Customs challenge for cross border eCommerce

The Reuter’s State of Cross border eCommerce report shows nearly all businesses experience delays due to incorrect documentation, with 94% of respondents say the delays are hugely costly and of grave concern because, second only to price, consumers value speed, and reliability of deliveries, which means repeat purchases are under threat.

The eCommerce sector has expanded massively, with sky-high growth rates during the pandemic and the opportunity is vast, with the global cross-border eCommerce market worth US $824.9 Billion in 2021-2022 and expected to reach US $7.9 Trillion by 2030.

There are many benefits of moving into cross border eCommerce including:
– Increase market size incrementally and exponentially
– Raise brand awareness and create a global following of enthusiastic shoppers
– Take advantage of different market cycles, to stay in demand all year
– Shift slow-moving lines to new market segments
– Improve business resilience by lowering market dependency

The report reveals that nearly two thirds of manufacturers and retailers conduct cross-border eCommerce, or are planning in the next year, but with over 90% of them experiencing issues with incorrect documentation, it is clear that while the opportunity is vast, so too are the operational challenges.

The move from domestic sales to international is a considerable challenge, that can create issues, as the new cross border shipper deals with unfamiliar compliance and customs regimes, which can lead to higher costs and delays.

The European Customs Union reduces the cost of international eCommerce within its borders, but 55% of of respondents said that they found the cross border eCommerce environment challenging, with the percentage of consumers liable for customs fees rising from 10% pre-2020, to almost 20% in 2023 and it is this customer experience that needs to be improved.

If good are not already in ‘free circulation’ a Delivery Duty Paid (DDP) model will allow shoppers to pay any taxes during the checkout process, enhancing and simplifying their experience, which is critical to build loyalty and trigger repeat purchases.

We recommend two primary areas of attention:
1. Simplifying and automating HS classification, duties, tax calculations and the preparation and filing of customs declarations will improve compliance with changing rules and regulations and streamline documentation processes, with less errors and customs issues.
2. Showing a checkout cart price to the customer at checkout, which is based on DDP calculations (when exceeding prevailing De Minimus thresholds) is advantageous to both consumer and company through jointly understood and consistent fees that accurately match classifications.

Noatum Logistics simplify international trade, with international transport, trading and customs compliance solutions, that create the most effective environment for cross border eCommerce.

Our eCommerce technology platforms automate order processing, global courier management, track & trace, inventory visibility, returns and more.

Global customs brokerage support, includes cross-border clearance, management of duties and taxes, Merchant of Record (MoR), VAT reporting and EU free circulation of product.

Scalable international eCommerce solutions that support sudden demand spikes in any region, as well as long-term international growth, together with a focus on the end-customer, that differentiates their experience and encourages loyalty with your brand.