Cross-border selling through Amazon, eBay and other marketplaces has a lot going for it. Just flip a switch and your inventory becomes available to hundreds of millions of international customers, almost instantly. Well, that’s the theory anyway.
In practice, it doesn’t tend to be that simple. Yes, you are selling the same inventory so there’s no additional effort for sourcing and managing stock (other than needing to do it on a larger scale). But just about everything else has an additional layer of complexity when you are selling internationally.
Fortunately, cross-border trade is booming, and many new international ecommerce services and suppliers have emerged, all geared up to help sellers trade successfully across borders. In this post I’ll explain who those suppliers are, what they do, and how to choose the right one for you.
What’s the big deal?
What makes international selling such a challenge? Language and distance are the most obvious differences: you’ll need to translate all eBay listings, and any private label (or otherwise uncataloged) listings you have on Amazon. Even if you share the same language as the country you are selling to you, there will often be differences in sizing and terminology.
Shipping and fulfillment can also be a problem, whether you are shipping directly or using a fulfillment house. Even some of the simplest fulfillment options (such as FBA) can give rise to tax and legal implications. Then there are issues like product compliance, returns, customer service and currency exchange.
Amazon and eBay are familiar platforms to many, but they might not be the only (or even the best) marketplaces to sell your products on internationally. Those “alternative” marketplaces, however, mean a whole new set of rules and processes to learn. Does that deter American businesses from cross-border ecommerce?
US sellers forget that tapping into Amazon’s European customer base is a massive opportunity – it provides an additional 300 million customers. But most sellers are too lazy to figure out how to navigate international waters. You should translate your listings with a native speaker, figure out VAT compliance sooner than later, decide on your returns policy, get a platform that supports international FBA warehouses and 3PLs, and understand how to ship your products both to FBA and directly abroad from your domestic warehouse.
Chad Rubin, CEO, Skubana, Managing Director, Crucial Vacuum.com
Listing translation is the first hurdle for many international sellers. While it is technically possible to sell internationally without translation – even to countries where English isn’t the first language – it’s always better to translate and localize your listings. The only occasion when translation isn’t an issue is when you are selling on a catalog-driven platform like Amazon, and they already have a good quality listing for your product on the international site.
There’s both translation and localization to think about. They are typically provided as a single service, but they’re different things. Localization goes beyond a literal translation of the listing, to consider and adapt all other aspects of the product to the target market. The most common examples are in fashion: sizing and style jargon can vary a great deal.
It’s crucial that you help international buyers find your listing (by including the right search terms for their country) and that they can select the right size. Localization matters in other categories too, sometimes in subtle ways you wouldn’t be aware of without knowledge of the language, culture and products.
When people start researching translation services, they quickly find two options to choose from: machine translation and human translation. Most people are familiar with machine translation through Google Translate – the results are usually understandable but often read awkwardly. Human translation is just what it sounds like: a real person translates your listing into the local language. Human translation normally gives a better result but is more expensive.
Not enough online sellers put emphasis on localization. Whilst machine translation is constantly improving, it’s still no match for human translation. Only a human can take your listings and optimize them for the target market. This is why I would recommend human translation, even if it is only for your top selling lines. Well… until they invent a machine that can truly localize.
Charlie McBroom, Ecommerce Specialist, Fitted Commerce
However, many translation services use both machine and human translation, so it’s often not a simple binary choice. Also, there can be good and bad examples with both types. A highly-developed, ecommerce-aware machine translation can give good results, and a human translation by a non-native speaker (or someone with little understanding of your products) can give bad results.
So I recommend that translation services are judged primarily on their output, not their methodology. Take a trial, or start with a small project, then assess the results carefully with an independent native speaker, and run some live listings to help pick up any issues. Scale up gradually and keep checking as you go, particularly when moving on to a different product category.
Browse the directory for Translation services, including reviews, news, related discussions, compatibility information and pricing.
One advantage marketplace selling has over trading through your own webstore is that payments are completely taken care of for you. Customers pay the marketplace (or PayPal) directly, then the proceeds are transferred to your bank account with little (or zero) intervention on your part. And there’s really no reason to want it any other way – when you are selling within your own country.
Selling internationally is a little different. Customers still pay the marketplace (or PayPal) directly, and they still transfer funds to your bank account. But when you are sent the funds, they automatically convert it to your local currency and includes a conversion fee of a few percent. That takes a piece out of your gross sales – the total sales proceeds before any expenses. It’s a great source of income for Amazon or PayPal, but not so great for you.
Avoid currency exchange at PayPal – they charge an outrageous 2.5%, which is bitten directly off your profit margin. If possible withdraw the funds to a bank account in the same currency, then do the exchange at the bank’s exchange rate.
Victor Levitin, CEO, CrazyLister.com
There are now a number of currency exchange services which help sellers withdraw funds from foreign marketplace sales more cost effectively. Their rates can look similar to the marketplaces’ rates at a glance, but even a difference of 1% or 2% can be a very significant saving over the course of a year. Because the rate applies to your gross sales, any saving is added straight back to your gross margin.
The way these services work is by providing foreign currency collection accounts. These are bank accounts which you can use only for the purpose of receiving transfers from marketplaces and PayPal (for eBay sales). Once you have signed up and been provided with the bank details, you simply tell the marketplace or PayPal that you want to add a new bank account (you might have to do it over the phone).
Then when you make withdrawals, they are paid into the collection account rather than your own bank account. You can have the funds automatically transferred to your local bank account as soon as they hit the collection account, or make withdrawals manually at a time of your own choosing. Another useful benefit is that some “alternative” marketplaces require a local bank account when you register as a seller, and these collection accounts usually meet that requirement.
In the world of ecommerce, there are few services as simple as foreign currency collection accounts. For most international sellers, there really is no downside to using them – as long as they continue to provide more competitive exchange rates than the marketplaces and PayPal themselves.
Browse the directory for Currency Exchange services, including reviews, news, related discussions, compatibility information and pricing.
Sending parcels internationally can be challenging in a few areas: addressing, customs forms and packaging, for example. However the biggest problem with shipping that holds back sellers from cross-border trade is usually cost. There are plenty of high-quality services for sending parcels internationally, such as those from UPS, FedEx and DHL, but the prices can be eye-watering, especially for larger packages.
International shipping costs can far exceed domestic costs, in part because freight packaging requirements are different to domestic requirements. Look at how you can cut your shipping costs across the board, from packaging supplies to carrier costs. Model your shipping charges and costs thoroughly and see what happens if prices change for your most popular products.
Alan Wilson, Founder, Expandly
The International Shipping category mainly covers parcel consolidators. These companies pre-sort packages from many different businesses and transport them in bulk to the destination country. When they arrive, the parcels are transferred to the local postal service (e.g. USPS in the United States or Royal Mail in the UK) for delivery to the buyer. This is explained in more detail in part 3 of Three Innovative Services to Save on Shipping.
The result is lower prices for international shipping, in some cases much lower. Sellers sometimes report savings of thousands of dollars a month or more by switching to a consolidator for their international shipments.
International shipping is complex, and consolidators vary in the service they offer. They might not be able to provide full door-to-door tracking in some countries, and their shipping speed will probably be slower than conventional international parcel services.
The companies listed in the directory include familiar names such as UPS and DHL, which might be a little confusing, but the listings are for their ecommerce-focused parcel consolidation service, not their standard international delivery service. There are also several smaller companies listed such as IBC. These are specialists in international parcel consolidation and should not be passed over just because they’re less well-known.
Browse the directory for International Shipping services, including reviews, news, related discussions, compatibility information and pricing.
Most sellers who start trading cross-border begin by shipping to international customers directly from their domestic warehouse. As their scale increases, some sellers outsource their fulfillment to a third-party logistics company (or 3PL) closer to the customers they are selling to – in the same country, or at least the same region. These companies provide storage facilities for the seller’s stock, then when an order is received they pick, pack and ship the order directly to the customer. Fees are usually charged for each part of the service (storage, pick and pack, shipping).
Using an international fulfillment company is not an easy path to take. You will have to ship inventory overseas in bulk, and before receiving orders from customers. Not only that, with an overseas warehouse holding your stock, you will have to manage inventory levels separately and make sure they’re always in sync with the local marketplaces you are selling through. Storing inventory in a foreign country can also trigger complex tax and legal compliance obligations.
The upside is faster and cheaper shipping of each individual order – and that is what matters most to customers. Even with the initial cost of shipping stock to the warehouse and the 3PL’s fees, the total cost per order can still be lower than shipping direct – if volumes are high enough. Why? Because the domestic postage cost per order is usually much less than international shipping.
Businesses with a high SKU count might use a hybrid strategy, where they use a 3PL close to international customers for their bestselling lines, and ship internationally themselves for the “long tail” of their inventory.
There are many companies with ecommerce fulfillment facilities in a single country, but in the Global Fulfillment category we list businesses with warehouses in multiple countries. Some cover the US and the UK, some have a comprehensive European network, and others have warehouses all around the world. While it’s certainly possible to build your own international fulfillment network by using multiple local companies (we include those under the main Fulfillment Outsourcing category) there is a benefit to using a single company who is able to handle order fulfillment in multiple regions.
Browse the directory for Global Fulfillment services, including reviews, news, related discussions, compatibility information and pricing.
Returns are a fact a life in ecommerce. Customers have always expected to be able to return products that are defective, incorrect or not as described. Consumers in Europe and other parts of the world (but not the USA) also have a legal right to return products bought online.
One of the biggest drivers of increasing returns is competition and changing consumer expectations – marketplaces and online retailers often pride themselves on their generous return policies, and use it in their marketing. More and more, marketplaces also mandate that sellers must accept returns, including for international sales.
The need to accept returns can be a big headache for international sellers, particularly those that ship directly from their own warehouse, with no physical presence in the buyer’s country. In the past, many sellers simply chose not to accept returns. Then in March 2015, new rules came into effect on Amazon, requiring a local returns address for international customers, or free return shipping. With that one change, international returns became an immediate problem for many sellers who had worked around it in the past.
A growing number of services now exist to help sellers process international returns. Some are provided by large global logistics companies, while others are from new businesses focusing exclusively on returns management. Some of these companies focus on large online retailers, while others are geared up to smaller businesses selling mainly through marketplaces.
Look for a service that will combine returns: some charge per parcel, but it is better to find a service that will aggregate returns into a single shipment. Also look for a service that provides confirmation of each return package they receive, so you can refund the customer quickly. Otherwise they will be waiting until the return comes all the way back to you, getting frustrated by the long delay and leaving you bad feedback.
Trevor Ginn, Managing Director, Hello Baby
Most of these services work the same way, providing a local returns address then consolidating packages and sending them back to the seller in bulk. This meets high customer expectations as well as Amazon’s requirements, while also reducing costs. Other services provide the option to inspect and grade returned products, then resell them on the local market. This has the additional benefit of removing the need to process international returns in-house – you never see the items again and just receive the proceeds of the sale less the company’s fees.
Read more about international returns in our post Options for Handling International Returns.
Browse the directory for International Returns services, including reviews, news, related discussions, compatibility information and pricing.
VAT & Sales Tax
International taxes are probably the most complex and worrying issue when it comes to cross-border trade. We are all used to the idea that avoiding our own country’s taxes can lead to big fines and even criminal prosecution, so we do all we can to get it right.
But the taxes of other countries are on a whole different level – just understanding if, when and how to register can be a mind-bending task. Then you need to report and pay the right amounts, to the right authorities, at the right time. In Europe, the EU helps to align requirements to some extent but there are still differences between member countries.
If your circumstances are straightforward (e.g. no drop shipping or international fulfillment providers) you might be able to assess if you are exposed to VAT/sales tax yourself. If you think you are liable then for most sellers it’s the right time to get outside help. There are enough plates to spin as an online seller, without trying to be an international tax expert as well.
Facing VAT challenges is always a good problem to have! If you’re making enough from your international sales for VAT to come onto your radar then you are doing really well. It may seem challenging on the surface, but with the right tools or consultancy, it can easily fold into your existing tracking and reporting processes.
Matthew Ferguson, Head of Account Management, Emanaged
Make sure the tax advisor you work with is experienced with cross-border ecommerce, or you might have to spend time educating them on how the business works. Thankfully, there are now a growing number of companies specializing in VAT and sales tax for international ecommerce, so it shouldn’t be a problem finding one with the right skills.
Browse the directory for VAT Tools and Services services, including reviews, news, related discussions, compatibility information and pricing.
While it’s certainly possible to sell internationally without any outside help, many sellers use consultants or advisors with expert knowledge of cross-border trade. Some like to have an advisor guiding them through the whole process. Others prefer to learn most aspects themselves, and get outside help only when it’s impractical or more expensive to go it alone.
In the UK there are government-funded agencies such as Open to Export which help businesses learn international selling. In the US local Small Business Development Centers (SBDCs) also have a remit to help businesses learn how to export. Free online resources, seminars and even one-on-one advice sessions may be available.
There are also independent advisors who specialize in cross-border ecommerce. As commercial businesses they will charge a fee and/or take a commission when referring you to other third-party vendors. But these consultants shouldn’t be dismissed out-of-hand as being too expensive.
Ecommerce consultants can help you leapfrog a lot of the pitfalls of going international but they can also be expensive. Be clear about what you want a consultant to do and what outputs you expect from them and only hire someone with the specific skills needed.
Alan Wilson, Founder, Expandly
As with most business decisions, it’s about return on investment (ROI). A hour on the phone with an expert might give you a headstart in several areas, and be well worth the expense. Or if they work on commission you may effectively get their advice for free – but watch out for exclusive relationships, or fees being tacked on top of what you would usually pay.
Consultants tend to live or die by their reputation, so most won’t want to work with you if they can’t genuinely help. They are in a person-to-person business, and word-of-mouth recommendations are crucial for most advisors. While they won’t be shy about charging you for every minute of their time, they would swiftly go out of business if they do a really bad job for their clients.
Browse the directory for Cross-Border Advisors, including reviews, news, related discussions, compatibility information and pricing.
International selling can be one of the most lucrative, and most difficult, types of ecommerce. In the words of Web Retailer member Bigian13:
If you do take the plunge and start selling cross-border, the rewards can be huge if done properly. Try and cut corners and you open up a whole lot of pain for you and your customers.
If international customers want your products, and they are willing to pay a price that’s profitable for you, then it’s one of very few ways to significantly expand your business – almost overnight.
Because wherever you are in the world, there’s a bigger potential market beyond your own borders.