Clint Reid

UPS, FedEx, and DHL Canada Brokerage Fees

UPS, DHL, and FedEx brokerage fees decoded

de·code (dēˈkōd): to convert (a coded message) into intelligible language.

Canadian brokerage or entry fees with UPS, FedEx, or DHL can be expensive and confusing.

If you are not familiar with UPS, FedEx, and DHL clearance fees in Canada, your Canadian customers will literally pay the price.

Air and ground shipments have different fees.

This is possibly the most confusing point to a fairly inexperienced seller. The shipping method you select has more of an effect on the cost of clearance than the carrier you choose. If your shipment travels on a truck with UPS or FedEx, the clearance fees are exorbitantly higher than if it traveled on an airplane. On the flip side - if you ship air, the shipping fees are exorbitantly higher than if it shipped ground.

For example, a nice shirt valued at $80 appears to cost $20 less to ship ground than air; however, your customer is only paying ~$5 less after fees when it ships ground. In fact, if there were two t-shirts and shipping didn’t change, your customer would pay $2.60 more in total for a ground shipment, even though your business saved $20 in shipping.

UPS Canada brokerage fees

UPS to Canada             Shipping cost Entry fee Bond fee                 ICOD fee           Total
UPS Express $40.00 $0.00 $10.00 $5.00 $55.00
UPS Standard (Ground) $20.00 $19.95 $6.00 $5.00 $50.95

FedEx Canada brokerage fees

FedEx to Canada           Shipping cost Entry fee Disbursement fee ROD fee           Total
FedEx Priority $40.00 $0.00 $10.00 $10.00 $60.00
FedEx Ground $20.00 $19.95 $10.00 $10.00 $59.95

DHL Express Canada brokerage fees

DHL to Canada             Shipping cost Entry fee Processing fee       Transaction fee Total
DHL Express $40.00 $0.00 $11.00 $5.00 $56.00

Ground to Canada brokerage fee comparison

FedEx vs UPS                 Shipping cost Entry fee Disbursement fee COD fee             Total
UPS Standard $20.00 $19.95 $6.00 $5.00 $50.95
FedEx Ground $20.00 $19.95 $6.00 $5.00 $50.95

Air to Canada brokerage fee comparison

Service level                   Shipping cost Entry fee Processing fee       COD fee           Total
UPS Express $40.00 $0.00 $10.00 $5.00 $55.00
DHL Express $40.00 $0.00 $11.00 $5.00 $56.00
FedEx Priority $40.00 $0.00 $10.00 $10.00 $60.00

Carrier terminology decoder

Brokerage fee: This is the fee by the broker for clearing the shipment with customs. UPS calls it an entry prepartion fee, whereas FedEx calls it clearance entry fees. Since international shipments with UPS, FedEx, and DHL include routine customs clearance, this fee is only applied to ground shipments.

Disbursement fee: The disbursement fee is for upfronting money to customs or paying the customs charges of duties and taxes on your behalf. In Canada, UPS calls it a bond fee (although in every other country in the world, they call is a disbursement fee). FedEx calls it either a disbursement fee or an advancement fee, whereas DHL calls it a processing fee.

COD fee (Collect on Delivery): A COD fee is charged only to the receiver of the goods when they either do not have an account number to invoice the customs charges with FedEx, DHL, or UPS, or the importer did not pay them prior to customs clearance. UPS calls it by the name that seems to make most sense - an ICOD fee, whereas FedEx calls it a ROD fee and DHL Express calls it a transaction fee.

International Ground Delivery (US to CA): UPS and FedEx offer ground delivery from the United States to Canada, and DHL Express does not. With UPS, it is called UPS Standard, and FedEx calls it International Ground.

International Air Delivery (US to CA): UPS has a few different air services to Canada - UPS Express, Saver, and Expedited. FedEx offers FedEx Priority and Economy, whereas DHL Express only offers their Express service.

You can calculate all the UPS brokerage fees with our UPS brokerage fee calculator.

Reduce UPS, FedEx, and DHL Canadian brokerage fees

There are a few different ways to reduce these fees to your Canadian customer base. If you send the shipment DDU, there is not a lot you can do, because the carrier or broker is the one charging the fees to your consumers. However, if you send the shipment DDP (and collect duties, taxes, and fees from your Canadian customer), you can be in control with what is ultimately charged and reduce the fees.

Below are a few tips on how to reduce Canadian brokerage fees when you send a shipment DDP.

1. Eliminate the COD fee.

Bill the duties and taxes to your shipper account; this will completely eliminate the COD fee, because the duties and taxes are billed to your shipper account with your carrier.

2. Eliminate or reduce the disbursement fee.

With FedEx, you can put a credit card on file and then bill the duties and taxes to your shipper account to avoid the disbursement fees.

3. Negotiate the entry fee.

Both UPS and FedEx will negotiate the entry fee; however, you may have to work with their brokerage team in Canada. Again, you only have to worry about this if you send a shipment ground to Canada, because the air shipment to Canada does not incur an entry fee.

4. Use an alternate broker.

You can bypass UPS, FedEx, and DHL brokerage altogether by picking a different broker. They still have fees, but they will not be as expensive as UPS or FedEx. For example, you could work directly with Border Buddy, Livingston, or another brokerage firm. It will require you to set up an NRI account (Non-Resident Importer); however, if you do high volumes - this could make a lot of sense.

5. You can ship with another company

For example, Landmark, RR Donnelly, APC, or other. Also, the USPS is less expensive, but they do not have the ability to bill the duties and taxes to your account; Canada Post charges at $9.95 CAD entry fee on top of the duties and taxes.

Clint Reid

Zonos, decoding cross-border

decode (dēˈkōd) - to take out of code and put into an intelligible form

When you are first introduced to Zonos, the circle included in the logo appears to be random. But in fact, it is not. The symbol itself is a cipher and contains an encoded word. The cipher is a literal representation of our mission to decode cross-border.

The Zonos mission is to reach everyone through decoding the complexities of global eCommerce. The team at Zonos wanted a logo that represented our mission and culture; the by-product is that it communicates to our industry. The Zonos cipher also gives a bit of a nod and wink-wink to our unique personalities.

cipher

Source: https://zonos.com/createyourcipher

Complementing our vision, the cipher demonstrates how something complex can be made simple. At Zonos, we stand for transparency and simplicity, which is the opposite of everything cross-border. There are so many different variables, e.g. duties, taxes and fees, compliance, payments, shipping calculations, and other unpleasant surprises when you sell or ship internationally. Global eCommerce can appear complex and challenging, but Zonos helps merchants crack the code.

Decoding the Barbury crop circle

cipher (ˈsīfər) - to put (a message) into secret writing; encode

The idea for the Zonos cipher is rooted in our internal science fiction-loving culture. We were drawn to the real-life story that showed a complex symbol being decoded and translated. On June 1st, 2008 - in a barley field on a small farm near Barbury Castle in Wiltshire, UK, a crop circle was discovered. The crop circle was unique in its pattern, but no one understood the meaning behind the symbol.

Location: Barbury, United Kingdom

Barbury

Source: https://www.dailymail.co.uk/news/article-1027178/Easy-pi-Astrophysicist-solves-riddle-Britains-complex-crop-circle.html

It was not until a year later when a retired astrophysicist Mike Reed, on the other side of the world, saw a photograph and decoded what was believed to be a random pattern. Upon closer inspection, with the proper process, it was discovered that the crop circle was in fact, a number. The circle was a pictorial representation of the first 10 digits of Pi - 3.141592654. Today, this has come to be known as the Barbury crop circle.

Pi circle

Source: https://www.dailymail.co.uk/news/article-1027178/Easy-pi-Astrophysicist-solves-riddle-Britains-complex-crop-circle.html

The Barbury crop circle looked incredibly complicated until someone decoded it. Once the correct formula was discovered, the simple meaning was exposed. Zonos is simplifying cross-border eCommerce and paving the way for merchants to change the way they sell internationally. For us, branding Zonos is as important internally as it is externally. Our team is continually reminded to look at the challenges cross-border presents as an opportunity to decode and add transparency to an industry that has never seen it.

Make your own cipher

Want to try making your very own cipher? You can visit our Create your Cipher page, which is Zonos’ tribute to our space-loving culture and our contribution to those interested in semiotics and uncovering the hidden meanings behind symbols.

Learn more about Zonos

If you are interested in simplifying the cross-border experience or if you want to learn more about Zonos, please reach out to us via our Contact Us page.

Aaron Bezzant

What is de minimis value?

You are looking to expand your eCommerce business internationally when you come across the term - de minimis.

What does this mean, and why should you care? When we’re talking about international eCommerce, de minimis refers to a country-specific threshold that tells you when duties and taxes are applied.

Country-specific de minimis threshold examples:

de minimis threshold

Definition

De minimis (pronounced dā ˈminiˌmēs) is a Latin term that simply means something that is so small or trivial that the law does not refer to it and will not consider it. This term has been around for a while with usage in legal arenas for various applications, but its application within international eCommerce is much more specific.

How does de minimis apply to cross-border transactions?

When goods get shipped to another country, the importing (or destination) country may wish to levy duties and taxes on those goods by collecting them from the person or company importing the products. Duties and taxes generate revenue for the importing country, but the de minimis can be used to encourage or discourage certain trade/purchasing habits of both consumers and businesses. So what does this have to do with de minimis?

The process for assessing and collecting duties and taxes requires time and resources for the importing country, so it doesn’t make economic sense to spend time on low-value shipments. That is why each country sets its own de minimis value threshold for when it will assess duties and taxes on an import. Generally, the duty de minimis threshold will be different from the tax de minimis threshold. The value threshold is what we call the de minimis value. Anything below this value is considered to be, “so small or trivial that the law does not refer to it and will not consider it.” The de minimis value may also be used to encourage or discourage certain trade/purchasing habits.

Take note that many items can be received duty-free if the goods meet the rules of origin under free trade agreements.

How does this affect my eCommerce business?

As merchants grow their international business, they need to understand the barriers an international shopper faces when purchasing from a foreign website. Many of these barriers involve rules and regulations that do not apply domestically. De minimis value is an excellent example of one of these foreign regulations.

De minimis value significantly impacts eCommerce. This is because B2C orders are typically a much lower value than B2B, and a larger percentage of your shipments will clear duty and tax-free to specific countries. Shipments below the de minimis value will clear faster and provide an opportunity to sell into certain markets more competitively.

The de minimis value varies greatly by country, and it’s worth understanding the markets you ship to or want to target.

Example - Canvas shoes with rubber sole, $175 USD:

Destination HS codes and duty & tax rates Foreign value Duty de minimis VAT/tax de minimis
United Kingdom 64.0411.00 / 16.9% Duty / 20% VAT 134.24 GBP <135 GBP >15 GBP
France 64.0411.00 / 16.9% Duty / 20% VAT 154.51 EUR >150 EUR >0 EUR
Canada 64.0411.11 / 16% duty / 5% GST + PST 231.38 CAD >20 CAD >20 CAD
Australia 64.0411.00 / 5% duty / 10% GST 246.69 AUD <1,000 AUD <1,000 AUD

How can de minimis influence the buying experience on a website?

Clearly communicating the calculated de minimis value can have the same effect as offering a promotion or sale. If a shopper realizes they can spend up to 150 EUR before a duty will be applied, they will more likely add items to their shopping cart to maximize the benefit of staying under the de minimis value. Providing a transparent de minimis value to international shoppers can have a positive impact on your ability to convert international shoppers into international customers.

If you are in the eCommerce business, de minimis is no small matter. To learn more about de minimis and other significant features of international eCommerce, please visit our Zonos docs.

You can also try our free Zonos Hello to provide de minimis information to your international shoppers while they browse your site.

Clint Reid

Rebrand lessons learned a year later

It has now been one year since we rebranded from iGlobal Stores to Zonos. For 20 minutes, we captivated a live audience of close to 1,500 people inclusive of various industries, competitors, partners, and our local community. Since the event, it has reached close to 5,000 viewers.

This is how we did it, on our own, with a team of 25 people for less than $15,000.

It probably started with one of those days where we had another sales call with a prospect that heard our name “iGlobal Stores” and then confused us for a competitor offering logistics. In frustration, I searched and searched the internet for a domain. There were a few domains I had been watching already, but something finally put me over the edge that day. Determined, I pulled all the key stakeholders into a room, saying we were not leaving until we either purchase a new domain or it was never going to happen. I wasn’t the only one unsatisfied with our brand and name, but if anyone in that room wanted something to happen, they knew they had one hour to decide or forever hold their peace. I think it took less than half an hour, and I painstakingly pulled out the credit card and purchased the domain: zonos.com.

Lesson 1: We need an evocative name.

One of the best things I did before the rebrand was a call with someone in the corporate branding department of a large company. He asked about our competitive landscape, what we did, and how we positioned ourselves in the market.

I learned if you want someone to understand what you do when they hear your name, pick something descriptive. If competitors have poured thousands or millions of dollars defining terms that you can leverage for quick understanding of your company, a descriptive name could make sense. That was the exact opposite of what we wanted.

On the other hand, if you want to explain what you do every time someone hears your name, then pick something evocative or invented. At Zonos, we are building a new category of cross-border technology without logistics. Choosing an evocative name allowed us to define who we are, not our name.

Click here to view the rebrand name reveal.

Lesson 2: Our brand needed to mean something.

On June 1st, 2008 in a barley field on a small farm near Barbury Castle in the UK, a crop circle was discovered. The crop circle was unique in its pattern, but no one understood the meaning behind the symbol. It was not until a year later when an astrophysicist on the other side of the world decoded what was believed to be a random pattern. Upon closer inspection and with the proper process, it was discovered that the crop circle was, in fact, a number. The circle was a pictorial representation of the first 10 digits of Pi, 3.141592654. Today, this has come to be known as the Barbury crop circle.

It has been one year since the revealing of Zonos. At first glance, the Zonos circle appears to be random, which in fact, it is not. The symbol itself is a cipher and contains an encoded word. The cipher spells “ZONOS”. Similar to the Barbury crop circle, the Zonos circle can be decoded. In fact, you can create your own cipher here.

Our new brand meant something to the entire team, and the by-product was that it now meant something to our industry. We ultimately said goodbye to the flying saucer, but the Zonos cipher gives a bit of a nod and a wink wink to our previous selves. Our team of Zonuts immediately fell in love with our brand, our name, and our mission of “Decoding cross-border”.

Lesson 3: Doing an event is worth it.

We decided to look for the right location for our event. The first stop was a small electric theater in downtown St. George that was built in 1911. We walked the stage; the theater holds a little over ~150 people, so I turned to our Chief of Staff and said, “We can fill this entire place up. No problem.” His eyebrows raised in surprise, and he responded, “Umm. Yeah, sure we can.” Next, we went to the brand new Dixie Technical College on top of Tech Ridge, a new master-planned community for living and working. Tech Ridge is also the future home of Zonos and other local tech companies. We walked the beautiful new college and entered the George S. and Dolores Dore Eccles Auditorium, and I said, “We have to do this here, and we have to fill it up”. In a bit of shock, our Chief of Staff replied, “It seats over 400 people!” It was the fall of 2017, and we had picked our location and set the event date for February 16th, 2018. Now we had to deliver.

At Zonos, our first core value is “Reach Everyone.” We are a global solution, yet we live in a small community in Southern Utah. Having a rebranding event allowed us to reach these three groups.

1. Community

We filled up the room like we hoped and had a keynote from Derek Miller, the President of WTC Utah. After the 20-minute rebrand reveal, we then had a panel with the St. George Mayor, Jon Pike as well as other tech CEO’s looking to go up to Tech Ridge. We gave out t-shirts to everyone, provided lunch, and bonded as a community. The event helped us with recruiting, but more importantly, it was a way for us to involve the community in what we are creating.

2. Industry partners

Every type of partner watched that event, eCommerce platforms, logistics companies, and competitors. Over half of the thousands that watched the event are from a industry-related business. We still hear all the time, “I saw your event. It was awesome!” We even have had multiple people working for our direct competition inquire about positions at Zonos.

3. Online retailers

It was to our customers and prospects that we really wanted to communicate the vision of Zonos and our future together. We revealed Zonos Hello, a freemium product that calculates duties and taxes for the shopping experience. A year ago, Zonos Hello didn’t exist. Yet today, Zonos Hello serves ~150k duty and tax quotes each day.

There were a lot of emotions after the event. The Zonos team delivered something to which I have yet to see paralleled. I am so proud of the 25 Zonuts that delivered our rebrand event and of the current team of 40 continuing our mission. Each one doing their part to decode cross-border.

Click here to check out our complete rebrand event video.

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Clint Reid

DDU vs DDP (Delivery Duty Unpaid vs Delivery Duty Paid)

DDU and DDP are both incoterms used loosely in the small package industry to describe the party responsible for paying the duties and taxes.

What is DDU?

DDU (Delivery Duty Unpaid): The buyer (receiver) is responsible for all the duties, taxes, and clearance fees.

What is DDP?

DDP (Delivery Duty Paid): The business (seller) is responsible for all the duties, taxes, and clearance fees.

So, why should you care about DDU and DDP?

When selling internationally, someone ultimately has to pay the duties and taxes. So you better know who it is.

When you sell cross-border, the country you ship to may impose duties and taxes on the shipment. Depending on the destination, you will have a choice between DDU or DDP. These applied duties and taxes are largely based on the declared value of what you are shipping. As each country sets its own rules and regulations, you will want to consult with an expert familiar with shipping internationally.

A critical element to selling cross-border is getting rid of surprises for your international customer. International shoppers are savvy; they want a complete understanding of the required fees and what it will take to get the package to their door. Many international shoppers will choose not to purchase if the fees and charges are not clearly communicated. This includes making it clear who is responsible for the duties and taxes.

Should I send my shipment DDU or DDP?

Unless you are feeling really generous, you do not want to pay duties, taxes, or fees on an international order if you have not collected them upfront. If you are new to international shipping or if you are unsure, send it DDU and the receiver will pay duties and taxes when the shipment has cleared customs.

If you collected the duties and taxes or you choose to absorb that cost, then send the shipment DDP.

How do I send a package DDP?

Each shipping system/carrier is slightly different and not all will use the term DDP. The table below illustrates a few common examples of options you may see in your shipping software when creating an international DDP shipment. Keep in mind that DDP is not available for all carriers and services, and the options displayed in your shipping software should reflect that.

The payment of duties and taxes to the destination country will be handled by your carrier, then invoiced to you on a separate freight bill. You will first often see shipping charges invoiced with a separate invoice for duties, taxes, and clearance fees to come later.

There is an exception to this process that only impacts large shippers to Australia. If you ship more than A$75,000 worth of goods annually into Australia, then you are expected to remit tax directly to the Australian government on DDU and DDP shipments. This is a new law that was enacted in July of 2018 and needs to be understood if your annual shipments to Australia are over A$75,000.

DDP shipping platform DDP shipping platform description Selector
DDP with Ship Station Bill duties and taxes to payor of shipping charges Checkbox
DDP with UPS Bill Duty and Tax To Dropdown: Shipper
DDP with DHL Online Shipping Bill Duties and Taxes To (In the payment options section) Dropdown: Shipper
DDP FedEx Ship Manager Bill duties/taxes/fees Dropdown: Shipper

Are there fees associated with sending a shipment DDP?

Yes. Sending a shipment DDP includes the entire total landed cost i.e. duties, taxes, DDP fee, advancement fee, and possible brokerage fees. In the U.S., UPS and DHL both charge a $15 DDP fee as seen below; FedEx and other international mail providers do not charge a fee. Keep in mind that fees assessed and terminology used can vary between carriers and the country you are shipping from. Zonos recommends you have a conversation with your carrier representative to fully understand the fees applicable to you. It’s also worth asking your representative for waivers and/or reductions on these fees.

Carrier DDP description DDP fee
UPS Duty and Tax Forwarding Surcharge $15 USD
DHL Duties and Taxes Paid (DTP) $15 USD
FedEx Bill Duty and Tax to Shipper $0 USD
If you are interested in learning more about how to manage international eCommerce for your business, please visit our Zonos Docs for further information.
Jamie Lords

What GDPR means for eCommerce

Why should you care about GDPR?

Everywhere you look in eCommerce, you will see someone discussing EU GDPR or the European Union General Data Protection Regulation. There is a variety of information, from technical articles to speculation on social media. We all want to know how it will affect us. What changes, if any, will I need to make? What does it really mean?

In this article, we will take a quick look at EU GDPR - what it is, how can we prepare, and how it might impact an online business.

Who does GDPR impact?

The EU GDPR not only applies to organizations in Europe but any organization that will process and hold personal data for individuals in the European Union as well as EU citizens living abroad. In other words, if you plan to have customers from Europe, you will need to pay attention.

What happens if you do not comply?

The GDPR will be enforced beginning May 25, 2018. Non-compliance penalties are significant.

  • Fines can be assessed up to 4% of annual global revenue or 20 Million Euro, whichever is greater.
  • Individuals will have the right to seek compensation for damages, including: loss of control over personal data or limitation of rights, discrimination, financial loss, damage to reputation, or loss of confidentiality of personal data protected by professional secrecy.
  • Individuals can choose to seek action against either the data controller, the processor, or both, and possibly anyone in the supply chain.

What are your options?

If you own or operate an eCommerce business, your options are insufficient. There are really only two options.

Option 1 - Embrace it (Good Idea!)

A friend once told me: “if you don’t know what direction you are going, you are already lost.” I think this is especially true with EU GDPR. There is a great deal to learn and still more that needs to be clarified. But achieving EU GDPR readiness begins with a decision to comply. Assess your situation and identify areas where you are not compliant. You can then establish a strategy for minimizing your liability.

Option 2 - Don’t sell to Europe or their citizens (Bad Idea!)

If you don’t wish to comply with the EU GDPR, we highly recommend that you don’t plan to do business with anyone from Europe. Please remember, those European individuals can live abroad. Limiting your eCommerce business to U.S. borders does not ensure your compliance. The risk of non-compliance is significant and can be described as “by pain of penalty.” Non-compliance is an option, but it is not recommended.

5 Key areas of the regulation

EU GDPR readiness involves becoming familiar with five key areas of the regulation - consent, individual rights, policies, and accountability.

1. Legitimate Interest

Article 6 of the GDPR regulation states that a data collector may only process data lawfully if, among other things, it has legitimate interest or consent. Determining if you have a legitimate interest requires “careful assessment” of the expectations and context of the data you are collecting.

It is tempting to use a broad interpretation of legitimate interest to overcome the need for consent. We discourage using an open-ended view of legitimate interest as a way to justify collecting data. GDPR provides some examples such as processing personal data to prevent fraud, internal administrative purposes relating to employees and clients, ensuring network security, and to report possible criminal act or threats to public security.

There is still a gray area around legitimate interest and the definition will become more evident over time. The short-term recommendation is to get in the habit of asking, “can the same objective be achieved without processing personal data?” If the answer is yes, then the best practice is to move away from legitimate interest as the basis for processing data; you should obtain consent.

There is no longer any passive consent. You need to state what you are going to use the data for. Here are two examples of how to request consent.

Used for order processing only
Used for order processing and marketing

3. Individual Rights

Under GDPR, the individual has the right to be forgotten. For example, if they consented to the use of the data for marketing purposes, they have the right to ask you to “forget them”. New rights have been introduced around subject access, objecting to processing, data portability, and objecting to profiling, amongst others.

4. Policies

Article 13 of the regulation gives 12 key areas that you need to inform your consumer of in clear language, not legalize. Develop a standard privacy policy that informs your customers how you manage their data.

It is required to have a designated contact person as well as contact information for your organization in the privacy policy.

5. Accountability

Educate your employees and provide the tools to help drive accountability throughout your company, not only for this regulation, but for all personal data you receive. Data protection is the responsibility of the entire organization. Anyone that comes in contact with data needs to be aware of the implications and non-compliance penalties.


Zonos, the leader in cross-border eCommerce technology, will continue to lead out and guide merchants through the challenge of selling their products to the world. We will continue to provide FAQs and document examples displaying internal privacy policies and processes that you can adopt. We will share internal training documents for you to use with your team. Zonos takes data privacy seriously and is committed to EU GDPR readiness. More details will be coming on a regular basis.

Aaron Bezzant

The 3 C's of cross-border success

Cross-border eCommerce presents massive opportunity

Cross-border eCommerce continues to grow at a rapid pace and presents a massive opportunity for merchants looking to grow their sales.

In 2016, worldwide eCommerce sales totaled $1.86 trillion, and that figure is expected to boom to $4.48 trillion by 2021*. Billions of global consumers are turning to the convenience of eCommerce, and that trend doesn’t appear to be slowing down as internet connectivity around the globe continues to grow. In fact, foreign eCommerce growth was rapidly outpacing eCommerce growth seen in the U.S. In 2015, the U.S. market accounted for 22.2% of the global eCommerce market, and that number is expected to shrink to 16.9% by 2020. With the U.S. piece of the eCommerce pie shrinking, it’s becoming imperative that online merchants look at cross-border to stay relevant.

Global eCommerce sales are growing quickly, and the U.S. share of cross-border is declining.

U.S. share of global eCommerce

Global eCommerce sales are growing quickly

eCommerce sales worldwide

Global eCommerce sales are growing quickly

Source: https://www.statista.com/statistics/379046/worldwide-retail-e-commerce-sales/

“It is imperative that U.S. online merchants look at cross-border in order to stay relevant.”


Leading online purchase drivers worldwide

Amazon found that shipping options are the leading driver for international conversion.

Leading online purchase drivers worldwide

The potential and importance of going global cannot be overstated in the current online world, but with opportunity often comes challenges. In the global marketplace, consumers have more choices than ever before, which makes creating a positive shopping experience a key differentiator for merchants. Sounds simple, right? Except there are hundreds of international markets that each have their own language, currency, and cultural nuances that need to be navigated in order to give each consumer the best-in-class experience they are looking for. On top of this, managing international orders for the merchant can often feel overwhelming. We get it - cross-border eCommerce can be complicated, but don’t let that deter you from embracing the opportunity.

“In an increasingly complex retail environment, engagement is the emerging skill to master,”

Patrick Dodd, President of Nielsen.com

Choice, Clarity, and Confidence

At Zonos, our mission is to decode the complexities of international eCommerce without requiring you to give up control of your business. With all the complexities out there, we’ve found to create a successful cross-border experience for you and your customers, simply stick to the 3 C’s of cross-border success:

choice, clarity, and confidence.


Choice

Choice for consumers

A major part of optimizing the experience for your customers is giving them the choice to create their desired experience. Not offering enough shipping and payment options can easily be a deal breaker on an international order. Unfortunately, many merchants take a one-size fits all approach to these areas, which ends up restricting their international sales potential.

Top barriers to shopping cross-border, among all online shoppers surveyed (% selecting each statement)

Top barriers to shopping cross-border

Source: https://www.paypalobjects.com/digitalassets/c/website/marketing/iglobal/shared/iglobal/media-resources/documents/passport-citation.pdf

Shipping options

Offering multiple shipping options at checkout can be one of the most powerful tools for customer satisfaction and conversion. Many times, merchants work so hard to get the buyer to the checkout page only to lose them, because the shipping options were extremely limited, often too expensive and not the needed service level. Your customers are now left with a “take it or leave it” choice. Even if they do purchase, they may not be very happy about what was offered and will be less likely to return. Why not give your customers what they are looking for? For best results, customize the options given to customers at checkout. It’s important to offer multiple price points and service levels that allow the buyer to choose the best fit for them. Their choice now changes from “take it or leave it” to a more pleasant choice of “which one”. This will not only increase conversion, but your customers will be much more likely to return to your site in the future.

Payment options

The preferred form of payment can vary greatly from country to country, so allow the buyer to choose the payment method that is familiar and comfortable to them. Forcing a customer to choose from a limited list of payment options can be a deal breaker, that’s why it is important to give them a choice.

Choice for merchants

You’ve worked hard to build your business, and you deserve to have the ability to choose the solutions that work best for you and your international customers. The international market is growing and evolving rapidly, and it’s imperative that you have the flexibility to adapt to the changing landscape.

Shipping solutions

You not only need the buyer to have multiple shipping options at checkout, but you need them to be the best value possible. Shipping costs can make up a significant portion of the overall international transaction. The better value your shipping options are, the better your conversion will be. It is important for you to maintain the flexibility to choose the shipping solutions that create the best choice and value for your customers. This allows you to custom tailor offerings to your customers and quickly change things on the fly if you find a better solution. This flexibility puts you in control and gives you the leverage to create the best value for your customers, which will create more sales for you.

Payment solutions

When evaluating payment solutions, be sure you have the ability to capture payments in the shopper’s local currency while still paying out to you in USD. This creates a positive buying experience for you and your customer.

Consumers want choice in how they pay

Consumers want choice in how they pay

75% of consumers feel retailers should accept as many different payment technologies as they can.

Source: https://futurepay.com/blog/payment-options-can-increase-sales


Clarity

Clarity for consumers

How willing would you be to give your payment information to a merchant thousands of miles away if you didn’t fully understand what was going to happen with your order? Customer confusion can quickly lead to lost sales so make sure your international shoppers can easily navigate your site.

Localized address

Trying to enter an international address into a U.S. address field can be confusing and difficult. It’s important that your address fields are localized to make it easy for the customer to understand how to enter their information. This also increases the accuracy of addresses, which makes for a better package delivery experience.

Language translation

International shoppers can use translation tools to navigate your site, but once they get to your secured checkout, those tools don’t typically work. This leaves them needing to fill out address and payment information in a language that’s foreign to them. Make sure you have a translated checkout to give a boost to orders by providing the customers the clarity they need to complete their purchase.

75% of shoppers prefer to buy products in their native language. (Source: https://www.shopify.com/enterprise/global-ecommerce-statistics)

Landed cost

Customers want and expect a better shopping experience without the surprise of additional costs when your product arrives at their doorstep. Showing a total landed cost removes the unknown for your international customers, giving them a superior customer experience.

Delivery expectation

Get rid of those broad and vague delivery windows that we so often see with international orders. Since you are in control of your shipping solutions, you can give a more definitive delivery expectation for your customers. If a customer clearly understands when they should receive their order, they will more likely make the purchase.

Clarity for merchants

If you don’t know it’s broke, then how will you know to fix it? Information is king when it comes to understanding your international customers and how you can increase sales and customer satisfaction.

Business intelligence

It’s important for you to have an information portal into your international business. With reports, dashboards, and analytics, you’ll be able to see what’s working and what isn’t. This information is powerful in guiding your business decisions.

Variant (A/B) testing

Got an idea to improve conversion, but you’re not sure if it will work? Don’t hesitate to do some A/B testing to optimize your conversion and have a clear understanding of what your customers want.

Localized re-targeting

Have you had an item that your customer added to their cart, but was never purchased? Don’t let them forget about it! Sending an email with a link back to your checkout can be a powerful tool in recapturing lost business and boosting your international sales. Make sure your emails are clearly understood by having them translated into the native language of your shopper. A good abandoned cart strategy can boost international sales by up to 10%.

$4 trillion (yes, trillion) of revenue is lost each year through cart abandonment, but 65% of carts can be recaptured within 24 hours; emails sent within 60 minutes of abandonment have a 40% open rate.


Confidence

Consumer confidence

The items discussed in the previous two C’s of Choice and Clarity tie directly into the third C of Confidence. Take a moment to think about your favorite websites that you like to buy from. What are the reasons you buy from them? How willing would you be to give your money to a merchant if you weren’t confident that they could take care of you? Make sure your international customers know that you “get it”. Here are just a couple more ways you can build your customer’s confidence in you:

Guided shopping

It’s important to build confidence when shoppers first hit your site and throughout their shopping experience. With the right technology, you can recognize where your customer is shopping from and identify their native language. This information can be used to customize the buying experience by providing country profile information, assisting with restricted item information, calculating duty and tax estimates, and translating any other pertinent information throughout the shopping experience. This information creates a transparent experience for the international shopper and eliminates surprises at checkout. Add extra power to the experience by communicating this information in your customer’s language and currency. Guided shopping is a great way to let your customers know you are a global eCommerce expert instead of a domestic company that’s going to stumble its way through an international order.

33% of shoppers are likely to abandon their cart if it’s in USD only. (Source: https://www.shopify.com/enterprise/global-ecommerce-statistics)

Localized currency

According to PayPal’s Cross-Border Consumer Research, when international customers were asked, “Which, if any, of the following would make you more likely to buy from a website in another country?” In their answers, currency was a major factor. Localizing the currency for your customers throughout the shopping experience and during checkout can be a powerful tool in boosting conversion and customer satisfaction.

Merchant confidence

When many eCommerce companies think about expanding globally, they worry about things like fraud, compliance, and all the paperwork that comes along with processing international orders. Many times, these worries have a paralyzing effect to the point where the merchant does not go global at all or puts so many safeguards in place, that they make it near impossible for legitimate international customers to purchase from them. Here are a few of the tools you can incorporate to sell confidently to your international customers:

The 10 largest eCommerce markets (by billion USD)

The 10 largest eCommerce markets

Source: https://www.shopify.com/enterprise/iglobal-ecommerce-statistics

Fraud screening

The fear of fraud can often act as an artificial barrier that keeps many merchants from going global, which can severely limit their earning potential. With the right fraud partner, you can screen out the fraudsters while still allowing legitimate customers to have a positive purchase experience.

Compliance

Managing denied parties and restricted items can feel overwhelming, but with the right partner and technology, you can turn that mountain back into a molehill. This allows you to sell confidently, knowing that you are compliant in a global marketplace.

Order fulfillment

While fulfilling an international order requires a little more paperwork than a domestic order, there’s no reason this should hold you back from selling cross-border. There are many software options through carriers and third parties that allow you to fulfill your international orders as easily as you fulfill your domestic orders.

Scalability

With a good global strategy, there’s a very good chance your international sales will grow rapidly. It’s important that your partners are flexible and scalable enough to keep up with your growing business.


Overseas purchases were in the majority on all but one continent

57% of online shoppers made an online purchase in the past six months from an overseas retailer.

Overseas purchases were in the majority on all but one continent

Source: https://www.shopify.com/enterprise/global-ecommerce-statistics

The eCommerce landscape continues to change and evolve towards a more global marketplace. Optimizing your global strategy is key for growing your business, but it is also an increasingly vital part of survival for many eCommerce companies. Tackling all your international objectives can often feel intimidating and overwhelming, but don’t let that deter you from seizing the enormous opportunity that’s out there. With the right partner, you can create the choice, clarity, and confidence needed to maximize conversion, retain customers, and improve your bottom line in a borderless world. Let Zonos decode the cross-border experience for you and your customers.

You can visit Zonos.com for more information.

Clint Reid

Free trade exists in eCommerce, just not for the United States

I truly believe the vision of free trade is good for business, good for economies, good for the world, and good for America. Too bad that, at the moment, it’s not fair or free and has never been. Today, agreements such as NAFTA, CAFTA or TPP still leave specific countries, states, or provinces on the wrong end of a deal, and it is usually the United States holding the bag. In the next five years, cross-border eCommerce sales will more than double; $424 billion by 2021. China will be the leader in sales abroad, not the United States. *Forrester

On February 4th, 2016, President Obama signed into law all shipments valued under $800 USD may be imported free of duties and taxes into the United States of America. China-based eCommerce giant, Alibaba, received a one-way free trade agreement for the majority of their US-based customers. Alibaba can now sell all across the United States and not incur any duties or taxes on the majority of their orders. What if you are a US eCommerce company trying to sell to China? Well, China just doubled their de minimis value to 1000 CNY. What a friendly gesture, too bad that’s only $150 USD off the U.S.’ generous mark by $650. If you go over China’s de minimis, it won’t be cheap.

This principle doesn’t just apply to China; it applies to most of the world. The US is one of the few countries without a federal tax such as GST or VAT. Canada has a de minimis value of $20 CAD and will charge GST, HST, and PST on any imports above that value (yes, even NAFTA eligible orders). If you are an online clothing retailer in the US and have Canadian competitors, those competitors can sell any product under $800 to the US buyer, even if it is not NAFTA eligible. Yes, that is duty and tax-free to the US customer for any order under the generous US de minimis. The US shop, on the other hand, trying to sell to Canadians will have at the lowest - 20% duties and taxes incurred on the orders into Canada over $20 CAD.

The United States didn’t have the wrong idea of raising the US de minimis value; we just need to ensure other countries to do the same when we trade with them.

Clint Reid

FedEx international ancillary fees

FedEx as well as other carriers offer standard customs clearance on express air shipments, and do not charge brokerage fees; however, they will still charge different fees by country for other services associated with customs clearance.

Examples of FedEx ancillary fees include additional line items, storage, freight clearance, returned goods, other government agency processing, temporary import, customized service, direct payment processing, post clearance entry adjustment, and an advancement fee.

FedEx Ancillary Fees

FedEx international advancement fee

The advancement fee is the most commonly charged fee of all the ancillary fees. The reason for this is because FedEx will pay for all the duties and taxes/VAT on behalf of the receiver, and then collect the charges from the receiver. For example, a shipment to the UK will have a minimum charge of £10.50 or 2.5% of the advanced duties and taxes, whichever is greater. UPS has similar fees; to Canada, UPS had a bond fee, and outside of Canada, it is a UPS disbursement fee.

Landed cost and ancillary/advancement fees

The FedEx GTM (Global Trade Manager) calculates and estimates duties and taxes that will be levied on your export shipments. Most customers do not realize that even if they use the Global Trade Manager, it only calculates duties and taxes/VAT and does not calculate any international FedEx advancement fees or other ancillary fees. This could mean a very large cost difference between the duty/tax estimator (GTM) and the actual total landed cost to the consumer. For example, a shipment is valued at $50 USD to the UK charged at a total of 25% VAT with duties estimated at $12.50, but is charged another £10.50 or close to $17.00 USD (Google Currency Converter). These additional charges could leave your customer paying a lot more than expected, or leave you with the extra cost if the order was sent DDP.

Zonos™ software allows for the calculations of ancillary fees and other charges to better estimate a total landed cost.

Daniel Johnson

APO and FPO shipping

Most eCommerce businesses get orders or inquiries from customers with an APO or FPO shipping address. Now, like most eCommerce businesses, you likely want to fulfill every order possible. But what is an APO or FPO address, and how do I ship my goods there?

What is an APO or FPO?

APO and FPO are abbreviations used by the US Military Postal Service to deliver mail and packages to military personnel overseas. APO stands for Army Post Office and is associated with the US Army and Air Force. FPO stands for Fleet Post Office and is associated with the Navy and its ships.

APO and FPO addresses enable the USPS to deliver mail to overseas military members. When the mail is delivered to the APO or FPO by the USPS, the staff will forward the mail to the recipient’s proper military division. The division will then deliver the package to the individual.

How do I ship APO and FPO packages?

APO and FPO packages must be sent via USPS. Overseas US military bases are considered a domestic shipment, which means you need to select the United States as the ship-to country. Do not select the country where the base is located. Military postage rates are the same as U.S. domestic postage rates, because the APO or FPO pays the transportation costs to the final destination.

The address format for APO and FPO shipments is the same as for domestic shipments. See the example below.

Name PFC John Smith
Address 1 1st Battalion
Address 2 Unit 123, Box 456
Country United States
City APO
State AE
Zip / postal code 09063

AE (Armed Forces Europe)

This includes Canada, Middle East, and Africa. The ZIP / postal codes start with 09, e.g. 09123.

AP (Armed Forces Pacific)

The ZIP / postal codes start with 962 – 966, i.e. 96400.

AA (Armed Forces Central and South Americas)

The ZIP / postal codes start with 340, i.e. 34011.

Customs

All military mail between the US and international locations is subject to customs inspection in the destination country, and customs documentation is typically required. Some countries may restrict or prohibit the importation of certain items. Check the USPS and the ship-to country’s regulations before shipping your goods to avoid destroyed products and returned packages.

Many businesses may have issues with APO and FPO shipments, but once you familiarize yourself with them and the proper way to ship them, they can become just as easy as every other shipment that you fulfill from day to day.

Daniel Johnson

UPS, FedEx and DHL international shipping weight calculator

Below are some of the pains that eCommerce businesses may experience with international shipments.

Dimensional weight miscalculations

This will put your business in the awkward position of needing to contact every customer that places an order to collect extra money for shipping.

Losing money

Getting billed more than expected by shipping carriers may result in you not hitting your target margins or even losing money on orders.

Losing orders

You may end up losing orders due to not listing international shipping charges and forcing customers to call or email to get a shipping quote. The possibility of losing casual buyers is considerably increased when potential customers can find the same product on another website that displays the international shipping cost.

How to calculate dimensional weight

Rather than worrying about losing orders or money (and dealing with extra work from the potential problems listed above), you can avoid some of these issues by calculating international shipping weight and displaying the cost to your international customers. International shipping weight is calculated differently than domestic shipping weight; international shipments are calculated similarly to domestic overnight or 2nd-day air shipments. This is often a factor that comes into play when businesses are experiencing one or more of the potential pains listed above.

While almost every eCommerce business has their domestic rate, billable weight, and shipping charges calculating correctly, they may not have taken all the factors into consideration that differentiates international and domestic billable weight. Billable weight is the greater of the actual weight and dimensional weight (when applicable). One way to ensure you are always billed the actual weight on your domestic ground shipments is to only use boxes that are below 5,184 cubic inches. You may have to pack one shipment in multiple boxes, but you will save yourself a lot of shipping charges that you would be billed for otherwise.

One of the biggest disconnects in calculating international billable shipping weight vs. domestic billable shipping weight is dimensional weight. Depending on if a shipment is a domestic or international shipment, the dimensional weight will vary because the domestic dimensional weight factor is different than the international dimensional weight factor.

The dimensional weight factor is a value that all major carriers use to calculate the dimensional weight. The formula used to calculate dimensional weight is:

length (l) x width (w) x height (h) / dimensional weight factor

The dimensional weight factor for domestic shipping is 164, and the international dimensional weight factor is 139. You may not think that dimensional weight makes much of a difference now, but in the examples below, you will notice how big of a difference the dimensional weight can make in what you need to charge customers and what you will be charged by the shipping carrier.

International shipment dim weight

Example 1 Example 2 Example 3
Length: 12” Length: 16” Length: 51”
Width: 12” Width: 16” Width: 15”
Height: 12” Height: 16” Height: 12”
Cubic inches: 1,728 Cubic inches: 4,096 Cubic inches: 9,180
Dimensional weight: 13 lbs. Dimensional weight: 30 lbs. Dimensional weight: 67 lbs.
Actual weight: 20 lbs. Actual weight: 7 lbs. Actual weight: 40 lbs.
Billable weight: 20 lbs. Billable weight: 30 lbs. Billable weight: 67 lbs.

Domestic shipment dim weight

Example 1 Example 2 Example 3
Length: 12” Length: 16” Length: 51”
Width: 12” Width: 16” Width: 15”
Height: 12” Height: 16” Height: 12”
Cubic inches: 1,728 Cubic inches: 4,096 Cubic inches: 9,180
Dimensional weight: 11 lbs. Dimensional weight: 25 lbs. Dimensional weight: 56 lbs.
Actual weight: 20 lbs. Actual weight: 7 lbs. Actual weight: 40 lbs.
Billable weight: 20 lbs. Billable weight: 25 lbs. Billable weight: 56 lbs.

In writing this blog post, we hope to help give eCommerce businesses the knowledge and tools to properly calculate international billable shipping weight. While it may be a little overwhelming, this is something that can help increase your conversion and revenue by capitalizing on the daily international traffic landing naturally on your site. If you do not have the software or technology in place to calculate the correct international shipment billable weight, you can always meet with Zonos or another third-party vendor to discover the best international solution that fits your business.