International shipping: Breaking down the basics to expand your small business’s reach

The way the world shops is rapidly evolving thanks to new technology and the continuously increasing popularity of online shopping. Many U.S. consumers are shopping beyond their borders. While selling to the U.S. and internationally certainly opens you up to new markets and customers, it’s important to assess if you’re ready for the challenge – and if your products can travel across the border safely!

Manage international shipping fees

Establishing shipping fees that make sense for your business and your customers is a necessary challenge that will ensure your success internationally. Several factors can impact your international shipping costs. The weight of your package and the destination will play a big part. In general, the heavier a package is and the further it’s going, the higher the shipping cost will be. Some carriers, like Canada Post, offer no-zone pricing to places like the U.S. – meaning you can ship to New York or California for the same price. This can be extremely cost-effective when you’re trying to budget your monthly expenses.

Reduce your shipping costs

Cost is an important factor for retailers to think about whether shipping domestically or internationally. Dimensions, weight and start/end destinations influence costs but so do unexpected costs like surcharges and currency conversion with some global shippers. It’s important to understand the full picture before choosing your global partner.

Factor duties and taxes into shipping costs

Duties and taxes will factor into the cost of your shipping. Taxes are charges placed on almost all purchases, and duties are a type of tax on goods entering or leaving a country. To assess how they will impact you, you need a basic understanding of how international duties and taxes work. A good place to start is with the de minimis.

The de minimis

The de minimis is an exemption value that allows orders under that value to enter a specific country duty-free. This de minimis varies by country. For instance, it is $800 in the U.S. With $800 set as the U.S. de minimis value, Canadian merchants have a great opportunity to expand south of the border. That means no additional fees need to be paid by you or your customers to ship orders under $800 – leading to better margins and higher conversion rates.

Keep in mind that certain products in the U.S. may not qualify for the exemption, regardless of value. The same can be said for other countries with their set de minimis rate. Knowing the specifics will set you and your business up for international success, so be sure to take the time to explore these fully and in as much detail as possible! If there’s more than one person from your business working on the international opportunity, ensure they’re well versed as well.

Who pays for duty

Who pays for duty depends on how you send the package as it’s different depending on whether you ship with Canada Post or another carrier.

If you ship with Canada Post

When sending items through the postal network with Canada Post, it’s typically the responsibility of the recipient to pay any duties. Customs officials will determine how much duty will be applied based on the information you have provided about the value of the shipment, country of origin, materials used to manufacture the product, etc.

If you ship using other commercial carriers

When you send items through the commercial network, the payment of duties and taxes can be the responsibility of the merchant or the recipient, depending on terms of sale.

Master customs

Let’s take a look at the paperwork required for selling internationally. To clear customs, merchants must provide officials with the information they need to do their inspections. This information includes the value of the item being shipped, the description, the reason for export and the weight. It can also include additional details such as where the item was manufactured or how the item is classified.

Make customs easy

When you ship with Canada Post, the customs form is integrated right into your shipping label! When you fill out the form, do it accurately and provide details when describing the contents of the package. Doing so will help you clear the primary inspection and ultimately get your orders to your customers faster.

At Canada Post, the customs process is automated, and your customs information will be electronically sent to customs officials once you fill out your form, so your package can make it across borders even faster.

Understand shipping labels and customs forms

Your shipping label will be generated by completing a customs form. Let’s break down the various elements of the label and the information you need to disclose:

Origin address

The origin address is the address you’re shipping from – so your address if you work out of your home, or your business or warehouse address where the parcel is coming from.

Destination address

The destination address is the delivery address your customer has provided.

Reason for export

This is the reason for sending or exporting the contents of the package . It may be a gift, a sale of goods, a commercial sample, an item for return/repair/warranty, documents or any other reason you are shipping.

Quantity

The quantity speaks to the number of items you’re shipping. For example: 2 baseball caps and 4 commemorative cards. List the quantity and type of item(s) here at a high level.

Description

The item description is where you’ll explain – in detail – exactly what you’re shipping. This should be very specific. For example, instead of “clothes,” you should write “women’s cotton shirt,” or “men’s denim pants.” For books, things like “hardcover” or “paperback,” “chapter book” or “children’s book.” The customs agents should know exactly what is in the package without ambiguity.

Weight

Weight is per item as well as the total package. So, if you were shipping clothing, you might write something like:

• 100 g women’s cotton shirt
• 150 g women’s blouse
• 150 g women’s cardigan
• 100 g box + shipping materials equals 500g total weight

Value

The value is the amount of each item, as well as the total package. So, if each of the 4 items in our earlier example is valued at $20, the total value for the shipment is $80. The value excludes any boxes or shipping materials used.

Country of origin

Country of origin is an optional form field when you send through the postal network – but the more information you can give, the better. This is where the item was manufactured – so if the item is made by you, in Canada, then list “Canada.” If your product is sourced from elsewhere, list the manufacturing country.

Harmonized System

Finally, the Harmonized System (HS) – or HS Tariff Codes – is a 9 to 10-digit code that classifies goods. Although it’s currently optional to fill out when shipping with the postal network, it’s strongly recommended as it’ll often improve the speed at which your package is cleared at customs. E.U. countries expect the HS code to be included on commercial shipments when you sell goods to E.U. customers. Use our online tool to find a list of HS codes.

If you’re sending your package through the commercial network (e.g., UPS, FedEx or DHL) rather than the postal network, providing the country of origin and the HS code is mandatory.

Understand the customs process

While all goods shipped internationally are subject to the specific customs laws and regulations of the receiving country, the postal customs process is similar for most countries. Keep in mind, if you’re looking to ship a prohibited item, your shipment will not pass inspections and you cannot ship internationally. Find out more about non-mailable matter.

The inspection process looks like this:

The primary inspection

Once the package is received in the destination country, it begins the customs process. This process starts with the primary inspection. At this stage, the information on the customs declaration is verified (e.g., sender, receiver, value, commodity, etc.) and the item is visually inspected by a customs official who decides whether to clear the item for delivery or forward it for a secondary inspection.
A package is generally cleared in this stage if:

• The customs form is filled out correctly
• There are no restrictions or prohibitions on the item
• The value of the goods being shipped is declared to be under the de minimis threshold

From here, your package is cleared for delivery and handed off to the destination country’s postal network.

The secondary inspection

There are several reasons a shipment may be subject to a secondary inspection:

• Its value exceeds the de minimis and duties needed to be assessed by a customs official.
• The shipment includes items requiring further inspection by other government agencies such as the Federal Communications Commission (FCC), Food and Drug Administration (FDA) etc., to determine whether the shipment is compliant with import laws of the destination country.
• Customs may find some aspects of the package suspicious and wish to perform a more in-depth inspection. This could include mis-declaration of value, suspicious content, etc.

Once your package clears the secondary inspection, it will continue on its way for delivery.

Packages that are denied clearance

During the secondary inspection, packages are generally denied clearance if they’re found to contain items that are non-mailable matter, prohibited or restricted and the merchant has failed to provide the necessary documentation.

If a package is denied, it is almost always returned to its sender. In some cases, the product is disposed of at the customs office if it’s a non-mailable product and deemed a risk at customs (such as flammables, batteries, etc.).

Before mailing your package, it’s a good idea to check whether the items being sent are considered prohibited or restricted by the destination country. Refer to the International Destination Listing for more information.

Communicate clearly with customers

Regardless of how you choose to ship, communication upfront is key. To manage customer expectations and avoid cart abandonment, it’s best to make your customers aware of all costs and estimated timelines associated with their purchase and delivery before they check out – including if they must pay duties and taxes. You can maximize your sales and manage expectations by giving your customers all the information they need upfront on your website. Whatever level of services, fees and features you are offering your global customers, communicate it accurately so you are setting clear expectations.

When it comes to shipping specifically, once you’ve determined what the cost of shipping is for your company, you’ll need to both determine and communicate what that means for your customer from a cost perspective.

Offer a free shipping alternative

Virtually every customer wants free or low-cost shipping as an option – but offering it can put a real dent in your bottom line. To appease your customers, consider these options as alternatives to free:

By taking the time to offer clear communications to your customers, you can help minimize frustration and inquiries to your customer support team.

Test and measure your results

Once you are up and running and selling to one or more countries outside of Canada, you’ll want to make sure that you are testing and measuring results closely so you can adjust elements of your strategy as needed. Things like website drop off from a given geographic area might indicate that you’re missing a currency or language to make your products accessible to that market and may signal an opportunity for you.

If you notice increased cart abandonment from a given region, it might have something to do with your shipping costs or return policy – revisit and make sure information is clear and easy to find to help instill confidence in the purchase. You can always increase – or decrease – the countries you’re shipping to, as well! Maybe you start with the U.S. and notice an uptick in traffic from the U.K. – that’s a learning you can use to bring your business into a new market when and if you feel ready.

Navigate international growth consciously

Going international doesn’t have to mean selling all over the world all at once – you’re in control of your expansion.

Recent years have been challenging as unexpected changes in border rules have led to delays getting products to the end recipient. It’s important to note, once you access foreign markets there may be factors that are out of your control. International retail requires you to be a bit of a diplomat, staying on top of everything from weather and health emergencies to local events and anything else that might impact getting you products to your global shoppers.

You can continue to build on things like return policies, shipping fees, the languages you include on your website etc. and make changes as the need arises. Adapting in this way will ensure that your business continues to thrive while also creating the best customer experience possible.