International Customs. Two words that deter many eCommerce entrepreneurs from attacking the international market. Customs can be scary, uncertain and confusing for businesses who are not used to selling in foreign countries. However, in this blog I will highlight the things that you need to do to ensure that your package arrives on time and intact.
Understand your Destination Country
The world is a big place and with 241 countries and territories, it can be difficult to pin down exact shipping costs, taxes and duties fees. Also, some countries may have slow or underdeveloped customs departments. Before expanding sales to any country it’s important to know the exact rules of that country. For instance, countries such as Germany charge a 19% tax on any item valued over $22.00 and duties fees on anything over $150.00. However, Norway charges taxes and duties on any item entering the country, regardless of value ($0 di minimus). These are just a few examples and these numbers can often change yearly. It’s critical that you do your research ahead of time in order to avoid future issues. There are sites that offer up to date information regarding di minimus values and the destination country’s shipping capabilities.
DDU or DDP?
Determining whether you should ship a package DDU (Delivered Duty Unpaid) or DDP (Delivered Duty Paid) Depends on a few factors. To make this subject more clear I’ll define the difference between the two. DDU means that the duties and taxes are the responsibility of the receiver (your customer). The opposite applies for DDP. Any duties and taxes that must be paid will be billed to you as the shipper. So, returning to my previous question, which is best? The answer really depends on your business model. In order to avoid an upset customer, some businesses hide the fees in the cost of the product while others have enough margin to absorb the additional fees. Other companies will let their clients know that they will be responsible for any taxes and duties that may be incurred. Regardless of what you choose to do, there are numerous shipping options available.
Shipping Carrier Options
Most carriers offer some sort of international program. However, not all of them are good. It is vital that you choose a reliable carrier with a solid track record in the international market. Some of the most common shipping companies are:
- United Sates Postal Service
These carriers are well established and have competitive shipping rates. They also have established relationships with most local governments and postal services. Shipping international can also be extremely expensive, even if you are using one of the large shipping carriers. It’s important to find established companies that can provide volume shipping rates. Many fulfillment companies have this capability.
One of the last but most important steps is ensuring that your shipment has the correct documentation. Incorrect or missing documentation will almost certainly cause your package to be held at customs or even rejected. Below is a checklist of documents that are required for successful shipping:
- Proforma Invoice – This includes sale price, description of goods, the name of the buyer and seller and other transaction details such as the delivery destination. It’s good practice to place these invoices in the box. Occasionally customs will open a package. If there is no invoice, then they will contact your customer and ask them to provide one before the package is released.
- Commercial Invoice – The commercial invoice tells customs exactly what the package contains and the value of the goods being shipped. It’s important to list the correct HTS codes along with a description of goods (such as “supplements”) and the declared value of the product. If you don’t use an automated service like UPS’s digital invoicing, then you MUST put the commercial invoice on the outside of the box.
- Packing List – Packing lists will let customs know exactly how many units are packed into a box. This item should be placed inside of the package, along with the proforma invoice.
- Specialty Documents – There are other documents that may be required in order for your package to arrive safely. Info on specialty documents and other requirements can be found here.
Finding a Solution that Works for Your Business
International shipping can be scary but you don’t have to navigate those waters alone. To avoid pitfalls that cost your business time and money, reach out to experts who are skilled in global logistics. Utah fulfillment centers such as Launch Fulfillment can help you walk this path. So you can turn your eCommerce business into the global giant you’ve always wanted.