What you should know about cross-border ecommerce regulations
Kelli Trapnell
·March 1, 2023
The pandemic drew more consumers to shop online than ever before. On the shopper’s end, online shipping removes borders for shoppers across the globe. When it comes to international shipping, there are several factors your brand should keep in mind. Be sure to know about all of the country’s regulations, pay customs taxes and duties, and meet delivery deadlines (for the shoppers’ benefit). Lastly, ensure your return policy is easy to understand, fair, and makes the process a positive experience.
Learn more about how international orders can help expand your shopper base in the Future of Merchant Growth
In this blog, we’ll discuss a few factors to keep in mind when considering international shipping, cross-border ecommerce regulations, and your company:
- Licensces and intellectual property
- Data protection, privacy, and transparency
- Currency fluctuations and returns
- Customs, export fees, and restrictions
- Common shipping Issues
- Automated, transparent returns
Licenses and intellectual property
As your company expands globally, your business license will be subject to the rules within the countries you ship to. Violating these regulations could have legal implications, forcing your company to change certain business practices or even completely shutter your business. Don’t leave yourself open to liability—do your research.
You may want to ensure you own the intellectual property of your product to prevent any issues with competitors. Claiming ownership of this will protect any copyrights, trademarks, patents and trade secrets. Learn more about the intellectual property rights in your country, as well as the ones you are doing business in. This will protect you against any future legal matters.
Data protection, privacy, and transparency
When marketing to international shoppers, you should use localized domains to properly reach them. One key aspect is to make sure shoppers’ data and the payment processing system are secure. Not only does it protect your brand and your assets but it will strengthen your customer relationship and increase their trust in your company. Many countries have local laws that prevent misleading advertising practices or collecting data from minors. There are also laws that forbid companies from processing unauthorized transactions even if you have the shopper’s payment information. Be sure to know the ins and outs of these to avoid violations.
When it comes to tracking shoppers, there are also laws in place to protect your shoppers. Many companies are required to provide the type of information being collected and how it’s used. Make your privacy policy as clear as possible and easy to find on your website.
Payment platforms are another place for security risks. Creating a well-thought-out cybersecurity plan can have a real impact on a brand’s future. Not only will it prevent future legal issues but it will save on financial loss and increase shoppers’ trust. The Payment Card Industry (PCI) has a list of suggested security standards for businesses and financial institutions. Steer towards payment processors that are PCI-compliant.
Be sure to offer plenty of payment options. This includes traditional credit card, digital payment systems and buy now, pay later (BNPL). Most shoppers expect this as standard today.
If you outsource your production to warehouses or regional manufacturers closer to your international market, stay abreast of local employment and labor laws. This will protect you from future violations and shows your company is ethical. Of late, sustainability and ethical business practices have become a primary concern for shoppers when choosing where to shop. It’s worth the investment, in the long run, to stick to these standards in order to increase your customer lifetime value and protect your brand.
Currency fluctuations and returns
The value of currencies fluctuates constantly. Be sure the prices of your products are up to date with the most recent exchange rate. On your company website, it should be easy to watch to switch to the local currency and make all shipping fees or international rates clear. Ninety-two percent of shoppers prefer to make purchases on sites that price in their local currency, and 33% are likely to abandon a purchase if pricing is in U.S. dollars only.
Learn more about how pricing is perceived in other cultures. For example, in China, most companies end prices in a round number instead of a nine, like in other countries.
The returns experience should be efficient and digital, if possible. Automating the process will improve your future relationship with shoppers. Gathering data on why the return was initiated is a vital next step to increasing revenue.
Want to learn how to attract new shoppers with cross-border returns? Book a demo with Loop today!
Customs, export fees, and restrictions
Companies that are shipping cross-border must meet all customs tariffs, taxes and export fees. These are put in place to protect a country’s economy and control foreign competition. Failing to do so could mean major delays in delivery or having the item rejected. While most products exported from the U.S. don’t require an export license, it’s important to find out what category your products fall under.
The International Trade Federation offers comprehensive resources on this topic. Some items are subject to something called Export Administration Regulations (EAR). This keeps track of exports for reasons such as national security, foreign policy, and other issues. You will need to see if your items have an Export Control Classification number. This can be found by consulting your manufacturer or looking at the EAR’s Commerce Control List.
When your products arrive at customs, there are specific documents and fees that must be completed or paid before arrival. If possible, send all documents electronically to avoid any hold-ups. Loop’s Shopify integration makes it easy to create cross-border labels that include the necessary customs information. Stay knowledgeable of what items are prohibited or restricted as this can vary. Consult the UPS and the USPS websites, which offer a breakdown by country.
Common shipping issues
On the buyer’s end, providing accurate delivery and tracking information is a must. A recent survey found that shoppers listed being able to track delivery as one of the top two factors that would encourage them to shop globally. Having a secure platform that offers accurate tracking information will install trust that your business is reliable.
When possible, outsource delivery to third-party companies. Utilizing local fulfillment centers and warehouses will mean the consumer receives the package in a timely manner and recognizes the shipping company.
Use AI technology to automate information, estimate arrival dates, and optimize returns. This takes the burden off your support team’s shoulders, provides instant communication with shoppers and helps keep the entire process efficient, from purchase to delivery or return. AI tech can even help you determine the highest quality, most sustainable types of packaging.
In the past few years, we saw the friction that lapses in the supply chain caused. Comparing shipping companies to find the one that will work best for your needs, offering shipping estimates to buyers and buying extra inventory to anticipate future shortages will help prevent hold-ups. During the pandemic, the shortage in supply chains meant that shipping companies could charge their consumers 20 times more than they usually did.
While prices have come down since then, they still remain high. If you anticipate higher than normal shipping costs, find ways to budget so the burden of these fees don’t entirely fall on the shopper. Where possible offer free, low-cost shipping.
If your customer base in one location is growing rapidly, consider adding a local warehouse. This will ensure faster delivery rates and potentially, lower labor costs. When it comes to returns, you will be able to offer solutions more quickly and items will be received that much faster.
Automated, transparent returns
Having a clear, fair return policy makes good business sense. 54% of shoppers were less likely to purchase an item if a company had a poor or unclear return policy. Having a fair return and exchange program improves your relationship with shoppers and makes them feel valued.
Be sure your return policy translates across language barriers, so nothing is left out of communication for international consumers. Disappointing buyers down can lead to lower retention and plenty of bad reviews. It also makes them feel taken advantage of. The policy should include information like what items can be returned, what items can be exchanged, what constitutes a “final sale” (ie: non-returnable, non-exchangeable) or when things can be returned or exchanged.
Offer options and flexibility to help ensure the experience is a positive one. Provide shoppers with automatic shipping labels, allow them to leave items at drop-off locations and offer even exchanges if they prefer this in lieu of a simple return.
Faizan Khan works as a media spokesperson at Ubuy. As a leading cross-border retail search engine, Ubuy allows shoppers to purchase items from outside their home country that aren’t readily available at local stores. Khan is all too aware that international product returns can often be complicated and expensive.
Businesses should be aware of the return policies and procedures for their target countries, including factors like shipping costs and time frames, customs and import duties, language and cultural barriers associated with customer communication, and compliance with local laws.
“It’s important for businesses to do their own research and seek expert advice before entering the international market. They should consider the costs, risks, and potential benefits of international shipping, and be prepared to adapt to changing market conditions and customer needs,” says Khan.
Additionally, providing excellent customer service and maintaining a positive brand image can help businesses to build a loyal customer base and succeed in the competitive global market.
Using tools like Loop’s ShipBob integration can help keep your team in sync, approve returns and exchanges automatically, help shoppers create instant shipping labels and offer multiple exchange options.
Cross-border ecommerce can be a highly lucrative revenue stream as long as you’re willing to familiarize yourself with the regulations and best practices.
Loop offers integrations that will make the entire process easy from purchase to delivery. Book a demo today!
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