Imagine being able to boost sales by between 10 and 25 percent. What’s the catch? Opening yourself up to buyers in other countries, which of course comes with its own set of challenges.
Raf Zimberoff, Vice President of Product Development for ShipRush, now a division of Descartes, believes sellers should take advantage of the growing opportunities of selling internationally. ShipRush is readying a new solution for online sellers to help them do international parcel shipping in a smart way, though the product is still in testing.
Zimberoff encouraged sellers to be open to exploring international sales even if they aren’t ready to make a full-blown commitment. Some major considerations: Merchants must ask themselves whether there is international demand for their products – and just as importantly, whether they have the margin and expected volume to support international sales.
Many sellers don’t know this, he said, but they can ask shipping carriers for help – including FedEx, UPS, and the US Postal Service. They have customs brokers available who can help with duties and customs issues and can suggest the most efficient shipping methods.
They can also help you understand what products are even permitted to be shipped internationally. “Some forms of electronics, and drones, as examples, are restricted,” he explained. Going over your products with your carrier’s experts is a great way to get educated – “they can walk you through the whole landscape.”
“They know they need to be your expert, otherwise you won’t ship international,” he said – “and they want you to buy their international service.”
Merchants must also look at the margins of the products they’re selling and the volume of sales they expect from international shoppers. “Items with super-low margins and super-low cost are often not going to fly because there isn’t any wiggle room in there for shipping cost.”
It’s going to be challenging for a $25-ticket item to go cross-border. But if you sell items in the $50 – $100 range, or an average $200 ticket item, “now you’re really at a point where you can look hard at doing cross border, and you should look hard.”
Zimberoff also pointed out, “when you’re in the lower cost, you can go cross-border, it’s just that you’re going to end up with a shipping service that’s going to be a little bit on the slower side, and you’re going to need to work out the shipping very aggressively up front just to prove viability.”
Another consideration with low-cost goods is volume. “If you’re not able to ship enough volume cross border, it’s just not going to make sense.” If you’re selling a $20 product and you can sell 100 a week or more cross border, you can work with a consolidator, he said. But if you’re only going to sell 10 a week, that may be a challenge, though it could work for sales between the US, Mexico, and Canada.
Parcel consolidators consolidate orders from multiple clients and send them as one shipment to each destination country; the packages go through customs in bulk and are then dropped into the local post. This process lowers both shipping and cross-border costs and increases shipping speed.
In some cases where a particular item would trigger costs (duties) for the buyer equal to the value of the product, the seller might find it more feasible to send a lot of products to a warehouse in the destination country and fulfill the items locally rather than shipping them individually using an international parcel service.
But Zimberoff said that holding inventory on multiple continents is the second or third stage of a merchant’s entree into cross border shipping, when the merchant knows they will sell products in volume – you wouldn’t do that experimentally. Just as with domestic sales, using TPLs (third party logistics warehouses) internationally requires sales velocity. Again, this is where shipping carriers’ knowledge can help merchants determine the most efficient shipping method for a particular situation, he said.
Zimberoff said merchants must consider other factors when selling internationally, including payments and currency issues. If you’re selling internationally through a marketplace, they’re handling those issues for the merchant, but if you are selling on your own website, you need to handle those issues yourself. In either case, currency conversion costs will impact your margin.
If you’re selling items between $10 – $40 in the US with super-thin margins and sending first class mail, those products may just not have a place outside the US, he said.
What about the risks of selling internationally? Deliverability – delayed or lost shipments, or cases where the customer gets a surprise notice of duties and taxes that must be paid in order to pick up their package. Clothing is one example of a classically protected product category.
“One of the rules for a successful business is to use the vendor’s knowledge. In this case, the parcel carriers have a lot of knowledge of cross border.” They’re in the position to tell you what products and at what prices might be a problem when it comes to duties and taxes in which countries. However, Zimberoff said, they’re often not in a position to manage the duties and taxes aspect for your shipments.
Even when you specify that the customer must pay duties and taxes, you may end up getting the bill anyway, because the shipper is ultimately responsible for all those charges.
ShipRush is looking to solve some of these challenges in its upcoming product, and it’s currently testing a feature that will calculate the fully-landed costs of such charges for merchants’ shipments. It’s also testing a solution to help merchants use a consolidator even when they are not doing the volume usually required.
Zimberoff has been working with online sellers for years – what advice does he have for a merchant who has a high-margin item they believe would be popular with international shoppers?
“Choose a small number of SKUs and make them available in other markets and see how you do.” He said he always proposes “incrementalism” – don’t get overwhelmed, just get started in a small way.
“The key is to get started to see what you can achieve and if there’s natural demand in international marketplaces,” he said.
Those on eBay have an easy way to open up to international shoppers though the eBay Global Shipping Program, which he said is successful, easy, and compatible with third-party shipping systems like ShipRush and others.
Those who complain about eBay Global Shipping should try it again. It’s not perfect, he acknowledges, but it really works, and gives you a larger market for whatever it is you’re selling.
A few other tips ShipRush offers online sellers when shipping internationally:
– Deliver 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.
– Look for an online shipping solution that offers Electronic Trade Documentation and Paperless Invoices. Electronic Trade Documentation is a real time-saver.
– Never misrepresent or under-declare the value of your items.
It’s worth exploring cross border sales, Zimberoff said – if you go whole-hog, you should be able to increase your sales between 10 and 25 percent.
“If you’re able to sell 500 orders a month now in the US, you should be able to bump that somewhere north of 15% by opening yourself up to other markets.”