deliveries cost large retailers an average of $ 85.00 every time.
The retailers often have to ship replacement products ASAP. The increased cost of doing business hurts profitability. This is in addition to the cost (hassle) of clearing Customs and paying for international shipping.
Your reputation is also tarnished as the customer associates a failed delivery with the merchant, not the carrier. An unhappy customer with a bad shopping experience leads to poor word of mouth ‘advertising’. Can your smaller eCommerce business afford this triple blow?
Action Item:
To prevent this occurring, verify each address during checkout, using a tool like PCAPredict’s Address Lookup and Verification.
Estimating Transit Time & Cost
It goes without saying that international shipping will take longer than domestic shipping.
Despite this, some customers expect sellers to use any means possible, including air transport, to get their products delivered quickly. Before committing to using either, merchants must look at cost and product.
- Can your product survive on a longer but cheaper sea trip?
- Or are the goods perishable and require speedy but expensive delivery?
Action Item:
As a merchant, figure out the most efficient way to get the goods into customers hands, in a way that still benefits your business. Display this shipping information on your site.
To Insure or Not To Insure
When delivering goods across international borders, regardless of the method used, the risk of damage is much higher. This means taking out insurance should be a no-brainer, right?
Some merchants try to save a buck or two by not taking out insurance.
Doing this risks a double loss if their goods are damaged during the shipping process. They’ll lose the initial cargo and still have to offer a replacement.
Action Item:
Always insure your goods.
Know Your (True) Numbers
When planning your move across the globe, it’s easy to make assumptions on costs. Merchants often focus on the lowest unit cost, and are caught off-guard when there is an additional, unexpected cost:
- What is the product requires any extra processing, like fumigation?
- What if there is a delay in delivery?
- Who pays the extra charges for an expedited delivery?
While these may seem far fetched, it’s best to plan for the worst.
Action Item:
Factor in costs like transportation, brokerage services, banking fees, financing, to name a few. Knowing these will help with your pricing strategy and enhancing the consumer buying experience.
Shipping Profitably
With the many moving parts required to successfully complete global shipping, it’s no wonder merchants are wary about using it.
But one of the secrets to being successful at eCommerce is to figure out how to ship profitably.
By reducing your shipping expenses, you can develop a price range that is appealing to the customer, and profitable to you too.
Shipping profitably isn’t as straight forward as walking into your local Post Office and asking for the best rates. Depending on packaging, weight, destination, the charges will always differ. Left unchecked, you’ll be shocked at how quickly these little charges add up.
Action Item:
By this time, the profit to be gained from international sales may not seem particularly attractive.
But this is where outsourced order fulfillment services come in–businesses like Floship exist to take the headache out of shipping internationally.
Final Words
When it’s all said and done, international shipping is much trickier than domestic shipping.
But with the proper logistics systems and processes in place, your sales can be maximized by tapping into international markets. By partnering with an experienced logistics provider, you will save time and effort.
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