Do you want to start shipping to international markets, but you’re not sure where to start? Should you wait until you have a lot of interest? Or start shipping and try to build interest? What if your company relies on easy returns and you’re worried about how complex it is to reclaim customs fees?
Answers to these questions and more are here in our readiness checklist for international shipping.
Do You Have Enough Traffic in the New Region?
It can be a bit of a gamble and a difficult decision to start shipping to a new country. You want to ensure you’ll have interest to grow your sales, but it’s hard to know where there will be interest before you start shipping. It’s a chicken or the egg conundrum, but there are some readiness signs that can help.
- Web traffic. Maybe your marketing team has noticed more traffic to your ecommerce platform coming from a targeted region. Or you’ve received enough requests to ship products to a specific country that you decide it’s worth it to launch international shipping.
- Requests. Are your social media DMs flooded with requests to ship to certain countries? Decide early on what your minimum volume is before you launch shipping to a new region.
- Customer acquisition costs (CAC). Some countries have much lower customer acquisition costs. If you can identify the region that makes sense for your brand, you’ll want to amplify your marketing there to gain traction in that new market quickly. If you’re seeing good conversions, then you know this is the right market to ship to.
How to Work with a Broker or an International Shipping Carrier
If you’re an ecommerce entrepreneur, you’re focus is on improving your products and keeping customers happy. There’s no way you can become an expert in the regulations and rules of each new country or region you start shipping to. When you start international shipping, it’s imperative to work with an international shipping expert who can help do that work for you. You shouldn’t spend the time understanding every single market, especially if it’s not a huge percentage of your customer base to start.
Some brands choose to work with a broker who knows the specific country of import. Benefits of working with an international shipping broker:
- They know one or a few countries very well.
- A broker will be on top of the latest policy and regulations to ensure your paperwork, customs documentation and tax preparation are always correct.
- They may have connections to government agencies, tax experts, and other legal bodies more than an international shipping agency might.
Other brands my choose to work with an international shipping company who can help them ship to many different countries. A few benefits of working with an international shipping carrier include:
- They will have the capacity to help you scale your sales easily. And when sales volume increases, they can help optimize your routes as well.
- Because they work with many brands, chances are they already ship into countries where you want to go, so the pathways will be easy to start.
- They may have integrations and software to help automate many processes for you, which will save you time.
- Many larger companies will help manage your customer relations, which means tracking, returns, and refunds.
- They may have a more robust network of local carriers to help you optimize your shipping for lower rates.
Understand Where You’re Shipping
Every country has different rules, regulations, and systems when importing and exporting goods. Getting detailed information on how your products need to be shipped to a new country is important before launching any international shipping. Here are the top considerations you’ll need to figure out.
Taxes, Duties, Tariffs, and Customs Fees
There are many types of import fees, and they change often and vary from country to country. Some provinces with a country might also have different taxes than other provinces.
Generally, here is a quick break down of the difference between duties, taxes, and tariffs.
- Duties are based on product characteristics.
- Tariffs are fees applied to specific products from specific countries for specific times.
- Tax rates (known as VAT or GST) are fixed and calculated on the total value of the product imported into the country.
Every country has different fee obligations, with different rates, rules, and forms. It’s important to work with trusted international partners to ensure you comply, and that you don’t have any surprise fees coming your way after you import your products.
Regulations, Laws, Product Requirements
It’s important to understand the laws and policies, not only in the countries you ship to, but also the smaller, regional markets within each country. Here are a few examples of this:
- Labeling – Some countries have different laws when it comes to labeling products. You may need to have labels in multiple languages, spell out ingredients in your product, or apply special announcements to your labels in various countries.
- Prohibited items – If your products have aerosols, contain alcohol, or lithium batteries, you’ll need to make sure you properly label them and work with a carrier who handles your specific goods. Seek out a full list of internationally prohibited items.
- De Minimis – if you are a CPG (consumer packaged goods) brand, or ship lower value goods you may avoid paying duties in certain countries because of a de minimis tax rule which states that if the value of your shipment does not exceed the countries de minimis value, you pay no import fees.
- Incoterms – Specific codes added to your import/export documentation, Incoterms define the transaction of goods between the entity exporting and the entity importing. They set out the various parts of trade that assign responsibility for cost, logistics, and any operational processes needed.
Returns and Reclamation
Returns and Reclamation It cannot be understated that setting up your reverse logistics is just as important as your forward logistics. Like every other aspect of international shipping, international returns are more complex than domestic returns.
One of the biggest headaches for merchants and consumers alike when dealing with returns is getting your full refund. In international shipping, getting paid back for the import and customs fees is called reclamation. There are many ways to manage reclamation for your customers to ensure they get a full refund on the product and all other fees they paid.
Let’s take Canada as an example. If you ship to Canada, and a customer wants to return a product, there’s really two ways to reclaim the duties and taxes. The first is a casual refund, where the Canadian consumer submits documents detailing the goods they purchased (amount, duties and taxes, reverse shipping information, etc.). Canada Customs then refund that customer for the duties and taxes they paid. This is a fairly simple process. The only catch is that the listed purchase amounts must exactly match what customs has on record. It can be cumbersome to organize the information and give it to the customer is a succinct way so that they can easily execute.
If you’re shipping to a business internationally, then you can work with your broker to reclaim duties and taxes that were paid on an import that was subsequently returned.
The second option is called credits, and it is the electronic version of the casual refund program. A Canadian customs broker will manage the refund on behalf of the US company. The broker will submit the refund request to Canada Border Services Agency (CBSA) and the US merchant will receive that refund directly. The company can then refund the customer for the product, duties, taxes, shipping, and everything all at once. this return, they can refund the price of the goods as well as the duties and taxes that were paid, all at once.
Set Up Your Import and Export Documentation
For each country you’ll need specific paperwork to import your products. In most cases the documentation isn’t long, but it’s very detailed and needs to be correct. Here is a list of the most common documents needed for importing goods.
- Certificate of Origin (CO). A CO is a document declaring in which country a commodity or good was manufactured. The certificate of origin contains information regarding the product, its destination, and the country of export.
- Commercial Invoice (CI). This customs document is one of the most common and important documents used in cross-border trade and shipping. Every shipment needs proper international documentation to clear customs and border checks (both export and import checks). Most basically, the information on a CI includes what the products are (classification, also known as HTS code), where they are manufactured (origin), and where they are going (destination). There are basic required items, but some countries may have additional requirements.
- Cargo Insurance. This is insurance that covers damage due to loading/unloading, weather conditions, piracies and other potential risks during international shipping. Cargo insurance can be specified for marine or air freight.
- Certificate of Insurance. A documentation of cargo insurance that covers the importer/exporter for any possible damage to the goods while in transit. Reach out to a broker or freight forwarder to arrange the insurance.
What is Duty Drawback? Considerations for International Retail Shipping
Shipping direct-to-consumers is complex enough, but when you add retail shipping or B2B shipping to your international mix, things can get very complicated very quickly.
Many merchants might want to start shipping to international marketplaces soon after launching a new country. If your product is listed on a popular marketplace, you’ll be more likely to grow your customer base quickly. One catch with marketplaces is that they may need to ship your products out of country if international orders come in. This brings up the question of duties and taxes paid on the imported products that don’t end up staying in the country.
Duty drawbacks are for a retailer importing finished goods, then warehousing them, then exporting them to a third country. Duty drawback only applies to B2B shipments.
The US duty drawback program allows merchants to reclaim 99% of the duties and taxes that were paid. A freight shipment will definitely have duties and taxes on it so the big benefit for merchants is if you can match up what was imported with the inventory that is left the country, then you can submit a claim and recover 99% of what you paid in taxes.
Historically the program was built for manufacturers bringing in parts and assembling them and then re-exporting them. But it now also works with the ecommerce industry, specifically retailers and marketplaces reselling items.
To make your duty drawback a success, it comes down the data collection you have. It’s important for both your freight forwarder and your fulfillment provider to track the inventory and SKUs (or barcodes in some cases) so that you can properly match everything up to get the maximum refund.
There are only a few firms who work to do duty drawback, most of them have very high minimums (they only want to work with big companies on huge shipments). But there are ways for small ecommerce brands to build a robust duty drawback program, often it requires working with a third-party provider who is doing the same thing for other smaller brands.
If you are looking for international shipping support, reach out to DCL Logistics for a quote. We have excellent international partners who integrate seamlessly into our systems. You can get flawless fulfillment from DCL and also freight forwarding from Flexport, or international shipping support from Passport Shipping.