As an American business that has newly branched out into the international market, you have a unique ability access demographics that localized business don't have access to. While this can present you with better opportunities for sales, it also opens your business up to shipping costs. If you're new to sending packages across the world--whether they are small or large--this can be a costly, frustrating endeavor. Cut costs and streamline your international shipping processes with these insider secrets today.
Avoid Jumping Into Too Many Markets
While it can seem easy to dive right in and start offering your products to every area of the world, this can be a dangerous endeavor. Each country--and to a lesser degree, each city--has its own laws and guidelines. Jump in all at once and you risk spending more time trying to sort through these laws and guidelines than you spend actually selling and moving items.
Instead, start with one or two countries or sub-locations at a time. Fully research the customs process and local shipping regulations before you begin to ship real items. If possible, send a test package or two to verify time frames.
Helpful tip: Never rely on publicly available information when dictating shipping times. Time frames depend largely on the type of shipping you use, how long the country's customs process can take and what you are shipping. Unless you are using priority or international courier services, all dates given should be considered estimates.
Once you have the processes and time frames down right, then you can start adding additional countries one at a time.
Know the Top Trading Countries
If you aren't sure where to start with branching into the international market, consider focusing on areas that are considered to be top traders. According to Census.gov, the following areas had extremely high trading rates for 2013:
- Canada imported $332.1 billion
- China imported $440.4 billion
- Mexico imported $280.5 billion
- Japan imported $138.5 billion
- Germany imported $114.6 billion
Not only will the shipping and customs processes be more streamlined in these areas, the level of international trade also occurring means that these markets are open to purchasing American products. Much as with any other business expansion, your mileage may vary, but these can be valuable areas to branch out into.
Avoid Offering Free Shipping on Large Freight
It's tempting to offer your customers free shipping across the board, but this can shoot you in the foot when you're shipping large-scale items. Furniture, autos, building supplies and any other large-scale freight items should all have an additional shipping fee. Even if your profit to cost ratio is high, you can lose thousands of dollars per quarter trying to push these into other countries with shipping promotions.
Instead, evaluate the following:
- What is your outright profit when the customer purchases the item?
- What is the shipping cost to send the item?
- At what point will you break even?
- Item cost to you: $1000
- Item profit after markup: $2000
- Cost to ship to hypothetical customer: $500
If you were to offer free shipping on this item, you'd lose $500 worth of profit on a 100 percent markup. That can be acceptable in some instances, but it is a big loss to swallow when you don't need to.
Instead, consider splitting the shipping fee with the customer. Instead of losing $500, you lose only $250, and the customer enjoys a reduced shipping rate. You can also take this information and market it as half-price shipping on freight in promotions.
Helpful tip: The numbers above are hypothetical--don't rely on the same structure for each specific item. Choose ratios that make the most sense to your business and the needs it has as it grows. The most important thing is to find balance.
Overall, finding the sweet spot between loss and profit is what international business is all about.
When your business is new to the international market, it can be almost overwhelming to navigate all of the laws, regulations and costs. While the above tips cover some of the most important facets of making international shipping work for your business, partnering with the right courier or shipping company can be helpful, too. For more information on these concepts or to gain information how you can make international trade part of your business model, contact a shipping company today.Share