Ultimate guide to international shipping for Australian eCommerce retailers

Why international shipping? 

With 54% of global consumers looking to increase their international online shopping, now is the time to expand your international shipping options. By tapping into markets like the United States, the UK, and across Asia, where online penetration tends to be higher, you can increase your reach and counteract seasonal spending patterns to diversify your revenue stream.

The great news for retailers across Australia and New Zealand is that there is lots of overseas demand to capitalise on, whether it’s the popularity of iconic Australian brands such as Country Road and RM Williams, or the trusted “Made in Australia” manufacturing tag that signals quality for many overseas shoppers. 

How to set your business up for international shipping success 

Global shipping can be tricky and costly for many eCommerce businesses because of challenges like managing customs, duties, and order tracking capabilities when a package leaves one country and enters another.

For retailers looking to ship internationally to new markets, the first step is deciding which countries you want to support and which products you want to offer. This should be based on customer demand, product-market fit, shipping costs, and any barriers to entry, such as language differences. According to Shippit data, the majority of international volume from Australia ships to three key regions and destinations. 

•  New Zealand
•  North America
•  United Kingdom

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Shipping costs and duties and taxes

Shipping costs are often one of the highest operating expenses for online businesses and any business that isn’t reviewing how their carriers are allocated is leaving money on the table. This is especially true for international orders. 

Based on Shippit data, the price of shipping a 1-kilogram parcel to the United States can vary anywhere from less than $15, to over $50, meaning you are potentially paying over double in freight costs if you’re not reviewing your carrier allocation. 

Beyond transportation costs, there are also duties and taxes associated with cross-border shipping. Duties and taxes can vary based on what and where you’re shipping, and present one of the main challenges when shipping to international markets. 

“Import taxes are taxes placed on international purchases but do not necessarily match domestic taxes. Import taxes can vary by country, region, HS code, and de minimis value. Every country has a unique country-level tax rate. Some countries have a general consumption tax, typically referred to as value-added tax (VAT) and occasionally as goods and services tax (GST). The way these taxes are calculated varies by country.”

Zonos, ‘Import taxes’  

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Understanding incoterms

Incoterms are a set of International commercial terms that clarify the responsibilities of buyers and sellers in a foreign trade contract. They are used to avoid confusion and disagreements between international trading partners.

Incoterms set out who is responsible for transportation costs and risks at various points during the shipping process, and different incoterms can apply depending on the mode of transport you use, and the type of goods you are shipping. Both the buyer and seller need to agree on the specific incoterms that apply to their transaction.

Retailers typically have two main options when managing duties and taxes for international shipping, DAP (Delivered at Place), or DDP (Delivered Duty Paid).

The most common incoterms used in B2C shipping are delivery duty paid (DDP), and delivery duty unpaid (DDU/DAP).  These terms define whether you or your customer pays the import fees, which can impact the buying experience and your costs.

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Duties and taxes

Calculating duties and taxes are vital to ensuring your international shipping rates cover the full cost that’ll apply to each product you ship, you should account for them within your price point, or set your shipping policy appropriately.  

Duties are calculated before your product is released from customs in the destination country, and are based on factors such as product value, trade agreements, country of manufacture and use of the product. We’ll admit; this is one of the more complicated aspects of shipping internationally, as each country has different rules and regulations around the duties and taxes it applies.

These fees can either be paid by your customer, or covered by your business, but more on that in the next point.

The good news is, there’s a certain value below which goods can be shipped before duties and taxes apply. Check the destination country’s de minimis threshold to work out what will apply to the products you are planning to ship overseas.

Depending where you’re based and what you sell, you may be able to ship your goods to the destination country without incurring any import duty at all. Australia has a number of free trade agreements in place, such as the Australia and USA agreement (AUSFTA), which makes allowances for Australia-made products. The Department of Foreign Affairs and Trade website has all the info.

Meanwhile, some countries in the Asia-Pacific region, such as Singapore and Vietnam, have free trade agreements with the UK and EU, which have removed or reduced tariffs on imports from these places. The UK and EU are actively seeking free trade agreements with other countries in the region, such as Thailand and Indonesia.

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Understanding DAP/DDU (Delivered at Place / Delivered Duty Unpaid)

• Delivered at Place (DAP): The buyer pays all duties, taxes, and clearance fees. This means once the package arrives at the destination country, the customer is responsible for any additional costs.
• Delivered Duty Unpaid (DDU): An older term often used interchangeably with DAP, where the buyer also covers all fees upon delivery.

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Understanding DDP (Delivered Duty Paid)

• Delivered Duty Paid (DDP): The seller pays all duties, taxes, and clearance fees. By choosing DDP, you handle all import costs upfront, creating a hassle-free experience for your customers.

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Why choose between DAP and DDP?

When selling internationally, clear communication about fees is crucial. According to Avalara, the majority of consumers have had poor international delivery experiences, and nearly 3 in 5 (58%) consumers report experiencing unexpected customs duties charges upon delivery. When this happens a staggering 75% reconsider future purchases with the brand. 

Hidden costs can deter customers from completing their purchase. Choosing between DAP and DDP helps set expectations:

• DAP/DDU: Use this if you want the customer to handle import fees. This keeps your upfront costs lower, but it may surprise your customer with extra charges.
• DDP: Opt for this if you prefer a smoother customer experience by covering all import fees yourself. This approach can improve conversion rates by eliminating unexpected costs at delivery.

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How to ship DDP 

Transparency at checkout is key. Use your shopping cart platform to display duties and taxes so customers know what to expect. Shippit partners with tools like Zonos to offer solutions such as Landed Cost APIs, plugins, and checkout integrations to automatically calculate duties and taxes based on product category and HS code, to show all fees upfront.

Before you set up the collection of duties and import taxes at checkout, verify that you've added your product category or Harmonized System (HS) codes of your products. If a product is missing a HS code, then calculations are based on the product's description and product category instead. If a product doesn't have an HS code, description, or category, then duties and import taxes aren't calculated for that order even if you've set orders from a country or region to collect duties and import taxes at checkout.

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Product range

Permits

Depending on your product range, you'll need to be aware of any restrictions or prohibitions on the items you plan to sell. Food, alcohol, and pharmaceuticals are product categories that may have restrictions applied.

Some products come with restrictions and require import permits to allow them into the destination country, and these can be more unusual than you’d think.  For example, did you know that the commercial sale of international calendars is restricted in Vietnam? There is a common shortlist of prohibited items that’s definitely worth checking out. The destination country’s customs websites should be your first port of call when working out if restrictions apply to your products and how to apply for the permits.

If you find that some of your products carry restrictions to certain countries, it may be worthwhile ensuring customers from those countries do not see web pages for the products in question. This can be done by setting up customer groups on your storefront of choice. Customer groups can also be set up to segment customers by price point – great if you’re planning to communicate country-specific discounts and offers, or display prices in the destination country’s currency.

Your product range will also impact the calculation of duties. For the purpose of determining this estimate, dutiable goods in the shipment are given a classification code (up to ten digits) known as a Harmonised System (HS) code , Export Control Classification Number (ECCN) or Schedule B number. When determining a classification code, commodity descriptions might appear to be similar, but they can have significantly different rates of duty.

Why is product information important?

Product categories or HS (Harmonised System) Codes are used by international shippers to help Customs identify the type of items contained within a shipment. For the most accurate calculation, the usage of HS Codes is almost universal. Every item will have an HS Code, and the exact code for a specific item will be based on several factors including material composition, physical state (solid, liquid, and gas), use, and whether it is a finished or unfinished item.

Where can I find HS Codes?

It is best to visit your local government website to find the correct HS Codes for your items. Here are some common country links:

• New Zealand - Tariff Finder
• United Kingdom - Trade Tariff Lookup
• United States - Schedule B Search Engine

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Size and weight

Size does matter when it comes to international shipping rates, shipping costs are usually charged at the greater cubic and gross weight, so it’s important to ensure goods are well packed and the volumetric weight is kept to a minimum.

In order to calculate roughly how much it’ll cost to ship items, you could focus on getting product weights and dimensions for the heaviest or largest 20% and smallest or lightest 20%, as these will have the biggest effect on the rates and could allow you to offer flat rates for specific regions (i.e Asia-Pacific, or North America) based on your findings.  

Or, the alternative option for calculating international shipping costs is to obtain live rates in real-time, as and when orders come in and notifying your buyer based on their shopping cart. This is the best way to ensure you’re getting the cheapest international shipping option for your customers.

Packaging your product appropriately for transit is vital. Breakages, leakages, and perishables should not be part of the unboxing experience, so take time to consider how you’ll pack your goods, before offering to ship long-distance.

As an online retailer, the expansion into international markets is an easy transition, after all, that’s why they call it the world wide web. And with a potential global market of 3 billion, offering international shipping is an exciting prospect and one that opens the doors to a whole world of new opportunities.

If you’re unsure which market to enter first, you may want to start by analysing your own website traffic to see whether you have any existing international customers and where they are from. Or, you can use Google Search data to see where there is high demand for the products you sell. You don’t necessarily need to limit yourself to places that speak the same language or are geographically close. Anywhere with access to high-speed internet and surplus money to spend is well worth considering.

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Tracking your international orders

Tracking is arguably even more important for international shipping than domestic shipping since there are more opportunities for orders to get held up, such as clearing customs. 

Shippit enables retailers to monitor deliveries from the moment an order is placed, to the time it reaches a customer’s doorstep, with automated notifications every step of the way. 

Some examples of tracking notifications that are specific to international deliveries include: 

With customs: The package has arrived at the destination country and it waiting to be cleared through customs.

Customs awaiting payment: The package has arrived at the destination country, but needs customs duties to be paid by the recipient.

Customs failed: The package has arrived at the destination country, but has been denied entry by customs.

Customs on hold: The package has arrived at the destination country, but is undergoing review by customs. 

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For more on tracking and notifications with Shippit, head to our help centre on our tracking statuses.

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Shipping to the key eCommerce markets

United Kingdom Incoterms and de minimis thresholds 

The United Kingdom calculates using the CIF method, which means the import duty and taxes are calculated based on the value of the imported goods as well as shipping costs.

• Tax and duties are calculated on the price of the products only
• Tax threshold: 0  GBP
• Tax (VAT/GST): 20%
• Duty Threshold: 135 GBP
• Find your product classification: Trade Tariff Lookup

All goods shipped to the UK are subject to VAT regardless of the price of the goods in the shipment. VAT requirements differ depending on how your items arrive in the UK and if you're importing goods into the United Kingdom you will likely need to register for an EORI (Economic Operators Registration and Identification) number.

Alternatively, you can take advantage of cross-border eCommerce solutions such as Zonos, who have pre-registered tax IDs for shipments to the U.K., EU, and Norway. This allows you to be compliant and take advantage of some savings even when you don't have your own registrations in these countries.

Shippit partners with Zonos, so you can easily start shipping with Zonos' pre-registered tax IDs. The additional benefit when using a pre-regsiterd tax ID with Zonos is theirLanded Cost guarantee, which gives you peace of mind with a transparent, fully-guaranteed calculation. Our partnered soltuion with Zonos covers any landed cost discrepancies, ensuring you never have to worry about disputing fees.

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United states incoterms and de minimis thresholds 

The United States calculates using the FOB method, which means the import duty and taxes are calculated only on the customs values of the imported goods. 

• Tax and duties are calculated on the price of the products only
• Tax threshold: 0 USD
• Tax (VAT/GST): 0%
• Duty Threshold: 800 USD

Import duties vary depending on what you're shipping. To find how your products are classified you can head to the United States census bureau's Schedule B Search Engine.

New Zealand Incoterms and de minimis thresholds 

New Zealand calculates using the CIF method, which means the import duty and taxes are calculated based on the value of the imported goods as well as shipping costs.

• Tax threshold: 1000 NZD
• Tax (VAT/GST): 15%
• Duty Threshold: 1000 GBP

Import duties vary depending on what you're shipping. To find how your products are classified you can head to the New Zealand government's Tariff Finder.

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Singapore incoterms and de minimis thresholds 

Singapore calculates using the CIF method, which means the import duty and taxes are calculated based on the value of the imported goods as well as shipping costs.

• Tax threshold: 400 SGD
• Tax (VAT/GST): 7%
• Duty Threshold: 400 SGD

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Hong Kong incoterms and de minimis thresholds 

Hong Kong calculates using the CIF method, which means the import duty and taxes are calculated based on the value of the imported goods as well as shipping costs.

• Tax threshold: 0 HKD 
• Tax (VAT/GST): 0%
• Duty Threshold: 0HKD

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Shipping documentation and labelling

Shipping internationally requires country-specific documentation and requirements can vary depending on the carrier that you ship with. At a minimum, the mandatory documents required are the following - with additional requirements based on what and where you’re shipping. 

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Commercial Invoice

A detailed breakdown of the imported goods, including their description, quantity, value, currency, and terms of sale.

Critical: It forms the basis for customs valuation and duty assessment.‍

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Packing list

Provides an itemised list of the shipment’s goods, including weight, dimensions, and packaging type.

Essential: Facilitates efficient customs clearance and warehouse operations.

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Shipping labels

Many carriers have labelling requirements to for customs clearance. Below are some of the common formats and information required whe shipping internationaly. 

Carrier-dependant: For example,  International orders with AusPost require a CN22 or CN23 label. FedEx require, at minimum, the sender’s and recipient’s names, addresses and phone numbers, the description, quantity and value of the commodities in the shipment, and the weight of the package.

On the other hand, labels with Shippit's Smart Routing International follow the same format and include all the details you need for customs clearance, including the total package weight, product category and quantity of itemsyou’re shipping. 

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Ready to expand globally with confidence?

If your eCommerce business is ready to take on the world, now is the time to harness the power of Shippit International. With market-leading rates, fast transit times, and unrivalled expertise, Shippit is here to help you unlock global markets and scale your business.

Explore Shippit International today and start shipping globally with ease!