International shipping for e-commerce

Your e-commerce business is growing and you're ready to start selling in new countries and continents. That means cross-border shipping and all that comes with it – from customs paperwork to duties and taxes. It's time to work on your international shipping strategy.

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Key aspects of cross-border shipping

In this introductory overview we cover seven key aspects:

  1. Why is international shipping for e-commerce different?
  2. International carrier services
  3. Customs paperwork
  4. Government regulations
  5. Duties and taxes
  6. Best practices
  7. International returns

1. Why is international shipping for e-commerce different?

It's a bit more complex than domestic shipping because goods are now being exported and imported between countries. That means there's more to consider like:

  • Additional documentation – for goods to clear customs
  • Additional regulations – goods must comply with the rules of the destination country
  • Additional costs – such as duties, taxes and ancillary fees
 

How do regional agreements affect shipping?

They simplify the import and export process – meaning there are minimal customs requirements to send goods between neighbouring countries with regional agreements. Examples include:

  • Shipping between EU member nations 
  • Shipping between the US, Canada and Mexico (NAFTA)
  • Shipping between Russia, Kazakhstan, Belarus and other members of the Eurasian Customs Union (EACU)

2. International carrier services

Besides getting a parcel from A to B, carriers also offer many other services for international shipping such as express delivery, insurance, customs brokerage, tracking and consolidation.

Other services, such as webshop shipping integration, flexible delivery options and international returns, are tailored to e-commerce shipping. It's important to explore these carrier services and find out which ones best match your shipping needs.

3. Customs paperwork

When sending a purchase to a customer in another country, having your customs documents in order is essential. This helps ensure a smooth delivery and prevents goods from being held by the customs authorities.

How do I prepare documents correctly?

While paperwork varies according to the type of goods being shipped, their value and destination country, there are 10 key steps that are usually the same for all shipments:

Preparing e-commerce customs paperwork in 10 steps

  1. Set up your commercial invoice template
  2. Write an accurate description of the goods
  3. Classify the goods with an accurate HS code
  4. Identify the country of manufacture for your goods 
  5. Check for any exemptions from duties and taxes
  6. Identify any other authorities regulating your goods
  7. Determine the Incoterms® you're applying to your customer
  8. Determine the duties and taxes you may need to pay
  9. Identify required customs documentation
  10. Create or gather your customs documentation

4. Government regulations

Besides import and export regulations, many countries place additional requirements on goods, which vary by product and country. For example, the USA has strict eyewear safety requirements set by the FDA – for a pair of sunglasses being shipped to the US this means that a 'Drop Ball Test' certificate must be included in the customs paperwork. 

How do I determine the regulations on a product?

Before shipping a product to a new country you must find out:

  • Is the product controlled in the destination country?
  • Which authorities regulate it?
  • What do I need to do to comply? (e.g. apply for registration, licence or permit)
  • What documentation do I need to provide to prove compliance?

What products are most regulated?

Some of the most common are:

  • Food (e.g. dairy products, noodle soups)
  • Fireworks
  • Sunglasses
  • Children's toys
  • Diamonds
  • Watches
  • Weapons (including replicas, parts and ammunition)
  • Controlled drugs and medication
  • Alcoholic and non-alcoholic beverages
  • Apparel shipments above a certain value
  • Mobile phones, laptops, e-bikes and other electronics with a lithium battery

So before you start shipping to a new country, remember to identify the authorities that regulate your product in that country, and to check what documentation they require (if any). Also be aware that carriers may not ship certain products – so always check if the goods you want to ship will be accepted by your carrier.

5. E-commerce duties and taxes

Goods that enter a new country are subject to duties and taxes. Duties are a tax on cross-border goods that are collected by customs as government revenue and to protect local industries. Taxes (such as VAT or GST) are a sales tax placed on purchased products, including those purchased from abroad. 

Any duties or taxes on a shipment will need to be paid by either you or your customer. As the seller, you can define who's responsible for paying these costs through the Incoterms®. The most common terms used in e-commerce shipping are Delivered Duty Paid (DDP, seller pays) and Delivered At Place (DAP, previously DDU, buyer pays). To manage customer expectations and ensure a smooth shipping process, it's essential to clearly communicate these terms on both your webshop and the commercial invoice.

Regardless of who pays, duties and taxes will directly affect the product cost, so before shipping a product to a new destination, contact your carrier or customs broker to determine the duties and taxes. Be aware that many countries, such as the US, have a de minimus threshold in place, which means that shipments with a value less than the de minimus are exempt from duties and/or taxes.

New import legislation

With the growth of e-commerce, many countries are introducing new conditions on the import of goods. Some countries are lowering or even removing the tax-free de minimus limit. This means that you or your customer will need to cover these new costs, if they apply. Countries that have recently introduced new import legislation include: 

  • Norway 
  • Switzerland
  • Australia
  • The EU (expected in 2021)

Trade agreements and duty exemptions

Thanks to international trade agreements, certain goods may be exempt from duties and taxes, or qualify for a reduced rate. This depends on the goods, where they were manufactured and which countries they're shipped between. Check with your carrier or customs broker if your goods are eligible. You may need to include proof of origin in your shipping paperwork.

6. E-commerce shipping best practices

For your international shipping process to run smoothly, you need to be aware of the main pitfalls and how to avoid them. Customs clearance problems or delays can happen when shipments don't meet the regulatory requirements of the country of export or import, or if you provide incorrect or incomplete paperwork. You then risk having your shipment delayed, returned to sender or even seized by customs.

Why are e-commerce shipments held at customs?

The main causes of customs delays are:

  • Undervaluation of product
  • Missing documents for customs
  • Incorrect labeling on parcels
  • Intellectual Property Rights issues (e.g. counterfeit goods)

How can I reduce the chance of customs issues?

To avoid customs delays and extra costs it's very important to:

  • Provide the correct paperwork
  • Pack your parcel correctly
  • Declare the correct value of the goods – undervaluation may not only cause customs delays but also fines to be imposed
  • Monitor the progress of your first shipments – until you establish a smooth and correct shipping process
  • Respond quickly to goods held at customs – the sooner you provide missing documents or information, the sooner the shipment can reach your customer

7. International e-commerce returns

International shipping for e-commerce involves bigger distances and more complicated logistics. Despite this, a customer may still choose to return their purchase. When goods have been shipped within a single country, or within an economic community such as the EU, returns can be simple.

However, when goods have been shipped internationally and involved customs clearance, the returns process has an extra level of complexity. When this happens, you need a structure in place to ensure the safe return of your goods and the refunding of any duties paid.

The international returns process

The most important steps in the returns process are to:

  • Generate documentation for a return shipment
  • File for duty drawback
  • Start a reimportation process on VAT/GST

Returns from different countries

Regulations in some countries such as Brazil, China and Indonesia can limit the chances for goods to be returned or to have duties and taxes refunded (if any have been paid). As an e-tailer, always consider your options and the costs involved with your return service offering.

Shipping requirements and documentation may vary between carriers. This website is designed to provide general information related to shipping. If you’re unsure of the shipping requirements that apply to you, check with your carrier. Make sure to check the rules and regulations of the country you’re shipping from and to prior to shipping. You can find this information on government websites.


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