International Shipping Readiness Checklist for High-Growth Ecommerce Businesses

You’ve done a good job of growing your brand through a domestic sales channel, but now you are thinking about shipping to other parts of the world. The US only accounts for 4.1% of the world population, making it a natural step to expand to other countries after any initial domestic success.  

Where many brands get tripped up when expanding their sales channels, one of the most important aspects is choosing the regions that will be a good fit for their product and shipping needs. By tapping into the right international markets, you can easily grow your brand by 35% – 40%.  

Here is our readiness checklist for international shipping—use it as a guide post when you’re planning to expand your brand reach to international ecommerce customers. 

Consider Your Customer  

Are you getting requests from online customers to ship to certain regions? 

Do you see any website or social media traffic that is coming from a targeted geographic area? 

Does your product easily translate to another culture or language easily?  

Have you seen your competitors start selling similar products to specific regions?  

Research the New Region

Does the new country or region require special labeling? 

Will you need to translate your packaging into another language? 

Does the import country require any special instructions, warnings, or additional product information? 

Are your products legal in the new country or region?  

What are the import laws for your product and its components?  

Are there high tariffs or duties for your particular products?  

Are your products allowed to be manufactured abroad and sold in this country? For example, some countries only allow certain raw materials to be grown or manufactured within the country where they are sold to protect that region’s natural resources and production economy.  

Choose the Delivery Experience  

How quickly does your customer need to receive products?  

Will standard shipping be satisfactory or are expedited options needed?  

Is it worth the added cost to include an expedited shipping option?  

Where will delivery information be clearly communicated to customers before checkout?  

Is visibility in order tracking important?  

Does your international shipping carrier and service provide tracking?  

How do you plan to communicate the tracking to customers?  

Is your customers service team prepared to help customers with tracking, otherwise known as “pre-parcel anxiety”?  

Will your company pay duties and taxes upfront, or will you expect customers to be responsible? This is a major aspect of the delivery experience and it will also inform your overall costs. Here are your options:  

• Delivered Duty Unpaid (DDU) — The shipper is responsible for ensuring that the order is delivered, but the buyer is responsible for paying the duties and taxes. The delivery is dependent on the recipient paying these fees. This is generally considered to be a less desirable delivery experience. 
• Delivered Duty Paid (DDP) — The shipper is still responsible for ensuring that the order is delivered but is also responsible for paying the duties and taxes. Sometimes these are calculated in the shopping cart or factored into the shipping and handling cost. Either way, the delivery is no longer dependent on the customer paying fees to take delivery. This is a much better delivery experience. 

Determine the Classifications of Your Products 

Before shipping internationally, there are many details you need to determine about your products and the materials that make them up. These details will help determine the duties and taxes paid, and ultimately allow your shipments to pass through customs.  

Work with an international shipping expert to help decide the following about your product.  

• Country of Origin. Where your products are made can impact their rate of duty into certain markets. Goods made in the United States, for example, may qualify for duty free shipping to Canada, under existing trade agreements.  
• Commercial value of the goods. This is used to determine duties and taxes. Countries have established various thresholds for when a shipment becomes subject to duties and taxes. This is known as the de minimis. It varies widely from country to country. 
• Harmonized System (HS) codes for all your products. This is also used to determine duties and taxes. Certain products may have different duties than other product types. 
• Clearance type. Depending on the item criteria above, plus the country of import, a shipment may be suitable for Low Value Clearance. Trade agreements between countries may also impact customs clearance, read up on the latest agreements your export country may have with others.  

Set Up Tax Registration  

Shippers need to be set up to properly pay customs fees before they begin shipping internationally.  

To do this, shippers should follow the guidelines of the country of import. All countries have unique requirements that must be met; if they are not, unpleasant monetary surprises may catch up with you. 

You may need to set up any of the following.  

• IOR (Importer of Record) is an entity responsible for goods being imported into their country. 
• IOSS (Importer One Stop Shop) is a program where shippers can establish all tax information for importing into a country.  
• EORI (Economic Operators’ Registration and Identification Number) an identifier for tax payment.  
• NRI (Non-Resident Importer Number) is a method of establishing your business as a tax-paying entity, not all business types will benefit from setting up NRI when shipping into Canada.  

Please note: There are many programs where the carrier has established these entities to transact on the shipper’s behalf. Often times this is preferable as the brand can focus on marketing and growth, and the carrier can focus on the regulatory aspects of importing products. 

Figure Out Your Returns Management Process 

Don’t wait until customers start returning products to iron out your reverse logistics. Returns are complicated, even more so when international shipping and customs are in play.  

Will your shipping carrier provide return tracking?  

Assess which service you’ll want to choose for return shipping.  

Determine if you’ll provide return slips within each package or only provide them once a return is initiated.  

One major point of international returns that needs to be ironed out is the reclamation of duties and taxes, it’s not a simple process and you’ll have at least a few options for how you manage this.  

• Reclamation is the process of getting back any customs fees that were paid to import a product when it is returned to the country of origin.   
• All countries have slightly different rules and processes. US-based ecommerce brands shipping to Canada, for example have two options: offer a casual refund where the customer is responsible for printing and submitting a refund, then Canadian customs pays these directly to the customer once the refund is approved; or offer credits, which is the electronic version of a casual refund managed by a Canadian customs broker.  

Read more details about the different options for reclaiming duties on international returns here.  

It’s imperative to make your return policy very clear to customers before they checkout, specifically if you plan to let customers manage the reclamation of customs fees.  

If you are shipping to retailers or commercial addresses internationally, you’ll need to understand duty drawback which is specifically used for retailers importing finished goods, then warehousing them, then exporting them to a third country. Duty drawback only applies to B2B shipments, online marketplaces and retail goods. Read more about the details and how to manage duty drawback.   

Estimate Your Total International Shipping Costs 

You’ll want to have a very clear picture of your total costs before starting to sell abroad. There are many factors that affect the costs of international shipping. Here are the main ones to consider.  

Transport and Logistics Costs 

• Depending on the shipping service you pick, your transportation costs will vary.  

Import Taxes 

• VAT (Value-Added Tax) is the tax for most countries, including EU/UK import  
• GST (Goods and Service Tax) is an alternative to VAT, required by Canada and Australia, among others.  
• Regional taxes like PST (Canadia Province Tax)  

Total Landed Cost 

• Because there are so many cost factors to international shipping, most shippers estimate their “total landed” cost before expanding to a new market 
• The formula is:  Total Landed Cost = product + shipping + customs + risk + overhead 

Only with a clear picture of all costs can you create a successful pricing strategy for international shipping.

Complete All International Documentation 

To pass through customs efficiently, you’ll need to make sure all your international documents are complete. Here are the major items you’ll need, there may be others depending on your country of export and import.  

• Commercial Invoice—provides a detailed description of the goods being shipped, including quantity, value, and other relevant information.  
• Bill of Lading (BOL)—legal document issued by the carrier or their agent that serves as a receipt of goods and evidence of the contract of carriage. 
• Packing List—may sound generic, but it’s a very specific and important list of the shipment’s contents.  
• Certificate of Origin—documents the country of origin of the goods.  
• Insurance Certificate—provides evidence that goods are insured against loss or damage during transit. 
• Import/Export Licenses—indicates special permissions to trade certain types of items.  
• Customs Declaration/Form—provides detailed information about the shipment and is used to assess duties and taxes and to ensure import/export compliance. 
• Phytosanitary Certificate—required for shipments of plants, plant products, or other agricultural goods.  
• Dangerous Goods Declaration—included with any hazardous materials. 
• Air Waybill—sent out when an international air courier ships them.   
• Letter of Credit—legal, binding agreement of payment between the buyer and seller of certain products. 
• Pro Forma Invoice—a tool for negotiating, used by the seller to quote at the beginning of an export transaction. 

Bottom Line  

International shipping is a huge growth opportunity for ecommerce brands. A lot of planning and strategy goes into shipping into new markets and each step should be considered with detailed attention. A misstep with documentation or incorrect classification can mean fines and delays. Work with a trusted international shipping broker or logistics partner to help you set up an efficient international shipping strategy.

Tags: International