There are pros and cons of international shipping for the small seller, but a global marketplace can be quite rewarding.
In our interconnected digital world, it’s as if the entire planet has become one big neighborhood. Whether you’re running a small online shop or a larger enterprise, the beauty of ecommerce lies in its power to connect you with customers not just down the street, but across the globe. Venturing into these international markets is filled with possibilities, but it’s essential to recognize that it also comes with its fair share of challenges and considerations.
I’ve put together a list of some of the pros and cons of venturing into international sales that I’ve run into over the past 30 years or so. When you know what you’re getting into when offering your items for sale globally, it’s easier to decide whether or not you should jump in.
Pros of Shipping Internationally
1. Increased Market Reach
The most obvious pro is the ability to reach more markets with your products, which increases you bottom line. An unseen benefit is the ability to connect with people of other cultures and experiences, which widens your world and exposes you to other perspectives. It can be quite enlightening.
2. Diversification of Revenue Streams
When you sell internationally, you not only expand your market reach, you lessen your dependence on one location. Maybe your U.S. market has dried up, but people in the U.K. are just discovering your products. This helps to stabilize your income.
3. Competitive Advantage
Many small ecommerce businesses focus on local markets because selling internationally is difficult at best. However, by opening yourself up to the global scene, you may have an advantage over the other sellers.
4. Access to Niche Markets
If you specialize in a product like I do, then you have a limited amount of customers domestically, but you might find that you can adapt to other countries and find more customers interested in your products.
5. Currency Exchange Opportunities
Currency fluctuations can be in your favor. When we have a weak dollar, other countries can spend more money on U.S. exports. For more information on currency fluctuations and what they mean, check out this article from Investopedia on what a weak dollar means.
Now let’s look at some of the reasons you may not want to reach outside of your country.
Cons of Shipping Internationally
1. Shipping Costs
One of the most significant challenges for small ecommerce shops shipping internationally is the cost of shipping. International shipping fees, customs duties, and taxes can add up quickly and eat into your profit margins. While we used to be able to ship from the United States to other countries relatively inexpensively, those days are gone.
2. Complex Logistics
International shipping involves complex logistics, including customs documentation, regulations, and potential delays at borders. This can lead to frustrated customers and damage your reputation. When using a service like UPS or FedEx, if your customs declaration isn’t filled out properly, your buyer could be hit with large import fees before they can pick up their package.
3. Currency Fluctuations
While currency exchange can be an advantage, it can also be a risk. Fluctuations in exchange rates can impact your pricing and profitability, making financial planning more challenging.
4. Language and Cultural Barriers
Expanding into international markets often requires addressing language and cultural differences. Effective communication and localization of your website and marketing materials are essential for success. By selecting likeminded countries to work with, you have less of a chance of running into cultural difficulties.
5. Returns and Customer Service
Handling returns and customer service for international orders can be more complex and costly than for domestic orders. Dealing with dissatisfied customers abroad can be challenging.
Making Informed Decisions
Before you make the decision to offer international shipping, it’s important that you understand the obstacles you may encounter. You need to know if your product can be shipped, if it can be imported – there are strict rules on both of these things – and whether you even have a target market in those locations.
Here are some things to help you make the decision:
1. Market Research
Thoroughly research your target international markets. Understand local demand, competition, and cultural preferences to tailor your offerings effectively.
2. Shipping Partners
Select reliable international shipping partners who can help you manage logistics, navigate customs, and provide tracking for your shipments. Make sure your items can be shipped and imported. For instance, check out this list from USPS.com on international shipping restrictions, prohibitions, and HAZMAT products. You can’t ship nail polish at all, and don’t even think about sending anything of the indecent nature to Israel.
3. Pricing Strategy
Make sure that your price can absorb costs like shipping, taxes, and currency changes. It doesn’t take long for a Value Added Tax (VAT) to eat into a profit. Technically, the buyer is supposed to pay that to pick up their package, but as many an Etsy seller has discovered, buyers don’t do it and the package is returned. If you want to know more about customs, I suggest you read this article from the post office on shipments to the EU, which is different now that the EU has broken up after Brexit.
4. Customer Support
As an individual seller, you need to be customer support, which means answering emails, texts, and chat questions about returns, costs, VAT, and other problems. If you’re really interested in selling internationally, educate yourself by reading as many articles you can before you start selling.
In addition, there are a number of countries with problems at the local post office level, which results in missing packages, stolen packages, and other ways that your shipment doesn’t reach its destination. I recommend you use your search engine to find out if there are any problems with a country you’re considering before you ship. For example, here is a post on the Rick Steves’ Europe travel blog that outlines some issues with FedEx and Italy.
5. Legal and Regulatory Compliance
Stay up-to-date with international regulations and compliance requirements to avoid legal complications when shipping internationally.
I don’t want to discourage anyone to expand their business; however, it is vital that you understand the problems you may incur when shipping internationally. I no longer ship around the world, but I did for almost 15 years without much of a hitch other than a few problems. If you’re up to the challenge, then I hope you sell well!
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