Oct. 2 2006 03:43 PM

The international shipping market is having a phenomenal growth spurt. Growth is being shaped by changes in international trade agreements, new technologies which are fueling globalization and the value of the US dollar. Double-digit growth, driven by increased buying power against the US dollar and expanded access to technology, is predicted in the demand for consumer goods by overseas markets.


Companies that are not equipped to deliver the goods in the international marketplace are turning away some of their best customers. Although the base is very small, we have seen better growth in our international than domestic markets, points out Kurt Kravchuk, Director of Parcel Transportation for Limited Brands Logistics Services. The Canadian market is growing in the high-single digits, partially offset by a Japanese market

in slight decline; the remaining international markets are growing at a pace in the low double digits.


Many small and emerging businesses, and even well established ones, are daunted by the perceived complexity of shipping to the overseas market. Yet this market represents a lucrative growth opportunity for those companies whose business and logistics systems allow for international trade. To give an example of how robust the demand is for American products overseas, consider that while 49% of registered eBay users live outside the United States, only 10% of eBay items listed in the United States are shipped internationally. Some American products enjoy a far greater demand overseas and foreign buyers will pay an average of 6.3% more for the same item.


VintageAuction.com is a good example of this phenomenon. When CEO John Farley started his vintage clothing Web site, he knew the Japanese market would be huge for his products. Through VintageAuction.com, Japanese consumers bid on vintage items such as a classic Harley Davidson Motorcycle jacket that will bring in about $200, to a pair of 1950 Levi Strauss 501s that might go for $2,000. Japanese buyers love vintage Americana, says Farley. They have the buying power and are comfortable purchasing online from a reputable vendor. And a Japanese buyer will rarely refuse, return or fail to claim a purchase.


Where Do I Start?

So how does a company interested in tapping global markets get started? Solutions are available for small, medium and large shippers to capitalize on the global marketplace. New solutions in technology, transportation and logistics are making it easier, more economical and more convenient than ever for businesses to play in the international arena. Getting started is not as complicated as was once believed. In the past year, technological advances in desktop and small systems shipping have made it possible for any size business to seamlessly integrate international shipping into their supply chain. One of the oldest names in the global transportation industry is the United States Postal Service. Since 1775, the Postal Service and its predecessor, the Post Office Department, have connected friends, families, communities and businesses in the United States and abroad.


Even more recently, the Postal Service has focused particular attention on helping eliminate barriers to international trade and commerce by making it easier for all sized businesses to ship products overseas. Recent innovations include a simplified express international claims process, expanded service guarantees for Global Priority Mail to Australia, China, Hong Kong, Japan and Korea and online notification of free carrier pickup for international package products. In addition, there are online solutions that allow businesses to use their existing shipping processes or a www.usps.com solution to generate international shipping labels with customs forms and postage and complete the free carrier pickup request at the same time.


The large majority of eBay sellers use the Postal Service as their shipper of choice, and other small and emerging online businesses are also finding a preferred partner with the Postal  Service. The reason is simple. International shipping with the Postal Service is economical as much as 40 to 60% below alternative shipping options and end customers prefer to receive packages through the mail. I surveyed my customers to find out which shipping provider they wanted me to use to ship products,  says Julie Swatek, President of ScrapYourTrip.com, a Web-based start-up company that is currently shipping hundreds of packages a week all over the world. The Postal Service was the overwhelming choice. And the USPS is helping big shippers as well.


The Word Is Out Victorias Secret Products Find Global Appeal

Limited Brands is the parent company to a specialty retail shopping enterprise that includes The Limited, Express, Bath & Body Works, The White Barn Candle Company, Henri Bendel and · Victorias Secret stores with locations in some of Americas most fashionable malls and shopping districts. Purchased by The Limited Brands in 1982 for $1 million, Victorias Secret has grown to be the largest of the Limited Brands with more than $4.4 billion in direct sales and more than $1.2 billion in indirect sales. The Victorias Secret Web site, www.victoriassecret.com, was launched in 1998 and has been profitable since day one. Victorias Secret Direct ships over 400 million catalogs annually to over hundreds of countries, and customers also have access to products through the companys popular Web site.


When you are Victorias Secret and you ship hundreds of thousands of international packages a year, youve got a lot of peoples attention. When you are Kurt Kravchuk the owner of strategic carrier relationships and the person responsible for the total supply chain impact of moving millions of packages annually you can leverage multiple expenses related to parcel transportation. Understanding the opportunity provided with a single source for exporting provides private carriers incentive to negotiate agreements with a holistic view of the supply chain expense associated with these exports. Negotiated service agreements are also available through the United States Postal Service and its Postal Qualified Wholesalers. We recently had an opportunity to speak with Kravchuk,  to find out what advice he might give to other companies whether they are shipping numerous international packages like Victorias Secret Direct or whether they are simply looking to implement or improve global shipping operations. See the sidebar to discover what we found out.



A Six-Pack of Tips from an International Shipping Pro


1. Understand the full supply chain, not just the cost of outbound shipping. Labor, duties and taxes, tariffs, customs expenses, licensing fees as well as customer claims can add back-end costs to a global package. All these factors must all be considered when designing your global shipping supply chain. You want to know these costs up front, and so does your end customer. If a package is refused by your customer in the destinating country due to unexpected duty or tariff assessments, it may be cheaper to abandon the package than to pay the cost of the return.


2. Build an order processing system that provides your customers with the total landed cost of their order up front. These costs include product expense, shipping and handling, duties and tariffs and any ancillary charges that may be incurred. Sophisticated software is available that will calculate total landed costs based on the country of destination and the products ordered from your inventory so that these costs can be passed on to the customer. Another method that can be used successfully is to average the total landed costs of your shipments for each country and build a landed cost model that will provide cost coverage. Providing your customers with a surprise-free purchase and including all costs in the order process builds customer loyalty and satisfaction and reduces total expense.


3. Choose the countries and markets that make sense for your business. Loss and pilferage rates and refused package rates vary by country as do the rates of customer returns. Content restrictions and total landed costs also vary by country. Start by identifying key markets where there is a demand for your product, your product is not restricted and the total landed costs are conducive to selling your product.


4. Build your processing and distribution center with globalization in mind. Right up front, build your pick, pack and ship operation so that it is seamless for domestic and global shipping. Build a process that allows your company the flexibility of using multiple carriers to maximize efficiency, reliability and economy of operations.


5. Take advantage of benchmarking opportunities such as the National Postal Forum and industry conferences such as the Parcel Shipping & Distribution Forum to learn the current best practices and the potential pitfalls from companies who have successfully made the transition into the global shipping market. You will hear from and have an opportunity to network with experienced professionals who have learned from hard-fought experience such critical factors as which countries have restrictions that will pose issues and challenges, which countries are hot spots and which countries are the most

favorable and lucrative for your business. You will also find out how to partner with reliable vendors and learn the latest trends and tactics used by the international shipping pros.


6. Partner with a service provider who has shipping capability for the countries where you want to do business. Victorias Secret uses a USPS solution as part of its distribution center model that generates a shipping label and customs declaration form based on each order invoice all in a process that takes about 60 seconds. Victorias Secret uses a postal qualified wholesaler for shipping to several key markets. Postal qualified wholesalers have an established workshare relationship with the Postal Service that enables them to provide volume pricing while offering access to the Postal Services universal global delivery network.


Are you interested in opening your doors to billions of new customers? For information on international shipping options, go to http://www.usps.com/ or e-mail us at PackageServices@usps.com.


Visit Kurt Kravchuck at the Global Package Symposium at the National Postal Forum on April 3 in Orlando, Florida.