If you’re interested in starting to ship internationally, there are many factors to consider. One of the biggest ones is which sales channel you think is best for your brand.
The type of distribution you choose will drastically affect how you import products. Each requires different customs, shipping, and fulfillment support. For example, B2C you’ll act as the importer, but with retailers or marketplaces others you won’t.
Looking at where your customers are, geographically, but also where they shop, will tell you a lot about how to launch into a new country. You’ll want to find traction quickly to grow your customer base.
Here is a breakdown of international shipping to direct-to-consumer (B2C), B2B, and to online marketplaces.
Understanding Which Party is Responsible for the Shipment
One of the fundamentals when importing products is understanding which party is responsible for the shipment. This drastically changes the types of documentation and the customs procedures you follow.
- For marketplaces, if you’re shipping to a fulfillment center, Amazon or otherwise, that’s considered a B2B shipment at customs. But the fulfillment center isn’t going to take the responsibility of being the importer, rather they’re going to put that responsibility back onto the shipper. This means the shipper must register for a tax ID in the country where they are shipping to. If they are shipping to Europe, they’ll need a tax ID for every country where they’re holding inventory in Europe. Shippers need to report taxes on every country where they ship to.
- For direct-to-consumer, the receiver of the shipment is the party legally responsible for the shipment. It sounds odd, but it’s actually stated in the rules.
- For most B2B imports, the retailer will act as the importer. They will hold all tax information and be the party responsible for the shipments at customs.
Tips for Importing Direct-to-Consumer (B2C) Internationally
Most brands who start shipping internationally do so with direct-to-consumer distribution. Often it comes up naturally because a brand will start to get requests from individual customers who want to purchase their products.
How to Improve Customer Acquisition
If you’re shipping directly to consumers, that means they’ve probably gone to your website and ordered products there. They’ve made an online purchasing decision as opposed to going to a retail location and picking up your package from the shelf.
In order to capitalize on this new traffic to your site, there are a few things you’ll need to consider in order to support these customers and attract new customers:
- Translate your content and product descriptions into the local language. For example, there are at least 21 languages in Europe, so if your customers base is expanding from the France region to Spain, you’ll need to consider a translation to support new Spanish-speaking customers.
- Packaging and labeling may need to be translated into various languages as well. Some countries have different requirements for ingredient labels.
How to Handle International Returns
International returns can get complex, and every country has different rules about moving products through customs. Be sure your return policy and instructions are very clear to your customers.
Tax and duty reclamation is a subset of returns that deserves noting. Get clear on how your customers will reclaim the duty and tax costs they paid for importing the product. Within each country there many be a few options on how to reclaim customs fees. Most brands do not handle the return and reclamation process because it’s too complex. Partnering with a reputable broker or international third-party shipper can help.
How to Ship B2B and Retail Internationally
It’s a common misconception that if you’re already doing B2C importing into a country, you can also automatically clear customs with B2B shipments.
The market requirements are often different for retailers versus direct consumers. It’s best to ask your broker or international shipping partner if the local authority will enforce customs and trade compliance differently if your products are going to a retail shelf.
Will I Need and EORI?
With a B2B shipment, customs will require an economic operator number (EORI), which acts like a customer’s ID. An ID basically denotes that you’re doing business in this market.
Sometimes carriers will ask for an EORI number if it’s a higher value shipment or if it looks like it’s going to a commercial location.
Who pays the VAT?
The big difference between B2B and B2C is who pays for the VAT (value added tax). Because it’s a consumption tax, it’s only supposed to be applied to the end consumer. But with a B2B shipment, you typically use the VAT ID of the receiver, which means the retailer pays the VAT.
For example, if you ship into a business in Germany, you get the business’s VAT ID. The tax isn’t actually collected at the time of import, taxes are processed each quarter. When the item is sold the business in Germany that bought it is going to pay the VAT on it then. This process is called a reverse change mechanism.
Power of Attorney
B2B shipments also need a power of attorney to sign clearance for a shipment at customs.
Anything going into business needs to have this. A broker usually can act as the agent here—they’ll place a hold on the shipment, reach out to the business, get them to sign a power of attorney for them to clear the shipment. And it’s a little bit of a delay there. So it’s just something to be aware of up front right to make sure you have that POA in place while the ship before it leaves or when it’s in flight.
The reasoning for this has to do with the overall value of the shipment being imported. B2C shipments are lower value, so they can clear without getting authorization from the consumer individually.
What Makes Importing to an Online Marketplace Different
All marketplaces operate differently, but if you’re shipping to a fulfillment center for it to be sold on a marketplace, there is a bit of nuance to be understood.
Most marketplaces are treated as B2B shipments at customs. For example, the EU currently holds marketplaces responsible for VAT collections. Anything sold on a marketplace in Europe, the marketplace would be responsible for figuring out how much VAT is owed and making sure it gets paid as opposed to the seller.
No matter which type of distribution you want to pursue, it’s important to work with an international broker who can help you. Each country has nuances that change often, and while it’s ultimately the shipper’s responsibility to have all documentation and processing correct, a broker can help you get there.
If you are a high-growth brand looking for fulfillment or shipping support, we’d love to hear from you. Brands who work with DCL Logistics save an average of 18% on shipping. Reach out to chat or get a quote.