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’  

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

The most common incoterms used in B2C shipping are delivery duty paid (DDP), and delivery duty unpaid (DDU/DAP): 

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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

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. Our Smart Routing International service simplifies this with global restrictions on what you can and can’t ship. Read more on our Smart Routing International guide. 

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 Tariff Schedule (HTS) 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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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!