Cross-border delivery is the process of goods which are transported from one country to the next. The goods go through customs and import duties may have to be paid depending on existing trade agreements and tax and VAT thresholds.
Cross-border sales have gained in momentum over the last two years due to ecommerce websites making international purchasing more accessible. According to figures, 67% of global consumers who shop abroad buy because prices are lower outside of their own country or to get their hands on brands or goods not available in their own markets.
However, introducing your products to new markets comes with challenges. Is there a demand for your product? How will you handle returns? And are you able to deliver to these countries?
Before you begin shipping overseas, it’s important you check to make sure you can actually import your product into your destination countries. Every country has its own set of rules and regulations surrounding taxes, customs and duties therefore some goods may be considered restricted while others may be strictly prohibited.
But with such a large and growing propensity for cross-border ecommerce, cross-border delivery it is and should be a challenge that retailers need to be rise to.
Investing in cross-border e-commerce is a crucial move for any business hoping to experience growth. There are a number of benefits to companies that sell to international customers across the world including:
Reach new markets
Offering cross-border delivery can be hugely beneficial for expanding your customer base and increasing your brand awareness globally especially for future growth and to combat the dominance of big sellers such as Amazon.
Increase in revenue
Naturally, increasing your company’s reach into foreign markets allows you to widen your audience, therefore establishing a presence across the world. If you sell products that are more affordable than elsewhere in the world you will see customers return to your company again and again.
Increased product interest
If you have a particular product that doesn’t perform very well in your own country, there’s nothing to say that it might not be a bestseller in a new destination. Shipping internationally can be a great way to try out new product lines and see what works best for different customers.
Cut out the middleman
Reduce costs by shipping directly to your consumer and country of choice. In the past, companies had to rely on international wholesalers and distributors, but now, thanks to new technology and improvements in logistics, businesses can keep prices competitive and ship directly to international customers.
Delivering across borders poses its own set of challenges. Here’s our top tips for ensuring your cross border deliveries are as smooth as possible:
1. Make it clear you're open for international delivery
If you ship your products overseas, make sure you say so, especially on your homepage, so a potential international customer knows that if they want to buy from you they can.
2. Include charges for customers before checkout
Be transparent! Depending on the product you are sending, you (or your customer) are likely going to have to pay extra as a cost of doing business for importing goods into a country. Therefore you do have options:
Delivery Duty Paid (DDP)
This means you, the merchant, pay all the taxes and fees associated with shipping internationally. You are generally billed by your carrier for these fees.
Delivery Duty Unpaid (DDU) – This means that the customer pays all taxes and fees associated with the package. If you choose this route, be sure to let the customer know up front that they will be responsible for duties.
The last thing you want to do is surprise your customers with a huge grand total when they’re about to hit “Buy Now.” Or shipping something around the world only for the customer to refuse to accept the shipment because of the high duties.
3. Meet the customer's shipping needs
It’s important to remember that a positive shipping experience is vital to customer satisfaction. According to figures, 39% of consumers who have a poor delivery experience will never shop with that retailer again, that’s a big portion of customers you could potentially lose as a result of a poor shipping experience.
With ecommerce becoming the norm, online shoppers now want and expect their goods as soon as possible and want that express delivery option, which actually can be good for business.
4. Provide free shipping
If you offer free international shipping you need to make sure you make enough on each order to cover the associated shipping costs. This is why you’ll see that most companies, such as Amazon, only offer free shipping over a certain price point and only on specific products. Essentially, only offer it for orders where you know you’re making enough on the sale to cover shipping and still make a profit.
5. Provide international tracking
In order to reduce the number of customer service requests and the chances of your shipment getting lost overseas it’s recommended you choose a carrier that offers good tracking. Giving your customers accurate, timely information about their order deliveries will improve customers' experience with your brand and increase their confidence in your company.
6. Meet the customer’s return needs
Many international online shoppers fear returns, with 23% of potential online shoppers assuming that returns would be difficult or costly as a barrier to shopping with an international online retailer. Therefore it’s vital you have a simple returns process and make that clear on your website.
7. Offer flexible delivery options
To ensure that you’re meeting the needs of your customers you should consider delivery preferences such as; leaving a parcel in a safe place or at a collection point. That said, these do vary from country to country and you should ensure that your shipping provider is able to meet the requirements of customers across the globe in order to increase both customer convenience and satisfaction.
The majority of challenges retailers face in cross-border ecommerce are related to logistics, with a poll of retailers showing the top concerns faced when looking to ship internationally:
Navigating customs compliance: 51% of retailers said this was a challenge.
Tracking deliveries across borders: 46%
Managing delivery expectations: 43%
Cross-border logistics: 30%
Cross-border returns: 24%
With the above in mind, it’s important to consider how to resolve these issues when shipping internationally.
Customs, tariffs and taxes
The process of sending (and returning) goods overseas is more complicated than shipping domestically. Especially as each country and region is likely to have its own customs, tariffs and taxes on goods sold outside its borders and imported into them. One of the biggest issues is VAT compliance when trading cross-border. With some 800,000 online stores in Europe alone, it pays to find out what VAT rules apply to countries and regions you are looking to do business in.
Returns are just as important and key as delivery. A lot of your customers may not want to keep your products so it’s important you manage your returns procedures and use third-party platforms such as carriers to bring goods back the other way.
The cost of cross-border shipping is a big pain point for retailers. The faster you want to send your product to a customer, the more that costs. Therefore it’s vital you have an effective and reliable logistics setup and strategy.
Cross border delivery journeys tend to involve multiple logistics partners for each leg of the journey. As such, delivery times are uncertain due to potential delays at different depots and at customs.
Therefore, ensure your customers are kept in the loop with proactive updates on the delivery’s journey, make sure your logistics back-end supports detailed logistics reporting across multiple carriers and evaluate the standard of customer service provided by your logistics carriers.
Brexit is likely to shake up all of the above. So keep up to date on a host of Government and EU VAT websites, including the European Commission or Web Retailer, as well as this free VAT checker.
As the internet continues to become the shopping platform of choice for consumers, retailers cannot afford to become complacent about the role that cross-border delivery management plays as part of their ecommerce strategy.
Despite the prospect of cross-border delivery being daunting to many, the opportunities are also huge for your business. So hopefully the advice above will have motivated you to confront the challenge of mastering cross-border online delivery, and taking your business to the next level.
If you want further information on how to get started with cross border trading download the full ebook today. You can also discover Opayo’s range of online payment solutions that can allow you to safely accept international payments.