As an online store owner, what do you need to know before you can start selling your products internationally? After the pandemic, e-commerce grows so fast the delivery services can’t even keep up. Do you want to miss the opportunity or make money on it?
You have to sell into new export markets but if you don’t have any exporting experience, how can you make sure that you won’t fail? After taking the steps, you will learn in this blog and finally be able to start selling your online product internationally and make significantly more money. Let’s jump right in!
SWOT for e-Commerce: Analyze your online business
You can use SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) to determine how your products stand out in the international market. SWOT analysis can help you for your online business whatever that is. It’s a concept that you can use in your business and management of your business.
It stands for strengths, weaknesses, opportunities and threats. This is a common tool that’s used to understand where you are, need to go and evaluate your strengths, opportunities, weaknesses and threats.
Strengths: For example; if you sell books, some of your strengths may be:
- Understanding books,
- Having a pretty good eye for them
- When you look at books, you can understand what can sell from experience.
Weaknesses: For you could be time. If you do this as a part-time basis, you could get behind.
Opportunities: If you’re expanding your sales through channels, that is an opportunity to sell your products internationally.
Threats: For all retails, there are some very common threats on the sourcing side. You can have your good sources, a store go out of business, more competition inflation etc. All of those are threats.
What we would recommend is that you get a piece of paper, go and write your strengths, weaknesses, opportunities and threats before starting selling internationally. You need to make sure that you have a plan and can follow through on.
6 Steps to Take Before Start Selling Online Globally
Step 1: Customs Duty
The first step you need to take is to determine the customs duty for your product in the export market. And maybe the reason why your product wasn’t selling internationally is because the duty rate on your product in the country of destination in the export market is very high.
Keep in mind that the target depends on the product itself in its country of origin. In the country of origin doesn’t necessarily mean it’s your country. For example; if your online stores are based in the UK and you sell the products that are made in China in the UK, there is a certain duty rate that your customers pay. If you suddenly start selling your products in Brazil via your online store, it doesn’t mean that your customers will pay the duty rate for the product as if it was the product made in the UK.
They will still pay the duty rate based on the fact that the product is made in China. It doesn’t really matter how much you paid in the UK when you imported this product from China to then sell it online to Brazil.
In general we want to know customs duty on your product in the export market. Thats’s because you want to make sure that your customers can afford this customs duty. As we mentioned in most cases the customer pays this duty not you.
Step 2: Certification
Next step is to make sure that your product has appropriate certifications to be able to export it to certain markets.
If your product can cause potential danger to the life or health of the consumer chances are it has to be certified before you can export it to your export market. The examples of those products could be food products, medical supplies and devices and also cosmetics pharmaceuticals anything related to chemistry, everything that contains mechanical parts or electrical parts and components.
You want to make sure that you are aware of certification requirements.The best way to become aware of those requirements is to ask your potential customer or distributor in the export market but if you sell your products online you can’t really ask your individual customers.
We would rather recommend you to go to the trade commissioner services in your country and ask them questions whether or not your products require certification.
Step 3: Pricing
The next step is to determine the price for your product when you sell it internationally. First of all you will make sure that the way you price your products make money and make sure that you either include shipping costs in your price or you make sure that the customer pays those shipping costs.
Keep in mind that international pricing is regulated by the rules. The rules are called Incoterms or international commercial terms. They determine what expenses the buyer pays and what expenses the seller pays. Make sure that you price your product for online sale profitably.
Step 4: Taxes
The next step is to understand how taxes work in international trade. If your country or country of destination has sales taxes then when you import the product you or your customer has to also pay not only customs duty but also the sales tax.
What happens if you imported the inventory of your goods into the country where your online store is and now you start selling the product online to another country?
First of all in most cases there is a way to claim the taxes that you’ve paid back and then when you export the product to the new export market then it’s the responsibility of your buyer to pay the local sales tax on imported goods.
The important new ones to remember is that you are not supposed to charge the sales tax that you pay in your country to your international wire.
Rather than that you have to record the amount that you paid and then when your fiscal year ends you claim the sales tax that you’ve paid to your local tax authorities and you receive the Money back.
Step 5: Labelling
The next step is labeling first of all to determine the language of the label. In most cases your label for the export market has to be in the official language or languages of the country you export to.
Please note that some countries have two or more official languages, for example Canada has two languages English and French. While the United States has one official language, English.
If you start exporting your product online to the United States you may also want to consider optional labeling in Spanish language. Even though Spanish is not the official language in the US so many people in the US speak Spanish and you don’t want to miss that market of spanish-speaking people in America.
Every label has mandatory information that typically you can easily determine yourself just by looking at the product. However there is also optional data that you may sometimes need to put depending on the country of destination.
The best way to determine what you actually need to put on the label is to buy a competitive product and check out what’s on the label.
Otherwise you can do some research with the help of the local trade commissioners in your country. They can give you the advice on what you need to put on the label.
Step 6: Warranty
The last step is to consider the warranty policy. There’s no international convention on things like warranty, repair or refund and return policies.
This is something that you have to determine on your own and make sure that your customers in the foreign market are aware of what to do when the product malfunctions.
First of all you have to determine the warranty period and in many countries there are mandatory warranty periods depending on the nature of the product that you sell.
So you may want to do that research and find out what’s the minimum amount of time that your warranty should last. And then you have to reflect on what are the worst-case scenarios that could happen with your product during the warranty period and after the warranty period and
What your international customers should do is to either return the product to you or your manufacturer or maybe you can find the local repair shop and send your customers to that repair shop in case they have a problem with your product.
So all of this you have to determine in advance before you start selling your product online and again there’s no international rule about it. So, it will be an individual warranty policy depending on the nature of your product and depending on the country of destination.