Limiting your e-commerce business to domestic shipping may hold your business back from increased revenue and growth. However, navigating global e-commerce and the requirements for international shipping can be complex, especially with current supply chain delays.
International shipping destinations each have their own unique rules and requirements for parcels arriving from the United States, including:
- Prohibited items.
- Agricultural regulations.
- Packaging and labeling requirements.
- Customs processes and timelines.
- Documents required.
- Importation thresholds for reporting, duty, and taxation.
- Multi-nation group importation rules.
To start shipping internationally (and avoid delays and fees), it’s critical to understand the requirements for shipping to each country.
Let’s look at thresholds for importation as a prime example of where e-commerce businesses tend to run into trouble, especially those that are just breaking into international sales.
De Minimis Values
Every country has a set amount that exempts imported items from duty or tax. Also known as a de minimis value, it can vary widely from nation to nation.
In instances where de minimis values are fairly high, the system benefits e-commerce vendors selling to consumers, as it’s less likely you’ll meet the threshold to pay duty and/or tax. If you’re selling B2B, however, your chances increase that you (or potentially your customers) will have to pay extra.
Not only must you know the de minimis values for the countries you ship to, but you also need to keep track of whether both duty and tax are required, as they are not uniform. And of course, in some nations, the threshold is zero, meaning mailing even the smallest item racks up costs and has the potential to slow down shipping for compliance. Some countries charge higher duties for items in certain categories.
Furthermore, your total sales volume may trigger additional required reporting. Once you hit a specific amount, you have to pay goods and services tax or VAT (value-added tax). If you import goods into one European Union nation, it may affect shipment fees to all other EU countries, but those regulations are convoluted and can depend on the port of entry.
Additionally, there may be processing charges and fees added to duties and taxes, such as in Australia. Items themselves may be taxed, but there may also be taxes applied to shipping and duties. Your landed cost when all is said and done can go up substantially. This will need to be factored into the cost of selling and shipping your products one way or another.
Other Port of Entry Challenges
Figuring out how to work with de minimis values is only one piece of shipping parcels internationally.
For example, if you sell health or beauty products, all the ingredients must meet importation laws in the country of their destination, which can again vary largely. Formulations, like some types of sprays, may be allowed in one country but forbidden in another. Products containing animal-based ingredients and regulated compounds like parabens and phthalates are particularly stringently controlled, as are electronics in many destinations.
Often, not having the proper documentation for the country of importation can lead to items being refused. Even the least controversial goods require the right paperwork, and in many cases, the bill of lading alone is not sufficient. It can often be left to the discretion of a customs agent whether or not shipments are accepted. You can incur delay fees as well if your items sit too long in customs.
Once your products have cleared customs, they still need to reach their destinations. Countries like Brazil, India, China, and Russia are obviously large, but unlike other vast nations such as the US and Canada, have infrastructure holes when it comes to internal transportation. There are countries like Mexico that have no formal postal service in many regions, so private carriers are nearly always used and last-mile delivery can be iffy.
Even in highly developed countries, transportation chain problems have become the norm between COVID-19 and severe weather events. Both supply chains and shipping routes are expected to face rising costs and delays well into 2022 or beyond.
Tips for Managing Unique Global Shipping Destination Hurdles
So, how can your e-commerce business get ahead of these challenges? Here are our top tips.
Price your goods and shipping to incorporate extra costs you incur via international shipping. Be aware that by the time you add taxes and fees, you could price yourself out of the local market, and it may not be realistic to ship every item to every country.
Think about how you can make your products unique enough to overcome competition at your destination or market to consumers for whom price isn’t a primary criterion.
Keep Customers Informed
Use transparency with consumers about pricing, in addition to realistic delivery timelines. Most online shoppers won’t commit to a purchase without knowing the full cost of shipping, including any taxes and duties they must pay.
Be ready to see fewer shipping contracts available and more spot pricing. This may become increasingly widespread as shipping companies respond to increased demand and delays.
Start Small and Scale-Up
If you’re just now starting to sell internationally, start small. Restrict your shipping to certain foreign countries to get familiar with their requirements before branching out to international shipping everywhere.
Work with a Global Logistics Partner
Navigating international shipping is complex, but working with a global logistics partner like IBC makes it easy to sell to the international market. We are experts in the rules and regulations for international destinations and can help ensure your shipments meet all of the requirements. Our global distribution network provides your business with turnkey access to sell to over 220 nations and territories. We can also find the ideal shipping solution for your business to reduce costs and expedite delivery times.
Contact us today to expand your e-commerce business to the international market.