This article is from Shopify, and was republished and shared through Elksourcing with the permission of Shopify.
Original link:https://www.shopify.com/blog/international-shipping
If you’re looking to grow your ecommerce business, expanding beyond your borders could be a great next step—but that means you need to figure out how to ship internationally.
To do international shipping right, you’ll need a strategy that works for you and your business. You don’t need to know everything about shipping, but you do need to understand the available options, and find an approach that will work again and again.
There are a lot of reasons you might not be shipping internationally right now. Maybe you’re just starting to consider it as an option. Or maybe you’ve even tried once or twice and you’d rather stick to your local or domestic market.
Selling beyond your borders can be an important growth area for your business, even if you only ship some products internationally, so it’s worth tackling the logistics head-on. Consider these figures:
- According to Oberlo, one out of every four people you see is an online shopper.
- Statista reports that retail ecommerce sales is going to grow from $3.53 trillion USD to $6.54 trillion USD in 2022.
- Statista has the average order value of an international sale at $147 USD. That’s 17% higher compared to an average domestic sale.
- Retailers who offer premium international shipping grow 60% times faster than those that don’t.
These figures show that online shoppers have come to expect international shipping, and ecommerce businesses are increasingly meeting that expectation. Shipping internationally creates an opportunity for stores like yours to sell to a larger audience.
Here’s what we’ll cover in this post so you can make better shipping decisions and expand your business on your terms.
- Building an international shipping strategy
- Shipping internationally through Shopify
- What to charge international customers for shipping
- Finding country regulations
- Preparing packages
- Working with multiple carriers
- Pricing out your shipping
Building an international shipping strategy
While it’s difficult to give a definitive list of best practices that apply to every business, there are a few central decisions you’ll need to consider for your international shipping strategy.
Where and what you’ll ship
You’ll first need to identify where in the world you’ll ship to and which products you’ll ship.
Unsure which markets you should expand to first? Here’s a few indicators that can help narrow it down.
- Start small. And close. By keeping the shipment close to home, you can set realistic expectations for customers on delivery times and rates. Starting small and close also allows you to get a feel for what it takes to expand your shipments.
- Track current demand. Check out your shop’s traffic analytics and see which markets or countries are already visiting your online store. You can also gauge interest by direct customer requests to sell to their market. Repeat visits or high traffic could show interest in your products or offerings.
- Consider the main languages of any market for expansion. Communication is essential when dealing with customers. If you’re fluent in a few languages, consider expanding into the countries that speak those languages first. If you only speak one language, find other countries or markets where that language is prominent.
- Ensure there’s product-market fit for your target country. Are there markets around the world that you feel suit your business better than others? Some research may be required here. Checking into ecommerce penetration could be a good first step (explore that data here). Dig into the consumer trends and tastes of those markets. An item that’s a celebratory gift in the US may mean something different in South Korea, for example.
You’ll now need to consider what to ship. You may want to offer your entire product line. However, before you start shipping all over the world think about these aspects of your products and your business.
- Building on the points above, are there items that would appeal to the international market(s) you’re looking to ship to?
- Lightweight and smaller items will be more cost effective to ship and easier to package.
- The more durable the packaging, the better. Shipping fragile products that may be damaged in transit if not packaged properly may increase the chances of a less-than-satisfactory delivery. If you decide to ship them, invest in sturdy product packaging.
Get familiar with country rules and regulations
Once you have an idea of what regions offer the most immediate opportunities, and which products you’ll be sending, it’s time to check into country-based rules and regulations.
Some countries prohibit items outright; others may limit them. Being informed on the rules and regulations that exist and which may impact your shipments can help ensure a smooth delivery.
There are a few ways you can get this information:
- UPS has a tool that shows country-specific rules and regulations by origin and destination countries.
- Check and see if your products are eligible to be imported into a given destination country. For example, the shipment of artwork from the US to Saudi Arabia is prohibited.
- Check and see if any of your products—or components of your products—are listed as “dangerous goods” while being shipped. In general, a “dangerous good” is defined as a product that may cause harm during transit. The best place for this info would be a country’s government website. Canada and the UK provide great examples.
How to ship internationally with Shopify Shipping
Shopify offers merchants in the United States,Canada, and Australia access to discounted rates with USPS, UPS, DHL Express, Canada Post, and Sendle so you’re already set up to compare their rates.
When you purchase international shipping labels through Shopify, the correct customs forms and documentation are automatically generated for you and can be printed on any standard printer. When you use DHL Express to ship from the US, this documentation is electronically transmitted to customs–no additional paperwork necessary.
When you’re ready to get your shipments out the door, you also have the option to schedule a free or discounted pickup for any UPS,DHL Express, or Sendle shipment or link out to schedule one directly with USPS.
When considering which shipping carriers you may use, there are four factors to consider.
Costs
Using multiple carriers is one way to reduce your shipping costs.
Postal carriers are often more affordable, but may not offer many options for package types and speeds. Express carriers tend to be faster, can accommodate heavier or larger packages, and provide more service options, but can be more expensive.
Do your research and price out postal, regional, and express carrier options. We’ll cover how to charge for international shipping below, but it’s good to know what’s available for your international shipping strategy.
Delivery options
Some customers will want their purchases right away, and others will be more willing to wait.
To best serve your customers, offer a good mix of delivery options. Providing a range of choices gives them the option to balance the tradeoff between timeline and price, and that might be the difference between a sale and an abandoned cart.
Tracking and insurance
Most carriers provide shipment tracking, so you and your customers can easily see up-to-date shipment statuses. You can also add ePacket tracking to give customers end-to-end tracking options.
If you’re worried about a package becoming lost or damaged, insuring your shipments is the way to go.
Insurance is offered by most global express carriers and if it isn’t automatically included in the cost of shipping, it’s relatively affordable and straightforward to add.
If you are a merchants in the US, you can add Shipsurance shipping insurance to any shipment, regardless of shipping method or order destination.
When using postal carriers like USPS or Canada Post, some shipping services are available that include insurance in the price of shipping. You can use mail classes like Priority Mail International and Priority Mail Express International for USPS or Priority Worldwide, Xpresspost – USA, or Xpresspost – International for Canada Post, to get automatic coverage. You can always pay for coverage using a different shipping service—usually a few dollars per $100 USD of declared value.
Whatever you choose, consider adding insurance to any package over $200 being shipped to another country. Doing so will add some peace of mind to both you and your customer.
Be transparent about fees
This might be the most important part of any international shipping strategy: Be as transparent and communicative as possible with your customers about shipping costs. Don’t surprise your customers with an unexpected total cost at checkout.
According to the Baymard Institute, nearly 50% of the cart abandonment they surveyed on ecommerce sites in 2020 was due, in part, to extra shipping fees and costs:
Our own research studies how customer trust develops during the purchase journey of shoppers who buy from a new online store. The study reveals that when shipping internationally, a store’s shipping policy that clearly states who pays duties and taxes is a must-have to build trust and win a sale with a brand new shopper.
One place you can communicate these costs is on your policy pages. Clearly lay out how and where you ship products internationally, and what costs may be associated.
You can also do something as simple as adding flags to your top navigation to show your shipping availability, like Pure Cycles did here.
Letting your customers know where you deliver to doesn’t have to just be about costs. A tool like the Free Shipping & Hello Bar can help you promote your shipping and rates to a global audience.
It’s best to use all options available to communicate shipping costs—or potential costs—to a customer, whether it’s on your homepage, product page, or on a policy page. It’ll set expectations for you both, which can help give the customer added confidence to complete their purchase.
What to charge for international shipping
There are four key components for deciding on the cost to ship your products internationally. All four contribute to how effectively you’ll ship around the world.
Packaging
Before you ship anything, you’ll need to get packaging supplies. You may need a few sizes of boxes to accommodate different sized shipments. You might also need cushioning, like bubble wrap or stuffing. You can get your packaging both online and at post offices or office supply stores.
In general, it’s best to keep your packaging sturdy but simple. No one wants to deal with three boxes of varying sizes when getting a single product from your business.
Trying to strike this balance of sturdy packaging and low cost may require some homework. Look for deals where you can. For example, if you use USPS as a business, you can order boxes for free.
Working the cost of packaging into your total product cost should be pretty straightforward. Depending on the size and quality, most packaging should cost somewhere around $1.00 – $5.00 each.
Cost of shipping
Building the cost of shipping into your pricing approach is an essential part of correctly setting your prices. You don’t want to lose money on shipping or overcharge your customers. To make sure your approach works, think through these steps:
Consider and compare
Do you ship a lot of similarly sized products? Or maybe a few sizes or weights of packages? This difference, naturally, affects how you’d price a shipment.
Here’s one way to find the costs of shipping internationally:
- Using a rate calculator for the carriers you’ll use, take your average domestic order and price it out as if you were shipping internationally.
- Then use the rate calculator for your smallest domestic sale.
- Now run the costs for your largest domestic sale.
With these three figures in place, you’ll have a sense of pricing for international shipping. It’ll also help you determine which shipments may cost more than others.
If you’re in the US, see how much it will cost to ship internationally with Shopify in our shipping calculator.
Here are two examples of this approach:
Merchant A
- Smallest domestic sale cost $5.33 to ship internationally
- Average domestic sale cost $15.47 to ship internationally
- Largest domestic sale cost $124.55 to ship internationally
Merchant B
- Smallest domestic sale cost $1.33 to ship internationally
- Average domestic sale cost $2.75 to ship internationally
- Largest domestic sale cost $3.25 to ship internationally
Merchant A has a broader range of shipping costs to cover. And Merchant B’s range is relatively narrow. Merchant A may be selling heavier and more varied products, while Merchant B’s offerings seem more consistent in size and cost.
Once you’ve determined your range, you’ll need a pricing structure that’s a good fit for you and your customers.
Structure your pricing
There are three main pricing structures when shipping around the world: Free shipping, carrier rate shipping, and flat rate shipping.
- Free shipping: Free shipping is an excellent option for customers. If your profit margins allow for international orders to be shipped for free, consider offering it. If you’re not sure, check out this post on calculating order thresholds for free shipping.
- Carrier rate shipping: Shopify already integrates with a few carriers (like USPS, DHL Express and UPS in the US, Canada Post in Canada, and Sendle in Australia) and gives customers shipping options and real-time pricing. Carrier calculated shipping can be very friendly since it allows your customer to choose and does the math for you. Plus, your customer will be charged the same rate that it will cost you to ship their order with Shopify Shipping.
- Flat rate shipping: If your international shipping is consistent, in both the size/weight of your packaging as well as the cost of shipping (like Merchant B above), it may be worthwhile to consider flat or manual rate shipping.
Handling charges
Along with the cost of your packaging and materials, consider adding a handling charge.
International shipments pass through many more additional facilities than the typical domestic order. You should be packaging these shipments with more care, and that’s included in your handling. To determine your handling charges, ask yourself:
- What’s your minimum hourly wage when preparing and packing shipments?
- How long does it take you, on average, to prepare an order for shipment (from reviewing the order to sending it out)?
Now you can determine your handling costs. Here’s an example:
It usually takes 10 minutes to prepare an order for shipment. And at $11/hour to prepare these packages, you would add a $1.83 handling charge to cover the cost.
(10 min/60 min) x $11 = $1.83 is the handling cost
Again, adding in a handling cost is entirely up to you, and you need to do what’s best for your business. Keep in mind that international orders are typically a bit more expensive, and international customers usually expect to pay a bit more for quality shipping. A big part of a quality shipment is how it’s handled and packaged.
Duties and taxes
International shipments can be subject to duties and taxes depending on a number of factors. It’s important to do your research and factor any duties and taxes into your pricing strategy especially for any key international market you are targeting. You can use this duty calculator to get an idea what duties and taxes may apply to your products per destination country.
Taxes are based on a fixed percentage per destination country (and sometimes state or province). Duties, on the other hand, depend on a number of factors such as:
- The value of the items being shipped.
- The country of origin or where items were manufactured.
- The type of the items being shipped and attributes such materials used to make them.
By default, the importer (i.e your customer) is responsible for any taxes or duties on the shipment and will need to pay them before they can receive their order. This is called Delivered Duty Unpaid (DDU) or, more officially known as, Delivered At Place (DAP). It’s very important to be transparent with the buyer about additional fees to manage their expectation and avoid returns and chargebacks. Make sure to set up a clear return policy on your website.
To provide a smoother and surprise-free buying experience to your customers, you can choose to be responsible for paying these fees, this is called Delivered Duty Paid (DDP). In this case, you need to collect these fees upfront.
From a logistical standpoint, you will buy the appropriate shipping label DDU/DAP or DDP and include customs documentation with your international shipment. Check with your domestic postal service as a local resource to make sure you know which documents you need to ship internationally. They’ll typically have these documents for you.
When you buy your shipping labels through Shopify Shipping, you’ll be provided with the necessary customs documentation needed to fulfill international shipments.
The correct customs paperwork required for an international shipment can vary by country. But typically these two documents will be required: a commercial invoice and an export packing list.
Commercial invoice
This is the bill for the shipped product from the seller to the buyer that helps prove ownership and payment. Used to determine the true value of the product(s) being shipped, this document helps the country assess customs duties and taxes. Here’s some essential information that should be included:
- The merchant and customer’s names and addresses
- The price, descriptions, and quantity of the products included
- How the sale was made and the terms of the payment
- Shipping method
Depending on the carrier you are shipping with, the customs information may be embedded in the shipping label. DHL Express provides Paperless Trade to most countries, reducing the need for extra printed documents.
Export packing list
The typical detail on a packing list is on this form (buyer, seller/shipper, invoice number, date of shipment, etc.) but it also includes more extensive information like:
- The mode of transport
- Carrier info
- Weight and dimensions of the packages (usually in metric measurements)
- The type and quantity of packages
- Package marks
Time to ship internationally
The first step to ensuring international shipping success is to have a strategy in place. From what and how you’ll ship, to where and at what cost—giving these factors some thought and research will better prepare you to grow your business around the world.
As well, remember to try out new approaches and techniques. Shipping is a fluid and seasonal industry. Be sure to re-apply and refine your strategy as new offers or changes take place.
