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 a 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 or 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.
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.
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.
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.
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.
“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.
The potential and importance of going global can’t 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 that following these three principles will help you improve conversion and achieve your goals for going global. 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 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)
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 which allows 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.
The preferred form of payment can vary greatly from country to country so it’s important to offer payment options that are familiar and comfortable to the buyer. Allow the buyer to choose the payment method that is familiar to them. Forcing a customer to choose from a limited list of payment options can be a deal breaker so make sure 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.
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 the 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.
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
75% of consumers feel retailers should accept as many different payment technologies as they can.
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.
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.
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)
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.
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 then they’ll be more likely to make the purchase.
Clarity for merchants
If you don’t know it’s broken 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.
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.
Do you have something that your customer added to their cart, but 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 boost your international sales. Make sure your emails are clearly understood by having them translated into the native language of your shopper. A good abandon 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, and emails sent within 60 minutes of abandonment have a 40% open rate.
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 customers confidence in you:
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 e-Commerce 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 in USD only. (Source: https://www.shopify.com/enterprise/global-ecommerce-statistics)
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.
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 paralysing 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 in order to sell confidently to your international customers:
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.
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.
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.
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.
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 of 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.
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 at the moment it’s not fair or free, and it 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 tax 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 US’ 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 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 wrong the idea of raising the US de minimis value; we just need to ensure other countries to do the same when we trade with them.
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. Here are some examples of FedEx Ancillary Fees of these are 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 International Advancement Fee
The advancement fee is the most commonly charged fee of all the ancillary fees. The reason for this is FedEx will pay for all the Duty, Tax/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 Duty/Tax 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/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 will only calculate duty and tax/VAT. It 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 valued at $50 USD to the UK charged at a total of 25% VAT, and Duty would be estimated at $12.50, but 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.
Most eCommerce businesses have had orders or inquiries from customers with an APO or FPO shipping address. Now, like most eCommerce businesses you probably 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 associates with the Army and Air Force. FPO stands for Fleet Post Office and associates with the Navy and its ships.
APO and FPO addresses enable the USPS to deliver mail to military members overseas. 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.
PFC John Smith
Unit 123, Box 456
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 962 – 966, i.e. 96400
AA (Armed Forces Central and South Americas)
The ZIP/Postal Codes start with 340, i.e. 34011
All military mail between the US and international locations is subject to customs inspection in the destination country, and customs documentation typically is required. Some countries may restrict or prohibit the importation of certain items. Check the USPS and 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.
Some of the pains that eCommerce businesses may experience with international shipments are:
Dimensional Weight Miscalculations
This will put your business in the awkward position of having to contact every customer that places an order to collect extra money for shipping.
Getting billed more than expected by shipping carriers may result in not hitting your target margins or even losing money on orders.
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 e-commerce businesses are experiencing one or more of the potential pains listed above.
While almost every e-commerce business has their domestic rate, billable weight, and shipping charges calculating correctly, they may not have taken all of 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 that you are always billed the actual weight on your domestic ground shipments is to only use boxes that are below 5184 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 of the major carriers use to calculate the dimensional weight. The formula that is used to calculate dimensional weight is Length x Width x Height / The 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
Cubic Inches: 1728
Cubic Inches: 4,096
Cubic Inches: 9180
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
Cubic Inches: 1728
Cubic Inches: 4,096
Cubic Inches: 9180
Dimensional Weight: 11
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 are hoping to help give eCommerce businesses the knowledge and tools to calculate international billable shipping weight properly. While it may be a little overwhelming, this is something that can help increase your conversion and revenue by capitalizing on the international traffic that is naturally landing on your site every day. If you do not have the software or technology in place to calculate the correct international shipment billable weight, you can always meet with iGlobal or another 3rd party vendor to discover the best international solution that fits your business.