Whoever wrote “It’s a Small World” obviously never had to pay international shipping costs.
Global expansion seems the logical conclusion of the ecommerce model. With the internet connecting everyone in the world, a successful ecommerce brand can continue expanding their market in perpetuity. The trouble, though, is the farther out you expand, the higher the costs. Your business plan needs to be spotless if you hope to profit.
So how do you manage it? How can you become an international ecommerce brand? Below, we give a crash course in international ecommerce shipping, covering everything you need to know to get started — all in under 10 minutes!
1. Research Profitable Countries
The first step is researching your target country beforehand. Your budget will be tight, especially when you’re just starting out, so you need to account for the nickels and dimes before moving forward. In particular, research these three areas:
Taxes & Regulations
Of course, every country has their own laws on trade. Step one is checking whether you can afford the extra fees, and whether your products are even welcome in the country in the first place. Don’t forget to double check your home country’s regulations, too!
Luckily, the UPS TradeAbility suite of free tools can save you some time in digging up information.
How big is the demand for your products in the target country? Different cultures have different tastes, i.e., your high-tech pasta maker may not sell in Italy, where they prefer traditional methods.
You also want to scope out your competition. Local suppliers can easily undercut your prices, so it helps to have an advantage other than price.
2. Calculate Costs
Not just your own costs, but your customers’ as well. Your main costs for expanding internationally are mostly shipping, or maybe building a new website if you want one that’s location-specific. We’ll talk about shipping below, but for now we’ll focus on what your customers have to pay.
If your international fees are too much, your shoppers will just buy dometic instead. That’s why it’s important to estimate your optimal price to see if you can compete in the first place. There are three types of charges that governments pass on to their international customers:
Taxes (VAT & GST)
The General Sales Tax (GST) is the blanket tax everyone pays, something your local competitors have to worry about too. However it’s the Value Added Tax (VAT) that gives local sellers the advantage, but these vary country to country.
Customs charges on incoming international shipments. Duties change not only by country, but also by the contents of the package, so sellers of large or exotic goods must pay extra attention. Even if you set up a shipping center in your new country, you’ll still have to pay customs when you ship your inventory there initially. One way to sidestep these fees is dropshipping through domestic supplier.
Lawmakers never have any trouble thinking up creative new ways to collect money. Don’t be surprised by the “hidden fees” of doing business with a country — research thoroughly and seek the advice of experienced sellers in that area.
Review how your target country handles these areas to estimate the final costs. You’ll need those numbers later when you calculate how viable an expansion there would be.
3. Choose Your Carrier
The best carrier for you depends on a lot of different factors: where you’re shipping, what you’re shipping, and how much time you have to make the delivery, just to name a few. Let’s break down your options so you can look into the best for you.
The first place to consider is your national postal service — USPS, Canada Post, Royal Mail, for examples. Usually the best option for domestic deliveries, public carriers work differently for international shipments. They essentially hand off the package from one country’s postal service to the other, so results can vary.
If you’re shipping from the US, you can learn more about USPS rates here.
These are commercial shippers not affiliated with the government. Services vary by company.
- FedEx. A few international delivery options, including freight shipments. See their Rates & Transit Times here.
- UPS. Similar international presence as FedEx. See their International Shipping Services here.
- DHL. A company specializing in international shipping, even offering services specifically for ecommerce.
Unlike public carriers, there is no “hand-off” when your package crosses a border. That gives your shipments just a little more security.
Fulfillment by Amazon
If you’re selling exclusively on Amazon, it may be best to use their international Fulfillment by Amazon (FBA) services. You can ship your inventory to their storage center in your target country, and have them ship it out locally. However, that’s not an excuse to be lazy — you still have to research and calculate costs to see if it’s worth it.
Last, partnering with the right dropshipping supplier can help you avoid international shipping altogether. If you can find a willing supplier that both offers your products and operates in your target country, you could have them handle all your shipping needs on a local level for a fraction of the cost. Of course, they take their cut as well, so you still need to calculate the fees associated with each supplier.
Dropshipping is also a smart way to test internationally markets before investing in an expansion. You could partner with a dropshipping supplier temporarily to see how your products perform instead of guessing.
With all the costs, expanding your ecommerce business internationally may not make you as rich as you hope. Still, if you’re smart about your decisions, do research beforehand, and take all the necessary preparations, you’ll still be able to increase your income. Just curb your expectations and be ready to put your nose to the grindstone.
FYI: The Sherman Brothers wrote “It’s a Small World” back in 1964.