This is a guest post by Colleen Hazelrigs. I was very impressed by thoroughness of her approach and hope that the article will be a valuable insight into international shipping.
There is growing interest throughout the world to buy from the US because of the shrinking dollar and the lower cost of many items in the US. You may have let go of potential sales to international purchasers because of the hurdles of dealing with customs, high shipping costs, and potential fraudulent payments. You may hesitate to allocate valuable resources to research and maintain an international shipping system with an undeterminable return on investment.
There is a simple way for you to expand your sales beyond US borders without the risk and expense of the learning curve and maintenance of such a system. Partner with a package forwarder. Their business is international shipping. They ship overseas every day to every available country, have experience with customs regulations, and have negotiated discounted rates with carriers based on volume.
Package forwarders have a system to screen their members for legitimate and available funds. In addition, you may choose to require international customers to use PayPal or prepaid systems such as Entropay, which offer an additional level of fraud protection. These systems provide a layer of protection between you and your customer and vice versa.
Partnering with a package forwarder allows you to breathe a sigh a relief as you take advantage of international interest in your product and the new stream of revenue with little or no additional cost or risk to your business. This system takes the process, cost, and risk of international shipping entirely out of your operations as a merchant and shifts them to the forwarder.
An Example Shipment – US to Pakistan
First, I want to touch on shipping weight. International carriers will charge on the actual or dimensional weight. To get dimensional weight (dim wt) you multiply the three dimensions of a package in inch increments and divide that by 139 and round to the next pound.
So, let’s take a look at an example shipment that we recently processed at our company, OPAS. Our customer from Karachi, Sindh, Pakistan ordered gaming equipment from K-mart in three packages, had them shipped to his personal address at OPAS in Portland, OR, and, the same day the last one arrived requested us to consolidate and ship them to his home.
The details of the shipment look like this, (funds are in US$):
Package 1: Play Station 3 $249.99
K-mart S&H $44.96
Total Purchase $304.98
Weight: 14 lbs, 16 oz; dimensions, 16 x 14 x 11 = dim wt 18 lbs
Received at OPAS 9/22/11
Shipped form OPAS 10/4/11 in consolidated package (stored in our warehouse 12 days)
Package 2: Six Play Station games ranging in cost from $19.99 to $39.99 each
K-mart S&H $0.00
Total Purchase $159.94
Weight: 1.84 lbs; dimensions, 13 x 12 x 3 = 4.0 lbs dim wt
Received at OPAS 10/4/11
Shipped from OPAS 10/4/11 in consolidated package
Package 3: God of War PSP Entertainment
K-mart S&H $11.36
Total Purchase $171.35
Weight: 2.34 lbs; dimensions, 13 x 18 x 4 = 7 lbs dim wt
Received at OPAS 10/4/11
Shipped from OPAS 10/4/11 in consolidated package
OPAS Shipment to Karachi: One Package
Weight: 14 lbs; dimensions, 16 x 14 x 11 = 18 lbs dim wt
OPAS Consolidation Fee $10.00
Insurance requested by customer for $681 $13.62 (2% over $100 value)
DHL shipping fee: $155.00
DHL Fuel Surcharge $22.48
Total Shipping from OPAS to Pakistan $201.10
Customs and Shipping
As we prepare packages for shipment we pull items that are hazardous and not approved for international shipping by the carrier and the receiving country and ask the customer what they want us to do with the item. In this shipment we found no such items. The customer also states in our system the value of the shipment. That information is provided to the carrier for customs in the receiving country.
The package was shipped via DHL at the customer’s request, with DHL’s Express Worldwide service, our negotiated service with DHL, which guarantees delivery by the end of the next possible business day. It was a non-doc shipment meaning it was not documents but items that were dutiable and taxable. The package went through London and arrived in Karachi, Pakistan on the 10th where it went through customs clearance. Customs notified the customer of duty and tax fees due and the package was delivered upon payment of those fees by the customer.
Customer Savings on Shipment
If we had shipped each box as we received them the estimated cost for each, including insurance and DHL fuel surcharge, would have been:
Package 1; $183.58
Package 2: $78.77
Package 3: $102.82
Savings from consolidation: $365.17 – $201.10 = $164.07
In addition, because Oregon is a tax-free state, the customer saved anywhere from 5% (North Dakota) to 11.5% (Illinois) which would have been $28.50 to $65.54.
The customer essentially got free shipping of the second two packages because Package 1 had the same actual and dimensional weight as the final, consolidated, package.
The customer also had an opportunity to add more items to the box for additional free shipping because of the 4 lbs of dimensional weight over the actual weight of the package. This is a great opportunity to save on shipping, especially for lightweight high ticket items like electronics.
We checked on prices of his items in Pakistan to see what the savings was for purchasing in the US. The God of War Entertainment Pack retails in Pakistan for $329, $79 more than K-mart. But we could not find it in stock in his country. Neither could we find the Play Station 3 retail in Pakistan.
We did find the games. Retail prices ranged from $47.25 to $8.50. Our customer could have saved $7 on retail price + the shipping, less any sales tax by buying at home. But he must be like me; the simplicity of getting everything at one place in one shipment overrides the hassle of extensive internet research and shopping multiple places for a few dollars savings.
To summarize the total cost of purchase door to door:
Purchase price + K-mart S&H to OPAS $569.92
Shipping from OPAS to Karachi $201.20Total Cost $771.12 + customs
Consolidation services saved him $164.07 on shipping.
Domestic shipping to a US state with no sales tax saved him as much as $65.54.
And because he could buy in the US he has what he wants rather than not. And that is priceless.
How would this work for my business?
For your on-line business to take advantage of international sales you would do a few simple things. First, you would state in your shipping policy and order page that international shipping is available via package forwarding. This lets anyone browsing your website from outside the US know that they can buy from you, one of the first things customers look for when shopping in the US from outside US borders. Letting them know early and up front that you can ship to them will whet their interest and keep them looking.
Your international customers will get a US address from your package forwarder. The forwarder will work with you to make sure the process is smooth for your customer. Then, the customer will place their order with you using their new US address. You simply treat the order as a domestic sale and shipment.
You can do it!
As a small on-line merchant you can easily access new streams of revenue by expanding to international sales। Partnering with a package forwarder shifts the risk and cost to an expert international shipper. Your product can serve more people and your business can thrive like you knew it could when you envisioned and created it.
Colleen Hazelrigs is Research and Development Director at OPAS, a fully owned brand of World Address, llc in Portland, Oregon. OPAS was the first package forwarder in the world, opening their doors in 1990, and provides addresses in the US and Japan for international shoppers.