THIS IS AN ARCHIVE POST FROM 2016
When you run a small online business and sell internationally, shipping can become surprisingly complicated. A few months ago I wrote about shipping orders internationally with the regular postal service. This time I want to talk about the other option we use at Virivee: courier companies.
I’ve been shipping Virivee tights internationally for many years, and because our customers are spread all over the world, I’ve had the opportunity to try quite a few different shipping methods. Courier shipping can be incredibly convenient and fast but it also has quite a few disadvantages that aren’t always obvious when you first start selling internationally.
Shipping with a courier company
Shipping with a courier is simple, convenient and fast. And it can be extremely expensive.
At least, that’s the general perception. In reality, it depends a lot on how much you ship, where you are shipping from, where you are sending the package, and whether you have a business contract with the courier company.
The first thing to know is that courier companies are really only worth considering for regular business shipping if you have a contract with them. If you simply walk into a courier company as a one-time customer, the prices can be shockingly high. Courier companies are mainly interested in businesses that ship regularly. An occasional customer creates almost as much administration and potential trouble as a regular customer, but without generating the same amount of business.
Once you have a contract, however, the situation can be completely different. The discounts offered to business customers can be huge. The advertised “standard price” might be several times higher than what a contracted business actually pays.
This is one of those things I learned fairly quickly after starting to ship products internationally. The price you see on a courier company’s public website isn’t necessarily the price you should expect to pay as a small business.
The price
When you negotiate a contract with a courier company, they will usually ask about your expected shipping volume. Their representative will want to know roughly how many parcels you expect to send and to which countries.
You don’t necessarily have to commit to an enormous number of shipments, but the more regularly you ship, the better your negotiating position usually is.
Prices can also change from year to year. Courier shipping rates are not simply one fixed amount either. The final price can include things like fuel surcharges, currency-related adjustments and other fees.
This is particularly important when you run a small business because even a relatively small change in the shipping cost can have a noticeable effect on your margins.
For Virivee, this matters quite a lot. Our tights are handmade and relatively expensive compared to ordinary mass-produced tights, so I have to keep an eye on the shipping cost as well. If shipping becomes too expensive, it can make the total price of an order feel unreasonable to the customer.
Where are you shipping?
The best courier company isn’t necessarily the same for every destination. If you’re shipping internationally, it is worth comparing several companies rather than assuming that one courier will be the cheapest everywhere.
A company with a strong network in the destination region may offer much better rates there. For example, when shipping within Europe, a European courier can sometimes be more competitive than a company whose main network is elsewhere.
And there is absolutely nothing wrong with using different courier companies for different destinations.
This is something that makes international shipping for a small business more complicated, but also potentially much cheaper. You don’t have to find one company that does everything.
What are you shipping?
The size, weight and value of the parcel can make a huge difference to the price.
Some courier companies offer their own packaging, sometimes free of charge or at a reduced price, if you use a particular type of parcel or envelope. This can be a good deal, but there are usually conditions.
The product has to fit inside the packaging, and there may also be weight and value limits.
Some types of shipping also include insurance up to a certain declared value. If you are sending more expensive products, the shipping cost can therefore increase along with the declared value.
When comparing shipping prices, I always think it is important to include the cost of packaging in the comparison as well. A proper shipping box may not seem expensive when you look at it individually, but when you’re sending hundreds of orders, packaging becomes a real business expense.
If the courier provides suitable packaging for free, that can make their apparently more expensive shipping option much more attractive.
Where can’t you ship?
This is another thing you discover when you start shipping internationally: just because a country is listed as a destination doesn’t necessarily mean that every type of shipment can be sent there without problems.
Different countries have different customs regulations, import requirements and restrictions.
Some destinations require additional information from the recipient. Others have restrictions on particular types of goods or require special customs documentation.
There are also addresses that many courier companies simply cannot deliver to.
For example, courier companies usually deliver directly to a physical address, so PO boxes are often not accepted. Some military and diplomatic addresses can also be problematic, depending on the courier and the destination.
This is something worth checking before promising worldwide shipping to your customers.
At Virivee, we have occasionally received orders to unusual addresses, including military or diplomatic addresses. In those cases, the regular postal service has been the only practical option.
Export and return shipping
This is one of the most important things to understand about international courier shipping.
The price you pay to send a parcel out of your country does not necessarily tell you what it will cost to bring the parcel back. In fact, the return journey can be several times more expensive. This becomes a serious issue when a customer doesn’t accept a parcel.
So what happens when an international package cannot be delivered?
Usually there are only three possibilities:
- The package is returned to the sender
- The package is delivered to another address
- The package is abandoned or destroyed
The original shipping price normally only covers sending the parcel to the destination. If the parcel comes back, you can be charged separately for the return transportation. And because the return may be treated as an import shipment, the pricing can be completely different from the original export shipment. Sometimes the return shipping can cost more than the actual value of the products.
In that situation, it can make more sense to ask the courier to deliver the parcel to another address in the same country. Even changing the delivery address can cost money, though, especially if the new address is far away.
In some cases, abandoning or destroying the parcel can actually be the cheapest option.
This sounds extreme, but when you’re dealing with international ecommerce, you quickly learn that a package isn’t necessarily worth bringing home at any cost.
Why don’t customers accept their packages?
It is surprisingly easy for an international customer not to accept a package. Sometimes they simply aren’t home. They may have gone on holiday, especially around Christmas or other major holidays. But another very common reason is customs.
A customer orders something online, sees the shipping price and thinks that’s the total cost. Then the package arrives in their country and they are asked to pay import duties, VAT or other customs-related charges. Some people simply refuse the package when they see the extra cost.
This is particularly frustrating for a small business because the products have already been made, packed and shipped. And now there is potentially another expensive shipping journey waiting for you.
This is why I think it is very important for international online shops to explain clearly that customers may have to pay import taxes or customs fees when ordering from another country.
Customs
Courier shipments are normally processed through customs when they cross an international border.
If the declared value of the package is above the destination country’s threshold, the customer may have to pay import duty, VAT or other local taxes and fees.
The exact rules vary enormously from country to country, and they also change over time.
When I first started selling internationally, customs and import taxes were something I had to learn about almost by trial and error. These days I try to make sure that customers understand that the price they pay for a product and shipping may not necessarily be the final amount they will pay.
There are unfortunately businesses that deliberately declare an unrealistically low value or mark commercial shipments as gifts to reduce the chance of the customer having to pay customs charges.
Apart from being against customs rules, this can also cause serious problems if a parcel is lost or damaged, because the declared value is what matters for insurance and customs purposes.
So although it can be tempting, it isn’t something I would recommend.
VAT and international shipping
VAT is another factor that can make a significant difference to international shipping costs.
When a business is shipping from the EU to a destination outside the EU, the VAT treatment can be different from a domestic or intra-EU sale, depending on the circumstances and the business’s VAT status.
This can sometimes make international shipping more competitive than you might initially expect.
The exact rules depend on where the business is established, where the customer is located and the type of transaction, so this is one area where it’s important to check the current rules rather than relying on something you read in an old blog post. Tax and customs regulations change surprisingly often.
So why use a courier?
For Virivee, the biggest advantages of courier shipping are:
- Speed. In some destinations, a customer can receive a package the next day. Even shipments to the other side of the world can sometimes arrive within a few days.
- Convenience. The courier collects the parcel directly from you, so you don’t have to take every order to the post office.
- Tracking. Customers can usually follow their package throughout its journey.
- Reliability. The chance of a parcel disappearing completely is generally much lower than with some cheaper shipping methods.
- Good prices for certain parcels. Once you have a business contract, courier shipping can actually be surprisingly competitive, especially for small and medium-sized packages.
For a small handmade business, the time savings alone can be worth quite a lot. When I’m making tights, answering customer messages, photographing products and doing all the other things that come with running Virivee, not having to spend hours at the post office is a real advantage.
And why not use a courier?
There are also some significant disadvantages:
- Small or very large parcels can be expensive. Courier companies are particularly attractive for certain weights and sizes, but not necessarily for everything.
- Customs can be unavoidable. International courier shipments normally go through customs, so customers may have to pay import charges when applicable.
- Returns can be extremely expensive. If a customer doesn’t accept a parcel, getting it back to you can cost several times the original shipping price.
- Some addresses aren’t accepted. PO boxes and certain special addresses may not be serviceable.
- The cheapest option isn’t always the fastest, and the fastest option isn’t always worth the extra cost.
For me, there is no single perfect way to ship a handmade product internationally.
I use different shipping methods depending on the destination, the size and value of the order, and what makes the most sense for the customer.
That is probably one of the less glamorous parts of running an international fashion business, but shipping is a huge part of ecommerce. You can spend days designing a beautiful new pair of tights, only to discover that getting that pair of tights from Spain to the other side of the world is its own little adventure.
And after more than a decade of shipping Virivee products internationally, I can definitely say that I have learned a lot about shipping that I never expected to have to know when I started designing tights.
