This post is by Matthew Ferguson, Customer Success Manager at Volo, a provider of technology and services to some of the world’s largest marketplace sellers. Matthew worked as an ecommerce manager in Florida for six years, before moving into a marketplace services role in London. For the last five years he has been helping ecommerce businesses expand their domestic and European cross-border sales, and explore new global markets.
There is no doubt that international ecommerce – selling to customers outside your own country – is one of the most complex and challenging aspects of selling online.
I can’t make it less complex for you than it really is (although I would love to do that if I could!) but I can highlight some of the areas that, in my experience, many sellers misunderstand.
So here are my top ten myths about international ecommerce, covering strategy, translation, returns, taxes and duties, passive versus active selling, selling to Europe, shipping and more.
I hope you find it useful, and would be happy to answer any questions you have in the comments below.
Myth #1: You need a “big plan” to sell internationally
Many sellers convince themselves that selling internationally requires a big, elaborate, long-term detailed strategy. Don’t get me wrong. Planning is important. But in today’s world, testing international markets is easier than ever, and it’s only by testing that you can get real evidence of which approach is the right one for your business.
Should you have localized stock fulfillment? Should you hire native speakers? Which markets should you expand into first? There are a great many risks and factors to consider, making it easy to convince yourself you need a big detailed plan. Most of us don’t have time for a big detailed plan when we are trying to run a business.
Instead, here is a simple plan any seller can adopt when considering international expansion.
What’s the simple way to start shipping internationally? On eBay, use the Global Shipping Program (GSP). Under that program, you send your products to a local hub and let eBay do the rest. eBay handles the operation, and charges the buyer a little more for shipping abroad, but you won’t be penalized if the package is lost or delayed.
The simple way to handle listing translations? On Amazon, sign up for a European Unified Account from Amazon.co.uk then connect to translated versions of your items that already exist. There’s a good chance many of your items are already on Amazon.fr, for example, fully translated. Connect it up and see what you find.
Yes, I am oversimplifying a little. The eBay GSP doesn’t handle returns. Selling internationally on Amazon requires you to map out shipping rates and service levels. But the point is that you don’t have to have a big detailed plan. Find all the little tools and quick tricks to expand internationally in small limited ways. Test the potential before you go all-in.
Myth #2: You need foreign-language speakers on your staff
Your listings do need to be in the local language. That’s expected now. You also need to provide customer service in the local language. With current marketplace policies, and the expectations of modern buyers, there’s not much getting away from that. But doing your own translations in-house is not the only solution.
Why make an exotic new hire, with the expenses of salary, training, holiday pay, sick leave and so on, when this is something you can outsource or automate?
There are some great services, with qualified translators, that know both ecommerce and marketplaces. Often you can get all your listings translated and optimized for a flat fee that wouldn’t cover a single month’s salary for a new employee.
Customer service can be outsourced successfully too. It will take some work to set up, and the more complex inquiries will still need your input, but the typical “where’s my order?” questions should not be a problem. Another option is to use Google Translate for customer support messages, but just in the short-term – there’s a lot of scope for misunderstandings with machine translation.
If your international order volume gets so high that it would be cheaper to provide native-language support in-house, then that would be a good problem to have!
Myth #3: Overseas customers won’t buy from me
Maybe you tried selling internationally in the past, but didn’t get many sales? There are a couple of reasons that your results might be very different today.
Firstly, the markets have changed a lot over the course of the last few years. Many more markets, buyers and product categories have opened up to buying internationally. You could try exactly the same strategy that failed a few years ago, and get a completely different result.
Secondly, there’s more than one way to sell internationally. If you saw weak sales in the past with a “passive” approach (making your products available internationally but not investing any further than that) you might do much better if you try again with a more active strategy.
What is a more active strategy? Translate fully, create local listings, understand the market and invest in building your sales. Consider using local fulfillment and native-language customer support. If you have a large catalog with thousands of SKUs, research the market then pick a small subset of your products to reduce the cost and risk of this strategy.
Even low sales can be a good indicator of a market’s potential. If you made just a few sales in a country where you had long delivery times, high shipping charges, and poor translation, how much better could you do if you fix those things?
Yes, if you’ve never sold to a particular country before, it absolutely makes sense to start with a “small” strategy in mind. But if you start to see a trickle of orders, that’s the time to invest more – not to give up on it due to slow sales.
Myth #4: Returns might as well be written off
A refund or return is never a welcome occurrence for a seller. Returns often result from the buyer changing their mind, but equally often they can highlight a quality issue which is within your power to address.
Analyzing returns to see where processes could be improved becomes even more important when you are selling internationally. Returns can provide really helpful evidence of a failure in your own operations:
- Did they received the wrong size or color? That indicates a pick-and-pack problem, or perhaps a cataloging issue.
- Do specific items keep getting returned for being poor quality? That might be an item you should stop selling. Often, if the quality is low then the margins are too. Low margin items aren’t good candidates to sell internationally.
- Do customers keep changing their mind? That might be due to poor listing data. Ask them what did not meet their expectations, and think creatively about how you can communicate that more clearly in the listing.
Even when you’ve done your best to reduce the number of returns you get, it’s unlikely you will ever bring them down to zero – either domestically or internationally.
International returns are different to domestic returns, and that’s generally due to the cost and complexity of getting the buyer to ship the item back to your country. It’s easy to take the attitude that you might as well give up on international returns, let the buyer keep the item, and write it off as a complete loss. But there are other options.
You could use a local company to receive returns on your behalf. Service providers like ZigZag Global and Intercultural Elements will receive your goods at a local warehouse, then consolidate them with other returns so they can be shipped back to you at a much lower rate. ZigZag can also resell returns on the local market, so you get some cash back fairly quickly without having to ship the return internationally or spend your own time processing it.
Simply writing off international returns is one option, and there’s no shame in using it in the right circumstances. But having it as your only tactic is costly and unnecessary – there are other options to play with.
Myth #5: Local taxes and duty are just the buyer’s problem
In some scenarios, particularly when you are just starting out selling internationally, import duties and local taxes really are just the buyer’s problem – technically. The buyer is the “importer of record”, not the seller, so it’s down to them to pay any local taxes that are due.
But when you have an unhappy buyer, who didn’t realize there would be duties to pay, they will quickly turn their problem into your problem. Who is technically right doesn’t come into it. A lot of customers will forget (or not even notice) that they are buying from a seller abroad. If their package doesn’t show up, and instead they get a bill for import duties, they might not realize the two are actually connected.
So it shouldn’t be surprising if international buyers say their order hasn’t arrived, or feel cheated because the total cost is much higher than they expected. Those situations can cause big customer service headaches, and get you into hot water with the marketplaces if the complaint comes back to them.
So what can you do about it?
First, be aware of the circumstances when local taxes really do become your problem. There are various VAT thresholds within Europe, for example, and if your sales go above them then you have to register. If you are selling to the US from abroad, you need to be aware of the rules on sales tax and “nexus”. It’s extremely complex. US sales tax and VAT have been covered on Web Retailer in the past.
The critical thing is to track where your sales are coming from – you need to be able to report on total sales by the buyer’s country for each month, whether it’s through accounting software, PayPal or an order management system. If you do need to register for local taxes, there’s all sorts of paperwork and requirements to take care of, so work with a specialist to make sure you get it right.
Second, if you regularly get complaints that orders have been delayed or subjected to customs fees, consider scaling back to products which attract fewer complaints – or even completely suspending sales to the countries where the problem is worst. Another solution is to look into DDP (delivery duty paid) shipping services which means you pay customs fees and taxes in advance, so the buyer receives their order more quickly and without charges.
Myth #6: I’m getting international sales anyway, so there’s no point investing in it
I’ve had this conversation with a lot of big sellers. It seems so logical. Sellers will say, “Well, we’re already selling internationally, and our sales are not great so I don’t see why we should try to expand operations.”
In cases like this, I recommend that sellers look a little deeper into their sales numbers. In a fairly typical scenario, they might find that 8% of their sales are international and 50% of those international sales are coming from Mexico. That’s 4% of all sales coming from one country abroad – not insignificant.
So next, in this example, they should look at how they are selling to Mexico. If their listings are in English, and shipping is expensive and slow for Mexican buyers, that actually presents a big opportunity to grow. How much more could they sell if they actually made an effort to appeal to Mexican customers?
I’m not saying a seller in this situation should immediately get all their listings translated, and put all their SKUs into a Mexican fulfillment center. But a smart move might be to take all the items they’ve sold in Mexico, plus their top 300 sellers in their home market, and their products with the best margins, and get those translated and localized to the Mexican market. If sales pick up even more, they can start thinking about Amazon FBA or another local fulfillment provider to get their stock onto Mexican soil in advance.
It’s amazing how many sellers look at their passive international sales numbers as a negative. Passive selling has so many constraints and tipping points that even small numbers can be good indicators of potential growth.
Myth #7: A literal listing translation is good enough
Not all translations are equal. Machine translation like Google Translate is an amazing technology, but certainly not an alternative to human translation. Even experienced human translators, while they should provide linguistically correct descriptions, might create completely inaccurate listings if they are not familiar with how people buy the type of products you sell, in the local market where you intend to sell them. Properly localized translations by an ecommerce specialist can make all the difference.
One of the first clients I ever launched into Germany, for example, sold women’s clothing. They had all their listings translated, and “women’s” became “damen” which is the correct literal translation. It stayed like that for a few months until they started to get some customer service queries which made them realize something was wrong. It turned out that for younger women’s fashion products, at that time, the majority of German women actually searched in English. Someone with local knowledge would have known that and helped them be much more targeted, leaving certain keywords in English or having them in both languages. Sales picked up once it was fixed.
Sizing is a huge issue, especially for bigger brands. Clothes sizes vary a huge amount between countries, even when the scale used appears to be the same. Sizing also varies a lot between brands, so each brand can have different size mapping requirements between countries, genders, garment types and so on.
EU sizes are standardized in theory, but it’s not entirely adhered to on the continent, let alone within countries. If you’re trying to map to that from a UK or US size, it becomes very tricky. Some country size maps overlap or completely omit certain values, which makes a mess of variation listings if you miss out sizes or try to map two to the same size. You would certainly want input from someone who understands the country on a deeper level than just being able to make a literal translation.
The best solution to address most sizing issues is to have a very detailed size chart. You can have a customized size chart on Amazon if you contact Seller Central, and obviously you can have your own size chart on your eBay listings. It’s not perfect, but it does tend to reduce a lot of customer service headaches.
Myth #8: For US businesses, selling to Europe is just too complex
This one is kind of true, but there’s a fundamental flaw in the strategy.
The flaw is this: Europe is not the “United States of Europe”. Several countries have the same currency, but Europe is still a collection of many different independent countries. You shouldn’t target all those different countries in one big blitz – you should tackle them individually.
So start thinking along one of two strategic lines: will you sell to a particular country first, say France or Germany? What marketplaces are available? What are the regional requirements? How competitive will you be in that particular country?
Or, should you tackle it by marketplace? Rather than trying to list all products into all marketplaces for one country, list all your product on Amazon France, Germany and Italy as a start. Either plan by country, or plan by marketplace. Both approaches can be successful. Just don’t try to do too much too fast.
Europe actually is really complex to sell to, but the complexity is a flaw of the idea that you can simply “sell to Europe”. How you would sell to Germany might be quite different to how you’d sell to France, for example. Aiming to sell on all Amazon EU marketplaces, as a starting point, would still be a challenge but safer than aiming to sell to all European marketplaces and countries.
Myth #9: It’s best to use your existing parcel carrier for international shipping
A lot of sellers, when they start selling across borders, will use their existing domestic parcel carrier to ship international orders. Much of the time they quickly realize that it’s not going to work.
Local carriers rarely have the best service for shipping internationally, either they are too expensive or the service will be too poor. It’s hard to find a middle ground in between.
There are companies out there that specialize in international shipping such as wnDirect (UK) and Asendia (global). They can offer a better balance, with reasonably good rates, service levels and tracking abilities. They still use local carriers in the destination country, so there can be glitches in areas such as tracking.
Run some reports on your international shipping volumes, and typical weight/dimension brackets. You will often find that you can get a better service by looking beyond your normal domestic carrier.
Myth #10: eBay and Amazon are the best channels to sell internationally
eBay and Amazon are not the top marketplaces in every country. They don’t operate at all in some countries, and they are not the dominant ecommerce sites in every country where they do operate. There’s no Amazon in Australia for example (other than a Kindle store), and eBay in Italy and Spain are still growing.
In France there are many strong marketplaces such as Cdiscount, La Redoute and Galeries Lafayette. Depending on your category, eBay may fall somewhere below those in terms of the revenue they can do. Sometimes if you’re not competitive on one marketplace in a particular country, you might be competitive on another. It’s quite complex based on your industry, margins, fulfillment network, shipping methods and so on.
As I mentioned before, you can think about international expansion at a marketplace level, and at a geographic level. At a marketplace level, you might just say, “I’m going to open a regional account for all of eBay, and sell to them all.” There’s nothing inherently wrong with that approach – if you’ve got your data fully translated and your margins are good.
But for a smaller company with less resources, a more structured step-by-step approach can give better results. You might focus on Germany, for example. Get all your data translated into German, then start exploring the different marketplaces. Germany has in excess of 30 or 40 different marketplaces that are significant players in different product niches.
There are also different buying habits to be aware of, such as payment preferences. Some countries – like Germany again – favor direct bank transfers or cash-on-delivery over credit cards. By targeting your international expansion at a geographic level rather than a marketplace level, you get to learn all the important details about a particular country – then apply that knowledge to multiple marketplaces.
Despite all the complexity and challenges, international ecommerce is growing fast.
One upside to that rapid growth for you – the seller – is that the breadth of knowledge, tools and services to support cross-border trade are expanding just as quickly.
In this post I’ve tried to dispel some of the common myths out there about international ecommerce, share my knowledge, and highlight some of those tools and services.
I hope it’s been helpful, and look forward to reading your comments!