While cross-border Ecommerce can be complex, it’s not stopping most retailers from taking the plunge. Online retail is still evolving in certain global markets but in many countries, it’s already flourishing. Take the United Kingdom as an example – in 2015 e-commerce sales were up 11% year-over-year equaling almost £114B in sales. Understanding where consumers are shopping is critical to your entry point. For example, as marketplaces start to heat up around the globe, in the UK a whopping 72% of UK consumers are most likely to buy products directly from a retailer’s website.
And while standing up a website can be a relatively quick proposition, there are factors to consider for the long-haul to ensure you don’t get slowed down. Are you ready to:
- Serve up transparent pricing and fully landed costs in the currency consumers in-country will recognize?
- Effectively manage the back-end processing for required documentation?
- Manage country-specific import / shipping restrictions?
- Provide great customer care throughout the transaction?
Online shoppers expect their retail experience to be fast, convenient and affordable. Inflated shipping costs, confusing taxation and long delivery wait times can over-complicate your buyer experience. Even worse, it can put your business at risk for non-compliance.
Understanding Duties and Taxes
As one of life’s great inevitabilities, taxes will be an obstacle when selling into any country. Duties are often required for purchases that cross borders either by import or export. On top of that, buyers and sellers should be aware of value-added national and local sales taxes, which are also added on top of the purchase price.
In the UK, consumers are also subject to a value-added tax (VAT), a type of sales tax in which a buyer at any stage of the supply chain must also pay a percentage of the item’s purchase price.
On average, UK import duty and VAT total over 32 percent. Of course, that’s just for the UK – other countries have different duty thresholds, may or may not require VAT, and may add on additional local sales taxes. If you aren’t accounting for each, you could be walking into a compliance minefield.
Country Compliance & Fully-Landed Costs
A simpler, clearer purchasing process not only assures compliance, it also removes complexity from the buying process.
For example, shoppers should know the fully-landed cost of a product, which describes all the costs involved in getting that product to their door. That means duties, taxes, shipping and even hidden costs like insurance, crating, handling and fees.
"A simpler, clearer, purchasing process not only assures compliance, it also removes complexity from the buying process."Gregg Zegras
Borderfree Retail from Pitney Bowes can conceal all that complexity by figuring in these costs ahead of time based upon the shopper’s country of origin. That way, you can be sure that each transaction you process meets compliance requirements in each country you sell in to.
At the same time, you get the added benefit of providing a single cost of purchase to your buyer upfront, before they ever commit to a purchase. This ensures buyers aren’t hit with surprise duties and taxes after they’ve made the purchase and the item arrives in their country.
Paperwork and Restricted Items
Keeping up with required documentation and restrictions country-by-country is an enormous undertaking. And while forms and requirements don’t necessarily change all the time, being unaware of updates can stop the transaction in its tracks, significantly delaying delivery and impacting your customer’s satisfaction and ultimate loyalty.
Reducing Consumer Friction with Great Customer Care
If you’re not ready to handle customer issues, you’re not ready to go global. While you may have customer care down to a science at home, consumer expectations and requirements around the world may not align to the processes you’ve put in place. Just like your domestic clientele, global consumers expect to receive their goods quickly and intact. They also expect to be able to ask questions on the product they’ve ordered, shipping status and returns. You need to be at the ready to answer the call when that call comes in.
Cross-border retail may be a brave new world for some retailers, but you don’t have to face it alone. Engaging with a partner that does this every day can help simplify your global entry and help you make your mark on the world. Please follow Gregg on Twitter: @GreggZegras