International shipping is an entirely different animal for small businesses than shipping domestically. Doing it right isn’t just about dropping your product in the mail and paying postage. You’ve got to be an expert at so many other things: Trade tariffs, legal issues, and hidden fees are just the start. Then, there’s theft, fraud, and overseas customer support.
This list goes on.
However, adding international sales to your current sales program can be very lucrative for small businesses. It represents an entirely new and untapped channel for sales.
At PFK, we see many small businesses selling internationally. Doing it right opens up new sales, while doing it wrong could negatively impact your business.
Here’s some advice to help you decide whether international shipping is worth those international sales.
First, Expect Good, not Great, Shipping Service
UPS, FedEx, DHL, and even USPS are in the business to make money. They’re not in business to take care of your customers. That’s why it’s essential to understand what they consider a successful package delivery.
Post-COVID, nearly all shippers confirm delivery electronically. Shipping confirmation is generally done with a barcode scan or by taking a photo of where the package was left to confirm a successful delivery.
However, the rate of successful orders doesn’t mean those orders are successful for you, the sender.
The following is an example of a “successful” FedEx shipment:
Did you notice the FedEx delivery person taking a “confirmation” photo seconds before two men (one with a knife) steal the box off the homeowner’s porch ….. and then steal the homeowner’s decorative pot? For $19 an hour in the US, the delivery person is not risking their life for your package. And they shouldn’t.
Delivering packages can be risky in any country. Expect the people providing your package will only do the minimum. Customers will look to you for any extra customer support.
Second, International Shipping is Complicated and Risky
Using international shipping as a small business means you must control more of the shipping process than your shipper. Your shipper will allow you to violate import restrictions and won’t tell you about possible hefty fines. They consider that your job.
If you don’t know the import rules for the country you’re shipping to, we strongly suggest you don’t ship to that country until you do.
A Case Study: Shipping Medicine
A group in Idaho made an exception to their shipping policy and sent a prescription medicine to a customer who lost their medication while on a month-long vacation to Peru. They trusted FedEx to fill out the paperwork, declare the medicine, and ship it.
The medicine took three days to reach Lima. Still, after another three days, customs declared that the shipment violated Peru’s rules on shipping medicine and fined the customer – not FedEx – for illegally importing medicine. It took a week to sort out the hefty penalty and provide medical records. It took another ten business days to get through customs and another seven business days to reach the customer’s hotel.
When the medicine finally arrived, the tourist already had a medical emergency. After getting the medication he needed, he finished his vacation and left for home.
He never got the shipment.
Why Didn’t FedEx Help?
Why didn’t FedEx flag the shipment before sending it? The package was marked as medicine, listing the medicine’s name and quantity. The person who shipped it clearly explained to the people at the FedEx shipping store that it was medicine.
However, FedEx didn’t stop the shipment because its electronic shipping system is only designed to ship packages. It’s not designed to know import policies in each country. Things like that fall on you.
Shippers have tight profit margins, which could be as low as 3% or even negative in some years. So, pushing risk back to their customers makes financial sense for them.
In 2016, for example, FedEx massively changed its shipping software by removing as many features as possible. According to Apptio, a software strategy company hired by FedEx, cutting even one feature could save up to 500 person-hours in support and maintenance costs a year.
A streamlined service is profitable for shippers, so expect to bear any burdens outside shipping yourself.
Third, People Steal Packages Everywhere.
If you’re shipping, you’re dealing with theft. Whether you’re shipping domestically or internationally, theft is a common problem, especially after the pandemic.
For instance, porch pirate thefts in England rose 500% over the past four years, partly because English thieves saw the success of American thieves. Significant increases were also seen in France and Germany, countries that used to have a very low percentage of package theft.
However, if you accept credit cards, you’re required to guarantee shipping to the customer’s shipping location. Credit card companies like Visa can refuse merchant services for eCommerce companies if they don’t. So, it’s imperative for a company selling internationally to do everything it can to protect against theft.
Visa also requires merchants to guarantee prompt shipping. If there are shipping delays, they could also trigger a chargeback.
What Can a Small Business Do about Parcel Theft?
Shipping internationally is still an important channel for online companies to use. Sales will always outpace theft. But how do you lower your risk of theft?
Here are a few ideas:
Know the Import Laws for International Shipping
Shipping internationally without a plan is a recipe for losing money. eCommerce companies need to know the laws and regulations of the countries they service. They should exclude shipping to countries where they don’t know the rules.
As noted in our case study example, shipping medicine or vitamins to customers in Peru differs significantly from shipping to Canada. Peru doesn’t allow shipments of prescription medicine into the country without a local doctor vouching for the medicine. In Canada, as long as the package is going to the person receiving the prescription, shipping a single prescription isn’t a problem.
Shopping channels can also have different rules when selling to different countries. Selling over Amazon to Canada, for instance, means you cannot sell certain cosmetics that are not a problem in Amazon’s US version.
Knowing the rules and regulations of each destination where you plan to sell will give you a better chance at profitability when the sale ends.
Make Up Your Insurance for Theft
Since the pandemic and especially since the rise of photo confirmation by shippers, package theft has been on the rise outside the US. Unfortunately, there’s no way around this. You should expect a certain percentage of packages in international shipping to be stolen or lost.
Shipping insurance generally only covers damaged or lost packages. It doesn’t cover theft.
To reduce losses to theft, consider using several trusted strategies to protect shipments:
- Add a signature confirmation service to your sale price for more expensive items for international shipping orders. Signature confirmation ensures that the buyer has to receive the item physically, making package theft much more difficult. For electronics or currency, this is the best insurance you can get.
- Consider adding an address validator plugin to your eCommerce software to protect your company from customers’ “fat finger” mistakes. This will auto-check that the shipping address is recognizable by shippers, increasing the chance of a successful shipment.
- Include a policy that your responsibility for package shipment stops when the shipper confirms package delivery. Customers should then accept your policy as a condition of sale. Such a policy will help you protest chargebacks against your store through the customer’s credit card company.
Use an Order Fulfillment Service like PFK for International Shipping
Selling your product and marketing your online store internationally takes time. You need to know the laws of the country you’re selling to, have policies in place to combat allegations of theft and have the resources to confirm shipping addresses.
Having a shipping company handle your shipping is an easy way to solve problems around international shipping. For just a small percentage of sales, it’s a far more affordable solution.
Consider using a shipping company and consider Precision Fulfillment and Kitting. PFK can also change your product boxing, instructions, or marketing material based on your shipping destination.
We’re here to make shipping, domestic or international, more accessible.