Retailers seeking new growth opportunities need look no further than international e-commerce, which is poised for explosive growth in the months and years ahead.
Similar to market conditions at the start of e-commerce in the United States, international e-commerce represents a real opportunity. Around the world, tech- savvy consumers with increased access to the Internet are gaining confidence in making purchases online that are both secure and private. Internet penetration rates, which measure the percent of populations with Internet access, are at only 50% in Europe and 17% in Asia, compared with 73% in North America. In some markets, such as Japan, online sales are expected to increase by as much as 40% annually, according to Reuters.
To tap into this trend and serve customers well, retailers must address complexities and challenges before getting started. They must ensure that their shipping and e-commerce platforms can effectively deal with the nuances of cross-border sales, as it’s more complex than domestic package handling.
Customs regulations, import duties, complex shipping rules, foreign taxes and the lack of in-country services represent bona fide challenges. Organizations that fail to address these complexities upfront end up with poor customer experience, low sales revenue and higher-than-expected costs.
To ensure success with international shipping and driving cross-border e-commerce growth, organizations should pay close attention to these four areas:
Local Laws and Regulations
Each country has its own import and export laws. International shippers need to know in advance whether they can legally ship their goods to a customer in another country. While some items, such as currency, livestock and radioactive materials, are prohibited nearly everywhere, each country has a long list of prohibited and restricted items. The U.S. Environmental Protection Agency has information on these items at their website: www.epa.gov/compliance/international/importexport.html
In addition, shippers must also contend with United States rules regarding cargo transported on passenger aircraft. For example, the 9/11 Commission Act of 2007, which requires the TSA to establish a system to screen 100% of goods, takes effect in August 2010.
Multiple Postal & Private Carrier Networks
When dealing with an international market, organizations must consider the multitude of different local addressing rules in each country that may impact how quickly shipments are delivered. In addition to customs forms, value limits and size limits, many countries do not follow the US standard of street address, city, state and ZIP. If retailers ensure proper addressing by understanding the rules of local postal administrators, they ensure a positive customer experience.
Duties and Taxes
When shipping goods from one country to another, it’s important to remember that regulations and fees are often based not on the location of a company or warehouse, but on the locale of the original manufacturer. Organizations need to know the appropriate rates for taxes and duties by country, then calculate, collect, remit and manage these funds.
In addition, it’s important to be aware that shipments must be coded using a Harmonized System (HS) number. These classification numbers are assigned to individual products and are used by customs authorities around the world for the application of duties and taxes.
Returns and Special Handling
The processing of international returns is an intricate process. Organizations should develop a process for documentation, cost-effective shipping and returns back to the US. They must also remember to draw back the duties and taxes paid to foreign governments.
While these four areas can represent challenges to organizations just getting started, there are a host of new technologies that make the requirements of international e-commerce and shipping easier to manage. One example includes enlisting the help of an e-commerce platform provider to automatically present and settle transactions in foreign currencies, handle international payments processing and simplify logistics.
Regardless of the technology or service chosen to help get organizations started, it’s important to remember that creating and maintaining a positive customer experience will ultimately drive success.
Similar to market conditions at the start of e-commerce in the United States, international e-commerce represents a real opportunity. Around the world, tech- savvy consumers with increased access to the Internet are gaining confidence in making purchases online that are both secure and private. Internet penetration rates, which measure the percent of populations with Internet access, are at only 50% in Europe and 17% in Asia, compared with 73% in North America. In some markets, such as Japan, online sales are expected to increase by as much as 40% annually, according to Reuters.
To tap into this trend and serve customers well, retailers must address complexities and challenges before getting started. They must ensure that their shipping and e-commerce platforms can effectively deal with the nuances of cross-border sales, as it’s more complex than domestic package handling.
Customs regulations, import duties, complex shipping rules, foreign taxes and the lack of in-country services represent bona fide challenges. Organizations that fail to address these complexities upfront end up with poor customer experience, low sales revenue and higher-than-expected costs.
To ensure success with international shipping and driving cross-border e-commerce growth, organizations should pay close attention to these four areas:
Local Laws and Regulations
Each country has its own import and export laws. International shippers need to know in advance whether they can legally ship their goods to a customer in another country. While some items, such as currency, livestock and radioactive materials, are prohibited nearly everywhere, each country has a long list of prohibited and restricted items. The U.S. Environmental Protection Agency has information on these items at their website: www.epa.gov/compliance/international/importexport.html
In addition, shippers must also contend with United States rules regarding cargo transported on passenger aircraft. For example, the 9/11 Commission Act of 2007, which requires the TSA to establish a system to screen 100% of goods, takes effect in August 2010.
Multiple Postal & Private Carrier Networks
When dealing with an international market, organizations must consider the multitude of different local addressing rules in each country that may impact how quickly shipments are delivered. In addition to customs forms, value limits and size limits, many countries do not follow the US standard of street address, city, state and ZIP. If retailers ensure proper addressing by understanding the rules of local postal administrators, they ensure a positive customer experience.
Duties and Taxes
When shipping goods from one country to another, it’s important to remember that regulations and fees are often based not on the location of a company or warehouse, but on the locale of the original manufacturer. Organizations need to know the appropriate rates for taxes and duties by country, then calculate, collect, remit and manage these funds.
In addition, it’s important to be aware that shipments must be coded using a Harmonized System (HS) number. These classification numbers are assigned to individual products and are used by customs authorities around the world for the application of duties and taxes.
Returns and Special Handling
The processing of international returns is an intricate process. Organizations should develop a process for documentation, cost-effective shipping and returns back to the US. They must also remember to draw back the duties and taxes paid to foreign governments.
While these four areas can represent challenges to organizations just getting started, there are a host of new technologies that make the requirements of international e-commerce and shipping easier to manage. One example includes enlisting the help of an e-commerce platform provider to automatically present and settle transactions in foreign currencies, handle international payments processing and simplify logistics.
Regardless of the technology or service chosen to help get organizations started, it’s important to remember that creating and maintaining a positive customer experience will ultimately drive success.
