What is Cross-Border? A Guide to Cross-Border Shipping and Commerce | FlavorCloud
In ecommerce, “cross-border” is when the customer and merchant are located in two different countries. Although the definition for cross-border is simple, the logistics involved with selling internationally can be overwhelming when you dip your toes into international waters. Before your store is ready to sell worldwide, there’s a lot to consider, from the various customs restrictions and regulations to the actual work involved with storing and shipping products.
The evolution of technology has dramatically increased business opportunities of selling internationally. Expanded visibility makes it possible to connect with customers regardless of where they may be on the planet. In the past, brick-and-mortar stores were limited to the local population and highly dependent on signage and their physical location; now, online retailers and ecommerce businesses can reach every corner of the globe by developing a solid cross-border strategy.
Your website may already be receiving international traffic, indicating it’s time to develop a cross-border strategy and monetize potential customers who are already interested in your products.
Whether you’re a B2B or a B2C brand, you can sell internationally, increase conversions, improve customer satisfaction, and boost your bottom line by learning to navigate the international market by knowing the best practices for cross-border business.
How to Get Started with Cross-Border Ecommerce
If you’re interested in expanding the reach of your online sales, the first step involves identifying your market.
When choosing your market, you need to consider two factors: Who wants your products most and what are you willing to do to reach them?
Customer inquiries and international shipping requests from online shoppers may have already given you some good clues about potential markets for your business. Dive deeper into the possibilities by checking your website’s analytics to see where site visitors live. If you have high international traffic but don’t sell to these countries, you are missing an opportunity for sales and revenue. Knowing which regions are already showing interest in your products gives you a solid idea of what to research next.
When it comes to cross-border shipping, you’ll need to decide if you’ll be shipping to a select number of countries or globally since a different approach would be required for each. If you choose to engage in international ecommerce with specific countries, you will need to research the laws, taxes, local currency, payment options, and duties of those areas; and possibly find a third-party logistics (3PL) partner specializing in those regions.
If you’re going global, the scope of research involved would be overwhelming—spend that time finding a shipping partner with worldwide experience who can handle large volumes of work instead. FlavorCloud, for example, takes care of all of the complexities for shipping to 200+ countries and territories.
What are the Challenges of Cross-Border Purchasing and Shipping?
Online shopping is oh-so-easy, but fulfilling and delivering those international purchases involves many moving parts. Cross-border ecommerce merchants have to juggle everything from customs forms to calculating and remitting cross-border tariffs, so it’s no surprise that many businesses don’t even know where to begin when it comes to branching out. Obstacles in the journey of cross-border ecommerce include:
Restrictions and Regulations
Technology may have created a singular global marketplace. However, geographical areas are still governed independently, making it challenging to develop a one-size-fits-all strategy for sales and shipping. You’ll need to be aware of any necessary documentation, labeling requirements, and customs duties to be paid.
For instance, Canada currently prohibits explosive, radioactive, flammable, or dangerous items or items that weigh more than 66 pounds. Any non-compliant items are usually destroyed instead of being returned to the sender. They also have strict guidelines on labeling and packaging, which can send your shipment into the “non-mailable” category.
The U.S. has a similar list of prohibited or restricted items, and they’re not all that you would necessarily expect. For instance, if you’re a beauty brand that sells nail polish, perfume, or anything in an aerosol can, international shipping is going to present some additional hurdles.
Understanding the potential complexities of cross-border shipping when it comes to your specific business and products can save you a ton of headache and hassle over time. If you choose the right cross-border shipping partner to help make it possible, it can be even easier. FlavorCloud is full-service and can make sure you are compliant with all the rules and regulations for any country.
When it comes to documentation, even friendly neighbors like the U.S. and Canada have high expectations. Shipping items between the two countries requires the following:
- A Bill of Lading that lists the items being shipped, information about product weight and size, and contact information
- A commercial invoice with detailed shipment information must be attached to the Bill of Lading.
- A Canada customs invoice (CI1) for shipments entering Canada
- A Certificate of Origin for NAFTA regulation compliance
- A signed Proof of Delivery to confirm the shipment was received as expected
Unfortunately, the documentation required varies depending on the destination and country of origin. Having a shipment get caught up, or worse—confiscated—by customs is a potentially expensive and time-consuming mistake that can evolve into a full-blown customer service nightmare.
Increased Costs and Time Spent
Shipping internationally comes at an increased cost and requires additional planning, but it can drive significant growth with the right strategy and partners. It’s important to have an understanding of the following when devising a cross-border shipping strategy.
- Import taxes or duties: International shipping means you must pay cross-border tariffs or taxes on shipments. Your options are:
- Delivery Duty Paid (DDP): DDP shipping means the taxes and fees associated with the shipment are paid at checkout, so they receive their order with no delays.
- Delivery Duty Unpaid (DDU): DDU shipping means the recipient is responsible for the taxes and fees when the goods enter their home country. This type of shipping involves surprise costs for the end customer, packages are often refused, and the merchant’s customer is unhappy (and often complains).
- Payment Processing: Exchange rates can make setting a competitive pricing strategy difficult. Potential customers must understand the cost of an item in their currency, so they are aware of the actual price and are not surprised when they receive their credit card statement, causing a poor customer experience.
- Packaging: Items being shipped long distances may require additional packaging to ensure that they survive the journey in one piece, which can increase costs.
- Returns: Handling returns internationally can be complicated, but the inability to return an item might discourage a potential customer from making a purchase. A cross-border fulfillment partner like FlavorCloud may be able to reduce the impact of managing returns.
What are the Best Practices for Cross-Border Commerce?
If you read all of the above and feel ready to close down shop and open a lemonade stand instead, have no fear. Although there’s indeed a lot to consider when it comes to cross-border shipping, there are also many options available to streamline the process. Here are the critical points to note if you’re interested in integrating cross-border commerce seamlessly into your online store:
- Optimize shipping costs: Reduce the pain points of an international purchase by offering your customers a variety of shipping options. Some customers are willing to wait if it results in a discounted shipping rate, while others won’t hesitate to pay a premium for expedited delivery.
FlavorCloud goes a step beyond, with an intelligent algorithm that chooses the best price and fastest route for your customer in real-time. You don’t have to select a carrier only to find that carrier doesn’t have the best rates at the moment or is delayed because of Covid. FlavorCloud is continually working to deliver the best rates at checkout, so your international cart conversion is the highest it can be. (FlavorCloud customers average an 80% increase in international cart conversion!)
- Use a relevant cross-border partner: A cross-border partner can take the worry out of international expansion. FlavorCloud acts as a managed service for international shipping for ecommerce, acting as the importer of record for your customer’s package and expediting it through their proprietary customs clearance network. They handle all of the taxes and paperwork, so you don’t have to hire more accountants and tax specialists—and your international customer is always as satisfied as your domestic customers!
- Simplify fulfillment with third-party logistics partners: If you work with a 3PL to warehouse your products, FlavorCloud can integrate directly with them, producing your international labels in the same way as your domestic labels. It is truly that simple! A 3PL manages the storage, sorting, and packing, while FlavorCloud manages your items’ first, global, and last mile of delivery and returns.
Although managing growth can be challenging, seeking out new expansion opportunities is essential to the continued success of your business. As technology continues to make our world feel smaller through increased accessibility, the ability to serve a larger market will become more critical than ever in defining your ecommerce strategy.
Overcome your fear of the legalities and logistics by finding a system, solution, or cross-border fulfillment or logistics partner that can deliver your products at a global level without an out-of-this-world increase in your workload.
Is your business ready to go global? Learn more about why FlavorCloud is the best international cross-border shipping option for your company and your customers.