If you’re an Amazon seller and haven’t already started selling internationally, you may want to start doing so. The international market offers fantastic potential and with the right strategy you can significantly expand your business.
Some sellers, however, may be discouraged by the seemingly daunting process of dealing with international shipping. No need to worry though, navigating this new territory doesn’t have to be so bumpy. In order to ensure that your operations go as smoothly as possible, it’s important to be aware of the do’s and don’ts.
Here are 5 of the most common mistakes made by sellers that should be avoided when shipping to an Amazon FBA:
1: Shipping with Incoterm of DDU
All international shipments contain commercial invoices. On the invoice you’ll be required to provide the incoterm, which refers to the rules set for the carrier on how to properly bill the shipper or consignee for the shipment. When shipping to an Amazon FBA make sure to mark the incoterm DDP (“Delivered Duty Paid”) as opposed to DDU (“Delivered Duty Unpaid”). DDP means that everything regarding to the shipment, such as taxes and duties, has been paid for in advance by the seller. In the event that something related to the shipment has not been paid for when the package arrives, Amazon will refuse the shipment and have it returned. However, because the shipment already crossed the border of the destination country, you’ll be billed for the return. Including the term DDP and paying for everything in advance will help to avoid this issue.
2: Importer of Record
The importer of record is the party responsible for the security and legalities of the shipment, such as making sure no prohibited items are being shipped. Generally, it’s the receiver who will bear this responsibility. Because Amazon doesn’t assume any responsibility in relation to international shipping, make sure to have a physical location (a warehouse, for example) in the forwarding country. Doing so will allow Amazon to receive the shipment without any issues.
3: Using the wrong HS code
On the commercial invoice there will be an option to include an HS code, aka harmonized/tariff code. The HS code is simply a designated number that matches an items accurate description. Be mindful to be as specific as possible when inputting a code for the product you’re selling. If you give a general description of the item, customs will assign the most expensive code related to the item and you may incur unnecessary fees. For example, children’s clothing is EXEMPT from VAT fees while adult clothing has a VAT rate of 20%. Being specific will help minimize your tax obligations and bring down costs.
4: Not planning for returns
A common question from sellers looking to ship internationally to an Amazon FBA is what happens to their returns. Bear in mind that Amazon does not return goods from overseas. If you have a removal order and you’d like to keep the product as opposed to disposing of it, make sure your shipper has a warehouse location in the destination country. Having this option will allow you to store your product overseas, relabel them for sale, or have them shipped back to you if you so choose. Planning properly for returns will spare you unnecessary headaches and save you loads of time and money.
5: Shipping LCL vs Air
Another common question sellers have is regarding the method of shipping: ocean vs air? For a large percentage of sellers air is most likely the best option, especially if they’re selling smaller items. Air shipping offers several advantages over container shipping. Air shipping does not require you to ship such large quantities at a time; shipping in smaller quantities allows to you avoid costly storage fees from Amazon. Additionally, you don’t have to worry about running out of stock too low because you can replenish it by air in no time. In short, air is an easy and fast way to ship and will help you bring down costs and maximize shipping efficiency.
The bottom line is, the international market offers tremendous growth opportunities that you’ll want to take advantage of. Having a forwarder who will assist you in avoiding common mistakes such as the ones mentioned above will enable you place your energy and focus into seriously expanding your international sales.