Website International Sales: Guidelines for Shipping and Payment

September 1999; Vol. 8 Issue 9

The Resource for Small and Emerging Businesses www.kcsmallbiz.com • www.thebizstream.com
In Focus International Business:

Website International Sales:

Guidelines for Shipping and Payment

By Brian Gauler

Selling overseas opens many lucrative avenues, but it also introduces new considerations for order fulfillment and customer payment.

With the explosion of commercial user for the Internet, many businesses are now creating Web sites to tell the world about their product and services. With this unique marketing tool comes a whole new way of reaching potential buyers, and one that is truly global. But what do you do when you receive an inquiry (or order!) from overseas?

The immediate concerns when an order is received are methods of shipping and methods of payment. There are numerous other potential issues, but understanding these first two provides a basis for serving the order. Since most firms marketing on the Internet are focused on retail sales to consumers, we will look at only those types of related issues. Manufacturers seeking international distribution for their products will face separate concerns not addressed here.

Shipping the Order

Most consumer purchases on the Internet are considered small package items for delivery purposes. For shipment overseas, the main considerations that a business wants to be sure to cover are the following: timeliness/cost, documentation, accountability and packaging.

Quick delivery usually means higher costs, although few items will be shipped via ocean freight. And some documentation will generally be required for items being shipped overseas, even when sending by mail. Further, it's very important that you, as a shipper, have accountability for the shipment. You will want to know its status throughout the process, particularly if it doesn't arrive when expected! And finally, packaging that is considered suitable for domestic delivery may not always accommodate shipment to some foreign destinations.

For standard consumer-type orders, there are three methods of shipment to consider:

Mail. Check with your local post office for guidelines on mailing overseas. They have special programs available for select countries that can be very cost-effective. One caution here, your accountability will be limited when you send items by mail.
Small package delivery services. These services are offered by well-known entities like UPS and Federal Express as well as couriers (such as DHL) and airfreight forwarders (such as Emery). These service providers can be found in the Yellow Pages of metropolitan areas such as Kansas City if they're not in your local directory. They provide the maximum in accountability and will take of any documentation needs.
Airfreight. Not all airfreight forwarders provide special small package services, and if your shipment is larger than allowed for that designation, you might have to consider standard airfreight shipment.

Note: There is a separate potential problem in using any service other than mail. Custom broker's fess will have to be paid for any items that must be cleared through customs by a commercial carrier. These are separate from customs duties (which may be assessed even for mailed items) and can be costly for the importer, especially if the shipment value is low (set fees for low values can be a higher percentage of total cost for the consignee).

Getting your Money

Since most consumer sites on the Internet accept credit cards, getting your money may not be a problem. However, if you are not using credit cards, you must determine the method of payment.

Most firms serving overseas markets quote in U.S. dollars (quoting or selling in foreign currencies open another whole set of potential problems) and that will probably be best for you. Two ways in which you can receive payment (in U.S. dollars) are a personal (or commercial) check drawn on a U.S. bank and bank transfer of finds (wire transfer from the customer's bank to your bank). Money orders and Western Union services are also used for transferring funds.

If your anticipated orders are large enough to warrant, you may want to talk with an international banker for help in establishing methods of payment for your products from overseas accounts.

The Bigger Picture

Aside from shipping and payment, there are other issues when exporting products that you may want to look into as well. For example, how will your product be serviced overseas? Will the product warranties be valid in the market you are shipping to? Is the manufacturer if your product already selling in that market through established retail dealers? Does your supplier provide any assistance for their products sold to overseas markets?

If you are interested in fully exploring your global market potential, you have many resources available to you, including the following publications:

A Basic Guide to Exporting (U.S. Department of Commerce)
Breaking into the Trade Game (Small Business Administration)
Trade Secrets: The Export Answer Book (Michigan SBDC, 313-964-1798)
Preparing for Global Marketing (MU Extension publications, 800-292-0969)

Each will give you an insight into specific areas of exporting. Together they provide a wealth of information to assist your export development process.