A discussion draft of the Online Sales Tax Simplification Act of 2016 is expected to be introduced in Congress soon.
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For retailers like Hartnett, who don't rely on help from a vendor, fees can be a major issue when shipping globally. "When we ship to a new country, we contact the customer and let them know that we have not shipped products to their country before," he says. "We tell them it's possible there will be additional fees charged by customs, but we will help keep them informed."
Selecting a shipper
Michael Hess, founder and CEO of Skooba Design, which sells bags for holding laptops and tablets, says he initially worked with a vendor to help with international shipping but has since dropped it in favor of handling global orders on his own. He says when consumers saw the shipping fees charged by the vendor nearly all of them abandoned their carts.
Skooba Design launched a new e-commerce site in 2011 using eBay Inc.'s Magento e-commerce platform. Now when a shopper selects a country other than the United States at checkout, the retailer automatically changes the shipping provider to the U.S. Postal Service, which Hess has found offers cheaper international rates than UPS, which he uses for all domestic orders. Hess also offers international shoppers a 25% discount to help cover Value Added Taxes, duties or other fees that the shopper may have to pay when an item hits his home country.
The site relaunch took around six months and setting up the international shipping module ate up around three weeks of that, Hess says. "It was a fairly substantial project," he says. "We had to tell the site that a lot of the required fields for U.S. addresses were not required for international."
When preparing an international shipment, Skooba accesses and prints out a customs document from USPS.gov that includes a description of the product, its value and its country of origin. Having a streamlined process helps him avoid potential pitfalls, which helps explain why he's only had items held by customs a handful of times in the past 13 years.
After his customs debacle with U.K. customs officials, PerformanceParts.com's Griffith decided to let a shipping service vendor do the work for him. Griffith is in the process of implementing a service from vendor BorderJump LLC that will handle services like duty calculation and shipping and logistics.
Soon, when foreign shoppers check out on PerformanceParts.com and PowerandPlay.com, they'll be redirected to a site operated by BorderJump where they'll see the sales total converted to their local currency and all fees so they'll know the total cost to get the goods in hand. BorderJump negotiates fees differently for each client but, on average, charges 10% of the goods sold. When a foreign shopper completes her order, the retailer will ship the goods to BorderJump's New Jersey warehouse and BorderJump ships the goods to the consumer. From the time the package leaves New Jersey, BorderJump says it takes about three to 10 days to arrive at the customer's door.
Last year online marketplace eBay and Pitney Bowes joined forces to launch a service for eBay sellers to help them more easily sell to consumers in 18 countries, including Australia and Finland.
The service, called eBay Global Shipping, is free for sellers. When a foreign shopper clicks to buy an item from a participating retailer, she's asked to enter her postal code. Based on her location, the service calculates the final price, including the item's list price, shipping fees and import charges. Shoppers must purchase the goods using PayPal.
From the seller's perspective eBay Global Shipping aims to make selling internationally little different from selling to domestic shoppers. The seller pays the same fee to eBay he would for a domestic purchase and he ships the package—along with a form that contains a code, provided by eBay, that identifies the international shopper's address—to Pitney Bowes' warehouse in Kentucky. At the warehouse the vendor prepares the item for customs, and then ships it out.
Most shoppers receive their purchase within a week after it arrived at Pitney Bowes' warehouse, eBay says.
The program takes the guesswork out of selling internationally, says eBay seller Kevin Clounch, co-owner of Ken's Sewing and Vacuum Center. When Clounch tried to sell to Canadian shoppers in 2005, about 75% of orders were refused by consumers because of duties and taxes they had to pay to receive the goods once they arrived in Canada. Clounch couldn't account for those fees, he says, because eBay didn't offer a way for him to calculate what the fees would be. And when a package got rejected, Clounch had to pay brokerage and tax fees to get it returned to him.
That led Clounch to stop shipping internationally—until last year. Since he began using eBay Global Shipping, the retailer has grown its sales by about 30%, and about 20% of the retailer's orders now come from outside the United States, Clounch says.
Clounch's experience shows that selling internationally offers a huge growth opportunity. But only if merchants have systems that ensure that packages reach shoppers' doors.