This article appeared in the Fall 2018 International Issue.
Selling internationally is a real opportunity for small e-commerce merchants. According to Statistica, from 2014 to 2021, worldwide e-commerce sales will grow almost 246%, from $1.3 to $4.5 trillion. By opening up your business to new markets in other countries, you are able to experience some of that growth. On average, selling products internationally can boost a merchant’s sales by between 10 and 25%.
However, it’s not necessarily all smooth sailing; there are many unexpected snags you can hit when selling globally. There are also many new challenges that must be addressed, including China’s dominance in the international e-commerce space, emerging cross-border issues, and last-mile challenges created by the increasing parcel volume. According to an International Parcel Corporation (IPC) survey, more than two-thirds of all international consumer e-commerce purchases are sent via parcel post.
Your success depends on making smart choices on what to sell, which markets to sell into, the customer experience, and cost control. It’s not all that unusual for even those with thriving online businesses, including successful international sales, to run into new roadblocks as the global e-commerce marketplace evolves. To be successful, merchants need to fill in the gaps in their regional knowledge and build new international shipping skills. Here are four tips to help merchants dip their toes in internationally, while avoiding some common pitfalls, in order to start taking advantage of the booming international e-commerce market.
1. Know what products and business models are traditionally more successful internationally. There are many significant factors to consider, including whether there is a regional demand for a given product, a product’s profit margin, and if the expected demand per location will be enough to make your efforts worthwhile. Sellers need to:
· When selecting products to sell internationally, look for good cross-border selling opportunities. As Amazon expands into more markets internationally, many e-commerce retailers will no longer be able to compete on price. Instead, they need to create satisfying brand experiences and an engaging community built around their brands. Generally speaking, products that retail for $50-$200 in US dollars are the sweet spot for cross-border selling. This range gives merchants more room to absorb shipping costs and other cross-border expenses. Top international sellers include high-end items, self-branded products, and products unique to North America that are in demand abroad.
· Use your carrier’s expertise in international shipping. Asking carriers for advice is one straightforward way to do some initial research on selling products internationally. Carriers have customs brokers available that can help answer questions about products in different countries, duties, and customs issues, and they can suggest the most efficient shipping methods. Carriers can also help you determine what items are legal to sell internationally and where; 98% of items are able to be sold cross-border, but some forms of electronics and drones, for example, are restricted in certain countries.
· Using online marketplaces to expand internationally. Smaller e-commerce companies often turn to marketplaces like Amazon and eBay to support selling abroad. Marketplaces like these allow customers to make international purchases in a safe, familiar environment. Marketplaces can help solve currency conversion issues, localization, and provide international exposure to a large number of customers. Supplementing these efforts with search engine optimization (SEO) of your own branded site(s) and online social media/marketing can also help drive demand.
· Incrementally testing product demand in different countries. When testing sales in new countries, choose a small number of product stock keeping units (SKUs) and offer items in small amounts to different markets. This allows merchants to see whether a natural demand for a product exists in different target countries before making any significant inventory and warehousing investments.
· Expand fulfillment capabilities and inventory to each country incrementally. Deciding on whether to keep product in a warehouse locally in each country or to ship product from the US depends on a company’s product values, business model, and sales volume. In early stages, SMBs often fulfill cross-border shipments for test countries in-house from the US. As sales grow, it might make sense to maintain inventory in warehouses locally in your target country and outsource all the fulfillment. For example, warehousing and outsourced fulfillment can be supplied by Fulfilled by Amazon (FBA). Working with Amazon is an investment, however, and merchants need to keep a deep SKU of products and maintain steady sales to have regularly stocking a warehouse make sense.
4. If you are processing your own orders, use shipping automation software to create a more predictable international buying experience for customers. International couriers can charge for delivery re-attempts, address correction fees, and return fees. Sellers need to provide valid and accurate contact and address information from customers. Shipping automation software eliminates input errors by allowing users to automatically import orders from marketplaces, such as eBay, Amazon, and others. Sellers can also purchase discounted postage, accurately and automatically print labels, and quickly locate orders and track shipments from a centralized dashboard. This is invaluable for immediately dealing with customs issues. Other features found in cloud-based shipping solutions that offer international shipping efficiencies include:
· Side-by-side carrier rate shopping, which provides more accurate shipping estimates and controls costs. Different international shipping carriers and parcel consolidators serve specific countries and customers better depending on their needs. Using shipping software with a side-by-side rate shopping feature allows merchants to search all of the international options available and see complete shipping estimates. According to the IPC survey, 93% of shoppers that buy international won't purchase unless they know the full cost — including delivery and duties — before they buy.
· Sending packages Deliver Duty Paid (DDP) rather than Deliver Duty Unpaid (DDU) by accurately estimating the full cost of a shipment, including duties, taxes and fees. Advanced shipping automation solutions simplify the process by allowing sellers to search premium customs content as part of their international shipping options and to see total landed cost estimates including duties. This allows merchants to send packages Deliver Duty Paid (DDP) rather than Deliver Duty Unpaid (DDU). Sending DDP decreases the chance that the parcel will be held up in customs and reduces unpleasant surprises for your customers ("$50 due before I can receive my package?").
· Offering Electronic Trade Documentation (ETD) and paperless invoices is a big time-saver at customs. Many countries require five printed copies of each invoice attached to the outside of the shipping container. By submitting customs documentation electronically, you no longer need to print multiple copies.
Customers all over the world want the same things. Focus on fundamentals: quality products with a strong brand, reasonable/predictable shipping costs, reliable delivery, excellent customer service, and a simple, clear return policy. With careful planning and incremental expansion, the world is your e-commerce oyster. Know the regional preferences, rules, and regulations of your target countries; address cross-border shipping challenges; take advantage of localized marketplaces; and get ready to grow your customer base.
Rafael Zimberoff is the founder of ShipRush, acquired by Descartes Systems Group, which provides on-demand, software-as-a-service solutions focused on improving the productivity, performance and security of logistics-intensive businesses. The cloud-based ShipRush software solution helps small-to-medium e-commerce businesses and omnichannel retailers ship parcels efficiently and cost-effectively.
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