E-Commerce International Shipping: Rates, Limitations, Set Up
In this article, we will take a look at setting up your international shipping strategy, as well as the rates and limitations which go with it. While packaging itself is important too, we will be dedicating our next article to packaging as part of the brand experience, continued customer satisfaction and word of mouth marketing. For now, let’s look at the ins and outs of international shipping and how to get started it.
Before you decide to service an international market, it’s important to make sure that your product is suitable for international shipping, and that it’s going to be financially viable to get your products to your customer at their global destination.
The first thing you need to decide about your shipping strategy is this: who’s going to pay for it.
Shipping is an expensive component of your international business and it’s important to take the costs and the implications those costs carry into consideration before you even start marketing your business.
Your choices are (essentially):
- Cover all shipping costs and work them into your overall product prices
- Charge real-time courier rates
- Charge a flat rate for all shipping
Cover all shipping costs and work them into product cost
While this may take a headache out of charging for shipping, it’s important that you don’t allow this method to price you right out of the market, while still keeping an eye on your profit margins. Start by mapping out all costs involved with getting your product to your customer. Here’s an example:
Cost of product $10
Shipping costs $7.50
Customs/Duties (if you cover them) $0.00
Credit card fee $2.50
Profit margin 50%
Total price $32.75
As you can see, the end cost of the product is significantly higher once you’ve added shipping and packaging costs. It’s a good idea to observe what competitors in your market are charging for similar products, and how they are covering shipping costs.
It’s important because to the outside observer (your customer) it may seem as if their product is priced better than yours because they don’t always factor in the shipping price in the initial decision-making process.
Real-time courier rates
To be able to accurately achieve this, you will need to look at integrating your E-commerce platform with a third-party courier like DHL or USPS. This way your customers will know exactly what they are paying for and they can even choose the service they want.
Again, take a look at what the popular market model is. The chances are that if a particular method is popular in your field it’s because it works.
Charge a flat rate
The trick with a flat rate is to find a happy medium so that you don’t radically over (or under) charge on shipping. A flat rate works best when you stock a fairly standard size product range and you have an existing relationship with the courier who is going to be carrying your goods to your customers. This way what you lose on shipping for some of your bigger items, you will make up on the smaller ones.
How to Calculate Shipping Costs
Regardless of which method you choose above, you have to know what your shipping costs are – and know how to work them out in future.
Below is a list of standard features which all courier companies look at when estimating your shipping costs.
- Package weight
- Package size (volumetrically)
- Country of origin
- Destination country
- Express / standard shipping times
- Customs and handling fees
Needless to say, the best place to get information on working out your shipping costs is directly from the source. Here is a list of international shipping companies who all have their own online shipping calculators for you to try out.
Insurance and Tracking
Depending on the value of what you’re selling, it can give you and your customers a great deal of security to have a tracking option and shipping insurance. Needless to say, this often comes at an additional cost and it is important that you get these costs from your courier before you finalize your advertised shipping price (or work it into your product price or flat rate).
You shouldn’t need to worry about finding an additional insurance company as most couriers have an in-house insurance option.
As soon as your package is headed for an international destination shipping insurance is an essential component as many packages just never make it.
Another area for shipping costs which is often overlooked by fledgling international E-commerce stores is the cost of getting your package through two sets of customs.
Both the country of origin and the destination country are going to have customs checks and these cost money.
They also require proper documentation. Your local post office or shipping company (or your courier of choice) should be able to supply you with the correct forms and guide you in including all of the relevant information.
Your customs forms should be clear, honest and descriptive to avoid your package being caught up at length at customs.
Here is a list of international customs forms from various countries:
Tariffs, Duties, and Tax
Many items carry additional customs fees when they arrive at their destination. Your customer will be responsible for these upon delivery. Make sure you know what these tariffs will be and communicate these costs with your customer to avoid a nasty surprise for them when they reach the post office. If you don’t you may find yourself facing bad publicity online.
Your website should carry a disclaimer letting customers know that they are responsible for any additional customs fees upon entry to their country.
Transparency and Expectation
Make sure that your customer is 100% aware of the estimated shipping times and delivery dates. Here again, your chosen courier company will be able to guide you. Once you have entered into an agreement with a courier company, they should be more than happy to supply you with all of the information you need to set up accurate tables and automate the estimation process with a bit of help from your dev team.
Analyse Your Results
As with everything else you do in your E-commerce business, you have to track your progress so that you can analyze the statistics. You should quickly be able to find which courier’s get you the best results for the best prices. Which of them leave your customers happier and how your different methods of charging are received by your customers.
Whatever works best for you - that is where you want to focus your attention in future.