Most e-commerce retailers thrive on their ability to attract customers on the basis of offering convenience, competitive pricing, and speed of delivery.It may have all started with the home market, but scaling the business and sustaining growth usually comes from branching out to also address overseas markets, maximising those sales opportunities. After all, there’s a growing global appetite for online shopping as our 2017 E-Commerce Fulfilment Report highlights; U.S. online sales alone are forecast to increase a further 14.9% this year over last to $459.07bn. Western Europe is no slouch either, rising 14.2% to €265.68 bn.
With an easy to access and well-established international carrier infrastructure, online retailers have little preventing them from rapidly developing cross-border sales. However, despatching products to overseas customers is not necessarily as straightforward as it is domestically, so for warehouse managers it can be handy to know what’s what when it comes to ensuring an efficient and speedy overseas fulfilment and despatch process. It may all work seamlessly at home, but don’t risk it coming unstuck by any unexpected red tape or paperwork when exporting.
While conversations and help from couriers and carriers is always welcome, knowing about and being able to complete the essential shipping documentation in-house can only enhance the quality of your overall fulfilment service, optimise customer satisfaction, not to mention making additional cost savings.
Looking at the big picture first, it is worth familiarising yourself with a few of the things that could ultimately save you, or your customers, some nasty surprises:
Duties and Taxes
These are usually paid before the goods are released from customs and are based on product value, trade agreements, country of manufacture, use of the product and the product’s tariff code – don’t worry, we’ll explain this one next.
For those who don’t know, duties can either be paid by the customer (delivery duty unpaid), or the merchant (delivery duty paid). For the products you sell, it is a good idea to make it very clear on your website if you are expecting the customer to pay duties, and any other handling expenses on receipt of their packages.
For obvious reasons, the majority of retailers will use the DDP option, where all fees and costs from the warehouse to the customer destination are paid in advance to the carrier, covering transportation, customs clearance and handling expenses. The carrier will pay the duty but may charge an upfront deposit based on a percentage of the value of goods being shipped, plus an administrative charge. One way or another they pay and then bill you.
Customs Tariff Code
Every product has a Customs Tariff Code (also known as a Commodity or Harmonisation Code). Each code has a set level of duty and tax but the tricky thing is outside of the EU this can vary from country to country and relying on a code provided by an overseas supplier is not recommended.
If you don't state the correct code then the custom clearing agent in the receiver country will decide based upon the description you have provided. Not a problem if it’s a low value item, but if it’s a high value one it may result in higher import duty rates. In any event, it will cause delays.
If you’re trading with a country outside the EU you can access their Tariffs using the European Commission Market Access Database and search for a product code based on your product description. The database also gives important tariff information and how it’s applied in other countries. For those retailers based in the US, the US International Trade Commission https://hts.usitc.gov/ is another useful place to search.
Once you know the codes for your products, you can work out how much customs duty and tax will be applied to your shipment. Be aware that any items packaged in a set that can be used separately, mean you must classify each item individually. If they can’t be used separately classify the set under the most significant item in the set. As a general rule, if you have an item made of 2 substances (for example, clothing that is 60% cotton and 40% polyester) you would usually classify the item as being made from the higher percentage content.
For more on classifying your goods visit the HMRC: https://www.gov.uk/guidance/classification-of-goods
You may find that some of your products are legally restricted from being imported to certain countries or it can even be illegal to export the product from your country. It is essential to check this out with the destination Customs Authority as they have the right to stop the shipment of any package. Aerosols, air bags, alcoholic drinks, ammunition, explosives, fresh fruit and vegetables, poison are a few obvious examples, but items such as nail polish and certain perfumes, may not be quite so obvious.
To reduce the time involved and to really scale your international sales, an e-commerce platform will become necessary which can filter any applicable restrictions by customer group, allowing customers in different countries to buy only those products you know you can export. Alternatively, a shipping rate management solution should be able to automatically take a customer’s shipping destination into account and alert them to any potential issues at the time of check-out.
Forewarned and forearmed with the above pointers, here’s the lowdown on the essential shipping paperwork:
Unless you are already in the EU and shipping within the EU, the appropriate customs documentation is a prerequisite and is available online or at your local post/shipping office. These forms tell the customs officers at the country of import what is in the package, how much it costs and whether it was a gift or a purchase.
The set of documents you need to complete are dependent on the details of your shipment.
These documents include:
Customs Declaration (Commercial Invoice):
The Customs Declaration, also called Commercial Invoice, determines the true value of the product you are shipping and is used when calculating the duties and taxes. This is completed by you as the the exporter and is required by the overseas buyer to prove ownership and arrange for payment. Ensure that all the information entered on the invoice is correct, with a full breakdown of what is being sent and a value per item. This is a legal requirement and failure to disclose the full contents and values of the parcel may result in a delay and extra charges at customs, or worse still, goods being returned.
This is a form that provides information on amount, nature and value of your product to the statistical office for compilation of foreign trade data and serves as an export control document.
Certificate of Origin:
This is an official document authenticating what country a shipment has come from and is prepared by the exporter.
Check with your country’s postal service to find out exactly what forms you’ll need to attach to your package. These forms should be completed honestly and clearly (don’t guess at weights or tariff codes) to prevent your package from getting held up in Customs.
For the UK, the Royal Mail advises, when sending goods outside the European Union (EU) and to certain EU countries such as The Canaries, Channel Islands and Andorra, you will need in all cases to complete and fix a Customs declarations form to the package. If your parcel is worth £270 or less, then you'll need to fill out a CN22 form which describes parcel contents, weight and value. If your parcel is worth over £270, then you'll need to fill out a CN23 form, which is a slightly longer form which requires the sender and receiver's address, and has more space for reference numbers, additional comments, and commercial details.
There are some items to certain destinations where additional documentation may be required so check this out or with your carrier or overseas agent beforehand.
For further guidance about shipping forms, and how to tell your Waybill from your Bill of Lading, take a look at the advice from DHL on the paperwork required. There’s also a handy glossary of international delivery terms from Scurri, an e-commerce carrier management software specialist.
In summary, while at first the amount of paperwork and red tape may appear a little daunting, your carriers and any reputable e-commerce fulfilment software provider will be able to offer advice. Some can provide practical solutions for streamlining the process, even including the automatic production of necessary documentation required by Customs and carriers.
If you would like to learn more about how Peoplevox Warehouse Management System could help to streamline your labelling, documentation, and printing processes, contact us anytime for a free, no obligation consultation.