Navigating International Sales: Essential Considerations for Small Ecommerce Brands

The piece outlines critical factors for small ecommerce brands expanding globally. Successfully navigating international sales requires understanding customs procedures, documentation requirements, and regional regulations that differ significantly from domestic shipping.

Understanding Customs Charges

Three primary cost components exist beyond standard shipping fees when selling internationally.

Brokerage Fees

Brokerage fees are charged by customs brokers handling paperwork and clearance procedures. These professionals:

• Prepare and submit customs documentation
• Calculate duties and taxes
• Coordinate with customs authorities
• Ensure regulatory compliance
• Act as your representative in the destination country

Typical costs: $50-150 per shipment, depending on complexity and destination

Taxes (VAT/GST)

Government levies on goods and services vary by destination country:

• VAT (Value Added Tax): Common in European countries, typically 15-27%
• GST (Goods and Services Tax): Used in countries like Canada, Australia, New Zealand
• Sales Tax: Various rates in different jurisdictions

These taxes are calculated on:

• Product value
• Shipping costs
• Insurance costs
• Applicable duties

Duties and Tariffs

Destination-country taxes on imports, determined by:

• Product classification (HS code)
• Country of origin
• Trade agreements in place
• Product value
• Intended use

Duty rates range from 0% to over 30% depending on the product category and origin.

DDP vs. DDU: Choosing Your Shipping Framework

Understanding who pays customs charges is critical to international sales success.

Delivered Duty Paid (DDP)

DDP involves your business collecting brokerage fees, taxes, and duties upfront from the customer.

How it works:

• Calculate all duties, taxes, and fees before checkout
• Display total landed cost to customer
• Include all costs in the purchase price
• Customer pays nothing upon delivery

Advantages:

• Transparent pricing: No surprise costs for customers
• Better conversion rates: Customers know exactly what they'll pay
• Smoother delivery: No delays waiting for customer payment
• Professional experience: Positions your brand as sophisticated

Challenges:

• Requires expertise: You must understand destination customs procedures
• Higher upfront costs: You advance duty and tax payments
• Complex calculations: Need systems to calculate charges accurately
• Potential errors: Miscalculations come out of your pocket

Best for:

• Businesses prioritizing customer experience
• Higher-value products where costs can be absorbed
• Companies with customs expertise or 3PL partnerships
• Brands targeting sophisticated international markets

Delivered Duty Unpaid (DDU)

DDU requires customers to pay fees directly to carriers upon delivery.

How it works:

• Customer pays product price and standard shipping
• Carrier collects duties, taxes, and fees at delivery
• Customer cannot receive package until paying charges
• You pay shipping to destination only

Advantages:

• Reduced seller liability: Customs charges are customer responsibility
• Lower upfront costs: No need to advance duty payments
• Simpler operations: Less customs calculation required
• Cash flow benefits: Don't tie up capital in tax advances

Challenges:

• Unpredictable costs: Customers surprised by charges
• Delivery delays: Waiting for customer payment
• Lower conversion: Customers avoid unclear costs
• Poor experience: Unexpected charges damage satisfaction
• Refused shipments: Customers reject packages due to fees

Best for:

• Businesses just starting international sales
• Low-margin products where DDP isn't feasible
• Customers familiar with import procedures
• B2B transactions where buyers understand customs

Critical Documentation Requirements

Proper documentation is essential for smooth customs clearance and avoiding delays.

Country of Origin

Manufacturing location (not shipping origin), determined by rules of origin governed by national laws and international treaties.

Why it matters:

• Determines applicable duty rates
• Affects trade agreement eligibility
• Required on all customs forms
• Subject to verification

Important considerations:

• Origin is where substantial transformation occurred
• Assembly location may not be origin
• Components from multiple countries complicate determination
• Trade agreements have specific origin rules
• Penalties exist for false origin claims

Harmonized System (HS) Codes

Standardized 6-digit product categorization codes developed by the World Customs Organization.

Code structure:

• First 2 digits: Chapter (broad category)
• Next 2 digits: Heading (sub-category)
• Last 2 digits: Subheading (specific product)
• Countries may add 2-4 more digits for national use

Why accurate codes matter:

• Determines duty rates (wrong code = wrong rate)
• Affects whether products are restricted
• Required for customs clearance
• Errors cause delays and penalties

Finding the right code:

• Use WCO's online database
• Consult customs broker
• Check country-specific classification guidance
• Review similar product classifications
• When uncertain, request official binding ruling

Declared Values

Invoice item values, with discounts applied per line item rather than total sum.

Best practices:

• Declare actual transaction value
• Apply discounts at line-item level
• Include shipping and insurance in declared value
• Use correct currency
• Be consistent across documents
• Keep supporting documentation

Common mistakes:

• Marking packages as "gift" or "sample" when they're not
• Understating value to reduce duties (illegal)
• Inconsistent values across documents
• Forgetting to include shipping costs
• Not documenting discounts properly

Tax Identifiers

Business Tax IDs or VAT Numbers required for customs declarations.

Required identifiers may include:

• EORI Number: Economic Operators Registration and Identification (EU)
• VAT Registration: For selling in EU/UK
• Tax ID: Country-specific business numbers
• Importer of Record Number: For specific countries

Registration considerations:

• Some countries require local tax registration
• Thresholds trigger registration requirements
• Each country has different rules
• Non-compliance prevents customs clearance

Restricted Items

Check for any restrictions on shipping certain items to the destination country.

Commonly Restricted Categories

Alcohol:

• Requires special licenses in most countries
• Age verification requirements
• Volume limitations
• Excise taxes apply

Biological Substances:

• Heavily regulated or prohibited
• Require permits and certifications
• Special packaging mandated
• Health authority approval needed

Weapons and Related Items:

• Firearms generally prohibited
• Knives and martial arts equipment restricted
• Airsoft and replica weapons problematic
• Export licenses required

Food Products:

• Safety certifications required
• Labeling requirements vary
• Expiration dates must be clear
• Country of origin must be stated

Medications and Supplements:

• Pharmaceutical regulations vary widely
• Prescriptions often required
• Quantity limits apply
• Some ingredients prohibited in certain countries

Seeds and Plants:

• Agricultural restrictions common
• Phytosanitary certificates required
• Endangered species regulations
• Pest risk assessments needed

Textiles:

• Country-of-origin labeling required
• Quota systems in some markets
• Safety standards for children's items
• Flammability requirements

Research each destination carefully as restrictions vary significantly by country.

Regional Considerations

USA Exports

De Minimis Threshold: Packages under $800 USD typically qualify for duty-free status, making US export very attractive for lower-value shipments.

Key considerations:

• Formal entry required over $800
• Some products excluded from de minimis
• Accurate valuation essential
• Electronic filing required
• FDA regulations apply to food/drugs

Best practices:

• Clearly mark "Made in [Country]"
• Include detailed commercial invoices
• Use HS codes
• Consider higher values may need customs broker consultation

European Union Exports

VAT/IOSS Requirements: VAT registration or IOSS (Import One-Stop Shop) numbers required for packages exceeding €25 EUR.

IOSS benefits:

• Simplified VAT collection
• Single registration for all EU
• Improved customer experience
• Reduced abandoned shipments

Postal carrier limitations: DDP shipments via postal carriers limited to €150 EUR maximum value.

Key challenges:

• 27 different countries with one system
• Language requirements for documentation
• CE marking for many products
• GDPR compliance for customer data
• Different national enforcement

Planning considerations:

• Register for IOSS before selling
• Use carriers supporting DDP for higher values
• Understand Brexit impacts on UK shipments
• Consider EU fulfillment center

Other International Markets

Canada:

• USMCA benefits for US/Mexico goods
• French labeling requirements for Quebec
• Generally straightforward customs

Australia/New Zealand:

• Strict biosecurity rules
• GST applies to most imports
• Detailed customs documentation required

Asia:

• Varies widely by country
• Often complex customs procedures
• Local representation sometimes required
• Language barriers in documentation

Additional Concerns: Foreign Warehousing

Storing inventory in foreign warehouses may trigger corporate tax obligations and regulatory requirements.

Permanent Establishment Risk

Maintaining inventory abroad can create:

• Corporate tax obligations in that country
• Requirements to file foreign tax returns
• Need for local business registration
• Potential for double taxation

Solutions to Consider

• Use third-party fulfillment centers (lessens PE risk)
• Consignment arrangements
• Consult with international tax advisors
• Understand treaty provisions
• Monitor inventory duration

Getting Expert Help

When to Consult Professionals

Seek expert advice when:

• Entering new markets
• Selling high-value items internationally
• Dealing with restricted products
• Facing complex classification questions
• Considering foreign warehousing
• Receiving customs violations

Recommended Resources

Customs Brokers:

• Classification assistance
• Documentation preparation
• Regulatory compliance guidance
• Problem resolution

International Trade Lawyers:

• Trade agreement navigation
• Regulatory compliance
• Corporate structure for international sales

Postal Carrier Resources: For Canadian exporters, postal carriers offer valuable resources:

• Canada Post international guides
• USPS export resources
• Carrier-specific restrictions lists
• Country-specific requirements

Conclusion

Expanding internationally offers tremendous growth opportunities for small ecommerce brands, but success requires understanding customs charges, choosing between DDP and DDU approaches, preparing proper documentation, respecting restricted items, and navigating regional requirements.

While the complexity may seem daunting, taking a methodical approach—starting with nearby or similar markets, partnering with experienced logistics providers, and consulting with experts when needed—enables small brands to successfully enter international markets.

The key is understanding these essentials before shipping your first international order, not after encountering problems at customs.

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Ready to expand into international markets? Contact Supership to discuss how our international shipping expertise and established carrier relationships can simplify your cross-border commerce operations.