Navigating International Shipping for Your E-Commerce Business

A cargo ship in the ocean carrying shipping containers

Lily Winnan 14 July 2023 minute read

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Navigating international shipping and customs can be a daunting task for e-commerce businesses; sending packages across borders, dealing with taxes and regulations, and ensuring proper packaging can be overwhelming. But, if you don’t offer international shipping, you’re missing out on a huge market.

International shipping is the process of sending goods from one country to another. For example, if you’re sending a parcel from the UK to Spain, this would be international shipping.

Expanding your e-commerce business’s reach to international markets opens up a world of opportunities. From accessing new customer bases to increasing your revenue streams, venturing into international shipping can provide substantial benefits for your e-commerce business. So, let’s delve into the key considerations, strategies, and best practices that will empower you to navigate international shipping and customs with confidence.

Research and select international shipping partners

One crucial aspect is researching and selecting reliable and cost-effective international shipping partners. Choosing the right shipping partner or partners is significant because they will be responsible for the safe and timely delivery of your packages to your customers.

When researching shipping carriers, there are several factors to consider:

Shipping rates: ensure they align with your budget. Look for carriers that offer competitive prices without compromising on service quality.

Delivery times: Efficient and reliable delivery is crucial for customer satisfaction.

Tracking capabilities: Tracking allows you and your customers to monitor the progress of shipments, providing peace of mind and transparency.

While researching shipping carriers, it's also essential to evaluate their reputation and customer reviews. Look for feedback from other e-commerce businesses or individuals who have used their services.

Some international couriers you could research include:

Royal Mail

Ship internationally with Royal Mail using these shipping methods:

International Tracked & Signed
International Tracked
International Signed
International Business Standard Priority
International Business Standard Economy

Evri

Evri, or Hermes as it was previously known, will ship your goods internationally using its:

Evri International

Parcelforce Worldwide

Parcelforce Worldwide offers the following services from the UK:

Global express
Ireland express
Global priority
Global value
Global economy
HM Forces

DPD

Send your business’ parcels internationally using:

DPD Classic
DPD Express
Air Classic
DPD Direct
DPD Priority international mail
DPD Standard international mail

FedEx

You can send your parcels via FedEx using:

FedEx Europe First
FedEx International First
FedEx International Priority
FedEx International Priority Express
FedEx International Connect Plus
FedEx International Priority Freight
FedEx International Economy
FedEx International Economy Freight

By conducting thorough research, you can find shipping partners that meet your requirements and ensure a smooth international shipping process.

Understand international shipping documentation

International shipping involves various documentation requirements that must be fulfilled for smooth customs clearance. Some of the essential shipping documents include commercial invoices, packing lists, and certificates of origin.

A commercial invoice is a document that provides details about the goods being shipped, including their value, quantity, and description. It serves as proof of the transaction and helps customs authorities assess the applicable duties and taxes. The information needed on a commercial invoice includes:

Your business and customer’s names and addresses
The price, descriptions, and quantity of the products included
How the sale was made and the terms of the payment
Shipping method

A packing list provides a detailed inventory of the contents in each shipment. It helps customs officers verify the accuracy of the declared goods and ensures compliance with regulations. The information needed on a packing list includes:

Contents information
Weight and dimensions of the package
The type and quantity of packages

Certificates of origin are documents that certify the country in which the goods were produced or manufactured. These certificates may be required to determine eligibility for trade agreements or to assess the appropriate duties and taxes. A certificate of origin is always needed when sending goods outside the EU.

Accurate and properly prepared shipping documentation is crucial for successful customs clearance. Ensure that you understand the purpose and importance of each document and complete them accurately. Mistakes or missing information can lead to delays and additional costs. Consider seeking professional assistance or consulting with customs experts to ensure compliance with documentation requirements.

Tariffs, duties and taxes

When you send items abroad, the goods you ship are given a classification code that corresponds to the items they are.

These codes play a crucial role in determining the duties and taxes applicable to either you or your customer for shipping, delivery, and receiving of goods.

It’s important that you accurately select the correct code for each item shipped internationally to avoid unexpected customs procedures or documentation requirements. Failure to comply with these regulations can result in customs withholding or destroying the package if the necessary documentation is not submitted within the specified timeframe or if either party refuses to cover the charges.

Customs compliance and regulatory requirements

Compliance with customs regulations is of utmost importance when shipping internationally. Failure to comply can result in delays, fines, or even the seizure of your shipments. Familiarise yourself with the customs regulations of the countries you plan to ship to and understand the specific requirements and restrictions.

Start by visiting the official customs website for the countries you'd like to ship to and take a look at the prohibited and restricted items. Some products, such as plants, seeds, alcoholic beverages, or food products, may face additional scrutiny or be outright prohibited. Research any specific import/export licences or permits required for certain product categories.

It's also important to stay informed about trade agreements and preferential tariff programs that may apply to your products. These agreements can offer reduced or eliminated duties for eligible shipments, allowing you to take advantage of trade benefits and remain competitive in the global market.

By thoroughly researching and complying with customs regulations, you can ensure a smoother shipping process and minimise the risk of complications or delays.

Tracking and customer communication

Once you've shipped your packages internationally, effective tracking and customer communication become vital. Providing customers with tracking numbers and regular shipment updates helps build trust and improves the overall customer experience.

That’s why it’s important to choose a shipping carrier that offers reliable tracking services. This allows you to monitor the progress of the shipment from dispatch to delivery.

Even better, share tracking numbers with customers promptly, such as in the dispatch confirmation email to ensure that they can easily access tracking information without having to contact your customer support channels.

What to charge for international shipping

This is one of the most important parts of your overseas shipping strategy - price it too high and you’re likely to see high cart abandonment rates at the checkout, price it too low and your business will be out of pocket. When considering your shipping charges, you should take into account:

Packaging

You might require various sizes of boxes or envelopes to accommodate different sized shipments. It's possible that you'll also need cushioning materials like bubble wrap or stuffing depending on what you ship. You can purchase your packaging supplies online, visit the post office, or office supply stores.

Incorporating the cost of packaging into your overall product cost should be relatively straightforward. Depending on the size and quality, most packaging materials should cost somewhere between £1 to £5 each.

Cost of shipping

This is the actual price of using a courier to ship the goods to your customer. Once you’ve decided which courier and service to use, factor this into the overall cost.

Insurance

The longer the distance your package is being shipped, the more opportunities for it to get lost, broken, or damaged. Getting shipping insurance might be worth considering if you’re going to ship high value goods. If you take out shipping insurance, the overall cost should be factored into your international shipping fee.

Duties and taxes

When the value of a shipment is above the tax threshold for a country, duties will apply. There are two ways to pay for duties:

Delivery Duty Unpaid (DDU): Duty is not included in the shipping cost and must be paid for when the item arrives at the destination port.
Delivery Duty Paid (DDP): Duty is included in the shipping cost at checkout, and has already been paid for by the customer before the item arrives at the destination port.

The bottom line

In conclusion, navigating international shipping and customs is a crucial step for e-commerce businesses looking to expand their reach and tap into global markets. By thoroughly researching and selecting reliable shipping partners, understanding documentation requirements, managing tariffs and taxes, complying with customs regulations, and effectively communicating with customers, you can navigate the complexities of international shipping with confidence.

Why not use your Capital on Tap Business Credit Card to embrace the potential of international shipping, and unlock the growth and profitability that awaits you.

This does not constitute financial advice. If you want to understand international shipping and customs in detail, you should speak to your financial advisor or accountant.

Lily Winnan Content Writer

Frequently asked questions

Small business owners’ frequently asked questions about pricing strategy:

What is transfer pricing?

Transfer pricing refers to the process of pricing goods and services between different divisions, subsidiaries, or entities within the same company or group. It is particularly relevant for small businesses that operate across multiple countries or have several subsidiaries.

In the UK, transfer pricing rules are designed to ensure that transactions between divisions, subsidiaries, or entities within the same company or group are conducted at arm's length, which means that the prices charged are similar to what would have been charged to unrelated parties. This is important to ensure that companies do not manipulate prices for tax avoidance purposes.

Small businesses in the UK should be aware of the transfer pricing rules and ensure that their transactions with related parties are properly documented and priced at arm's length. Failure to comply with the rules could result in penalties and additional tax liabilities. It is therefore important to seek professional advice if you are unsure about the application of transfer pricing rules to your business.

What is MAP pricing?

MAP pricing stands for Minimum Advertised Price. It is a pricing policy that some businesses or manufacturers use to set a minimum price that their products can be advertised for.

In the UK, MAP pricing is not legally required, but it is often used by businesses to ensure that their products are not advertised below a certain price point. This can help to protect the brand's image and prevent price wars between retailers that can damage profits for both the manufacturer and the retailer.

For small businesses in the UK, MAP pricing can be useful if you are a retailer selling products from a manufacturer or distributor that has a MAP policy in place. By adhering to the minimum advertised price, you can ensure that you are not undercutting other retailers and maintain a level playing field in the marketplace.

However, it is important to note that MAP pricing does not set a minimum sale price, only a minimum advertised price. Retailers are still free to sell the products for any price they choose, as long as they do not advertise below the MAP price.

What is the pricing curve?

The pricing curve, or curved pricing, is a pricing strategy where a business charges different prices for the same product or service based on various factors, such as the customer's willingness to pay, the quantity purchased, or the time of purchase.

Examples of curved pricing include volume discounts, loyalty programs, dynamic pricing (where prices change in real-time based on supply and demand), and price skimming (where a high initial price is charged and gradually lowered over time).

The goal of curved pricing is to increase profits by capturing more revenue from customers who are willing to pay more for a product or service, while still attracting customers who are price-sensitive. This can be especially useful for small businesses in the UK that may have limited resources and need to optimise revenue.