Ecommerce opens up a world of possibilities — literally. You can reach consumers from across the globe and get your products to those who would have never had access to them back in the days of exclusive brick-and-mortar retail.
While selling online may seem like your potential customer reach is limitless, there are of course many obstacles you’ll have to work out in your shipping and logistics strategy.
Just because your customers don’t have to go to a physical store to get your products doesn’t mean you can get international orders to them cost-effectively or fast.
So, how does your ecommerce business grow internationally and capitalize on international markets?
We’ll look at how using fulfillment services for international orders affects your customer reach as well as shipping and logistics costs.
Are you ready for international fulfillment partner?
It’s hard to know when exactly you might need global fulfillment partner. Here are a few signs your ecommerce business may consider expanding your reach and shipping international orders.
You are receiving more international orders
Consider the following questions depending on which scenario fits your business.
1. If you’re already shipping internationally:
- Have you noticed an increase in international orders — both in sheer volume as well as a percentage of total orders?
- Are there certain countries that people are ordering from often?
- How many countries have you shipped to thus far?
Understanding the representation of your current customers is a great way to analyze demand for international orders. Of course, if that’s just from organic demand and not as a result of targeting shoppers abroad in your marketing efforts, there may be a lot of untapped potential.
Alternatively, maybe you’ve chosen not to ship to certain countries because your ecommerce business lacks the resources to do so. In this case, the shopper would get a message at checkout notifying them that the order can’t be shipped to their destination.
2. If you’re not yet fulfilling international orders:
- Are you receiving any inquiries or questions from consumers in these countries, asking if you can ship to them?
- Are your competitors shipping international orders or only domestic shipments?
Being aware of what the competition is doing as well as paying attention to chatter online can help you see the need for international fulfillment.
There is global customer demand for your product
Simply knowing there are billions of people overseas could be worth exploring new markets to drive awareness and additional sales from people who have never been exposed to your products.
If you already have a strong product-market fit, do more market research, demand forecasting, and testing to see if your product exists or resonates across borders. Be sure to research each country’s regulations and whether you’re allowed to sell your product there, as well as purchase preferences and propensity to buy, local offerings, and other external forces that may impact your success.
If it’s a good fit and makes sense for your business, being able to offer affordable, fast delivery to more shoppers can help reduce cart abandonment and drive more revenue.
Main costs and considerations for global fulfillment
Whether your ecommerce business is based in the United States and you want to optimize shipments to countries all over the world, or your business wants to break into the US market from a different country, there are many variables that impact a global fulfillment strategy and subsequent costs.
1. Package dimensions
The dimensions of each shipment may impact the ultimate shipping cost. Dimensional (DIM) weight is a pricing technique used for commercial freight transfer by all the leading shipping carriers for both domestic and international shipments. When transporting international orders, the amount of space is limited, so DIM weight takes into account package density to determine shipping rates. Even if you have a lightweight package, if its dimensions are large, you may pay for the size and not a shipping rate based on the weight alone.
2. Commercial invoice
Commercial invoices are required documents prepared by a freight forwarder or exporter to prove ownership and schedule for payment to the exporter. The commercial invoice must contain the description of goods, their value, the seller’s and shipper’s shipping destinations, and delivery and payment terms. The commercial invoice helps process and clear a package through customs.
Customs refer to a country’s import and export laws and regulations. The customs department administers and collects the duties levied by a government on imported goods. When a shipment arrives in the destination country, customs will inspect the shipment and review the commercial invoice. Once customs approves it and the duties are paid for, the package can be delivered to its shipping destination.
A duty is a payment or tax that must be paid before a shipment can be delivered. Import duties can differ significantly from country to country and are legal requirements. It’s important to note that customers may be asked to pay additional duties and taxes before an international shipment can be delivered. These costs are sometimes unexpected and can deter the customer from paying more money and getting their package.
5. Free trade zone
A free trade zone is a geographic area where goods can be received, stored, handled, manufactured, or reconfigured without intervention by customs authorities or duties being paid in most cases. Free trade zones exist to minimize the challenges of cross-border commerce. Note: Once the goods are transported to the end consumers of the destination country, they are subject to the existing customs duties.
A tariff is a tax on imported or exported goods. Money collected under a tariff is called a duty or customs duty. Tariffs raise the price of an imported good. Different countries have various tariffs for incoming shipments, and tariffs are constantly changing and being updated. You can prepay international duties and tariffs or pass the costs onto to your customers.
5 benefits of using a 3PL for global fulfillment
Handling international order fulfillment yourself can be very challenging. Many ecommerce brands turn to 3PLs for worldwide fulfillment — whether that’s a 3PL with fulfillment centers all over the globe, a 3PL that provides great international shipping rates, or even using different fulfillment companies on different continents.
1. Keep shipping costs down
“We partnered with ShipBob to scale up operations in the United States. We’ve seen a reduction of 70% on shipping costs in the US, which helps keep conversions high.”
Greg MacDonald, CEO & Founder of Bathorium
In addition to warehousing items near your customers, you can work with a third-party logistics (3PL) provider that offers bulk discounted shipping rates to other countries. Because they work with thousands of ecommerce merchants, they can negotiate bulk rates that are much cheaper than what one company could get on their own.
2. Meet delivery time expectations
In addition to saving on shipping costs, keeping your inventory near your end customers and shipping from closer locations also reduces the time in transit, letting international orders get to customers much faster.
It’s not uncommon for it to take a month for an international order to be delivered. By today’s standards, that doesn’t always cut it. Since customers today expect fast, affordable shipping, they will look elsewhere if you don’t offer what they want.
“Speeding up deliveries and keeping them affordable for customers is a top concern for us. With ShipBob, we can comfortably assign a shipping cost to each order by pinpointing the product weight and destination zip code. In comparison to shipping products to the US from Canada, which can be extremely variable in cost, fulfillment by ShipBob is much easier to estimate because we know the true fulfillment cost.”
Greg MacDonald, CEO & Founder of Bathorium
3. Manage inventory levels easily
When you’re shipping from multiple fulfillment centers to better reach international customers, you need to have visibility into inventory tracking to view your stock levels and ensure you have enough product in each location for accurate inventory accounting.
“We have access to live inventory management, knowing exactly how many units we have in each ShipBob fulfillment center. It not only helps with our overall process in managing and making sure our inventory levels are balanced but also for tax purposes at the end of the year.”
Matt Dryfhout, Founder & CEO of BAKblade
4. Minimize shipping errors
When you’re growing fast, fulfilling international orders can be hard to keep up with. If resources are tight and time is limited, you may make more mistakes packing boxes since you’re just trying to keep up as fast as possible. And errors with international orders can lead to unhappy customers with expensive returns.
“As we’ve grown internationally and in our general order volume, we’ve seen satisfaction go up. ShipBob was a key player and significant partner in helping manage what became unmanageable when we were shipping orders out ourselves.”
Matt Dryfhout, Founder & CEO of BAKblade
3PLs are also experts in ecommerce fulfillment and are able to perform international fulfillment services more efficiently and specialized than most ecommerce companies could do themselves.
“If I’m going to outsource one of the most important parts of my business, it needs to be in the hands of people who are honest, knowledgeable, and can do the job a lot better than me. ShipBob was the perfect fit.”
Tracey Wallace, Founder of Doris Sleep
5. Scale operations quicker
When you use an international fulfillment solution, you don’t need to invest in the infrastructure and facilities yourself. By leveraging the 3PL’s network of fulfillment centers, you can scale effortlessly without having to worry about hiring a workforce to keep up or grow your operations.
“As our customer base grows, so does our global reach. Having orders shipping internationally, ShipBob’s affordable rates solved our need for international fulfillment capabilities.”
Carl Protsch, Co-Founder of FLEO Shorts
Choosing a shipping carrier for international shipments
Many shipping carriers offer similar international shipping services. Let’s dive into the differences between government and private carriers and how they serve international orders.
Private carriers include companies like UPS, DHL, and FedEx. They are known for having the most reliable order tracking and dedicated support teams if an issue arises. The carrier is in possession of the package throughout the entire shipping timeline — from the moment it’s picked up to when it’s delivered.
The downside is they charge a brokerage fee for customs clearance and the end customer typically pays more upon delivery. If the customer doesn’t pay the delivery charge, the carrier may charge a return fee.
Government carriers are federal agencies such as USPS, Canada Post, Royal Mail, Canada Post, Australia Post, and others. With international orders shipped via government carriers, the package originates in one country and ends in another, so it is handled by multiple government carriers. This makes for a less reliable experience than a private carrier.
However, using a government carrier typically means less fees because they do not charge customs brokerage fees like private carriers do (though they still charge customs clearance fees). If a customer doesn’t pay the delivery charge, the government carrier will bring the shipment back to a warehouse at no cost but it often takes longer.
Global fulfillment can be challenging, expensive, and slow but potentially very fruitful for ecommerce businesses. If you’ve thought international fulfillment seemed too complex for you, or you don’t have the resources yourself, learn how ShipBob can help. ShipBob has fulfillment services all over the United States and ships to all countries served by USPS, UPS, FedEx, and DHL with discounted international rates from all carriers.
Want to learn more about ShipBob’s fulfillment services and international capabilities? Request more information below.