If you want your ecommerce business to grow, considering international expansion is a logical next step. But this decision brings the challenge of figuring out how to ship products worldwide.
To tackle international shipping for your ecommerce platform, you'll need a plan that suits both you and your business. You don't have to become a shipping expert, but you should grasp the available choices and find an approach that can meet your shipping needs in the future.
WHAT IS INTERNATIONAL SHIPPING?
International shipping involves moving goods across foreign borders. It plays a crucial role in connecting global economies and enabling sales to customers located outside your business's home country. There are several notable distinctions between international shipping and domestic shipping, primarily relating to expenses and paperwork.
Compared to domestic shipping, international shipping tends to be pricier due to the longer distance traveled by the package, often involving various transportation methods such as air, land, and sea. Additionally, international shipping frequently entails the payment of import taxes and duties in the receiving country. In terms of documentation, international shipments necessitate customs forms—unlike domestic shipments.
Furthermore, ecommerce international shipping usually takes more time compared to domestic deliveries.
UNDERSTANDING THE COMPONENTS OF INTERNATIONAL SHIPPING COSTS
When it comes to international shipping costs, there are four essential elements that play a crucial role in determining how efficiently you can manage global deliveries. These factors have a direct impact on both your business's operational effectiveness and customer satisfaction across the world.
Before embarking on any international shipment, obtaining the right packaging supplies is paramount. Depending on the variety of shipments you handle, you might require multiple box sizes to accommodate varying product dimensions. Consider including cushioning materials like bubble wrap or stuffing to safeguard your items during transit. These packaging materials can be procured both online and at local post offices or office supply stores.
Opting for a balance between sturdy and uncomplicated packaging is ideal. Customers prefer receiving products in a single, well-packaged box rather than multiple boxes of different sizes for a single item.
Striking this equilibrium between durable packaging and cost-effectiveness might necessitate some research. Seek out deals and discounts where possible. For instance, if you use USPS as a business, you can order boxes for free. Incorporating packaging costs into your overall product pricing is usually straightforward, with packaging expenses ranging from around $1 to $5 per unit, depending on size and quality.
2. Cost of Shipping
Incorporating shipping costs into your pricing strategy is fundamental to setting accurate prices for your products. Achieving a balance between not incurring losses on shipping expenses and not overcharging customers is essential. Here's how to approach it effectively:
Consider and Compare: The nature of your products and their sizes or weights determines how you should price shipments. Are your products consistently sized, or do they vary? To calculate the costs of international shipping:
- Use a rate calculator for your selected carriers and simulate pricing for an average domestic order shipped internationally.
- Repeat the process for your smallest domestic sale.
- Similarly, calculate costs for your largest domestic sale.
With these three figures, you can establish a foundation for pricing ecommerce international shipping. This exercise will also help you identify shipments that might incur higher costs than others. Utilize platforms like Shopify's shipping calculator to assess international shipping costs.
Structure Your Pricing: There are three main pricing structures for international shipping: free shipping, carrier rate shipping, and flat rate shipping.
- Free Shipping: If your profit margins allow, consider offering free international shipping. Customers appreciate this option, and it can boost sales. Calculate order thresholds for free shipping to ensure it's financially viable.
- Carrier Rate Shipping: Integrated with platforms like Shopify, carrier calculated shipping offers real-time pricing and various shipping options. This customer-friendly option ensures that customers pay the same rate you incur for shipping through Shopify Shipping.
- Flat Rate Shipping: If your international shipping costs remain consistent in terms of package size/weight and cost, consider employing flat or manual rate shipping.
3. Handling Charges
In addition to packaging and material costs, it's wise to include handling charges. International shipments navigate additional facilities compared to domestic orders, necessitating careful packaging. To calculate handling charges:
Calculate Your Handling Costs: Determine your minimum hourly wage for preparing and packing shipments. Estimate the average time it takes to prepare an order for shipment. Multiply the hourly wage by the time required to prepare an order. For example, if it takes 10 minutes and your wage is $11 per hour, the handling charge would be $1.83.
Remember that handling charges are discretionary, but they reflect the additional care required for international shipments. Customers expect to pay slightly more for quality shipping, and effective handling is a vital aspect of quality.
4. Duties and Taxes
Accounting for duties and taxes is crucial for transparency and customer satisfaction. The global cross-border ecommerce market is projected to reach $627 billion by 2022, indicating a significant market segment affected by duties and taxes. Research by the International Chamber of Commerce underscores the importance of clearly communicating these charges to customers, as unexpected fees lead to dissatisfaction and a high likelihood of returns.
Implementing Delivered Duty Paid (DDP) is recommended by DHL Express for seamless customer experiences. Data from a survey by Pitney Bowes indicates that 81% of consumers are more likely to make a purchase if they know the total cost upfront, reinforcing the need to transparently include these charges in your pricing.
WHEN SELECTING SHIPPING CARRIERS, CONSIDER KEY FACTORS:
Adaptability is key in the dynamic shipping industry. Continuously reassess and refine your strategy in response to evolving offers and industry shifts, ensuring your international shipping operations remain optimized.
- Costs: Amplify cost savings by employing multiple shipping carriers. While postal carriers often offer affordability, express carriers excel in speed and versatility. Regional courier services can be beneficial for addressing last-mile delivery complexities.
- Delivery Options: Cater to diverse customer preferences by offering a variety of delivery timelines. Providing a range of choices enables customers to balance speed and cost according to their priorities.
- Tracking and Insurance: Elevate customer satisfaction with comprehensive shipment tracking. Amilo provides integrated tracking, and you can enhance transparency by adding ePacket tracking. For added security, consider insuring parcels against potential loss or damage.