There’s a big world out there, and to take advantage of the weak Rupee and lower labour costs can only be a sound decision when you have solidified your domestic Indian sales. It’s probably crossed your mind before; but it can be a daunting task to take on, and should not be taken lightly. Many companies have expanded too quickly, and without the right back-end shop processes and up-front research to support your expansion you could be in the unfortunate situation of selling more, or less, than you bargained for.
Reasons for selling internationally
There are quite a few reasons that you might decide to start selling abroad; it could be to sell seasonal stock that you’ve bought for a domestic event. For example, to sell excess stock from Diwali for Christmas internationally or wet weather clothing from the monsoon season into Europe in the Autumn. Alternatively, your growth rates in India might have saturated and you need a bit of a kick in sales, or you want to try and increase your margins by avoiding the price wars at home.
It also depends upon the sector that you’re in, for mass produced electronics, China and other cheap suppliers will always have an advantage, however for handicrafts and traditional apparel a good market exists abroad and because of the lack of supply a higher margin could be generated.
Where to start selling abroad
The first step in such a process must be to identify a target market for what you’re selling, where you can, without too much hassle, interact with customers, sell your goods, and get paid quickly.
If you are already selling internationally because you have regular sales in a particular country from an online marketplace within India, then that might be a good starting point. If you’re not in such a fortunate position, then we’ll explore our options further.
We can rule out continental Europe for starters. Many Europeans are good English speakers (though many are not) and there are many on-demand translation services around, but to get a rapport with your customer you need to be able to communicate fluently in customers’ native language, and Amazon especially makes this a requirement.
So, we’ll leave the European continent for the time being, but certainly consider it in the medium term, once you’ve got your processes in order, and overcome the initial difficulties of selling abroad. By a process of elimination, I will settle on the UK as a good initial target, though I should declare that I am biased (being British myself).
What to start selling abroad
I won’t go into this in too much depth here, as we’ve got a quite a lot of content coming up, however a Nielsen report suggested the following;
The top categories were found to be – clothes, shoes and accessories ($12.5bn); health and beauty ($7.6bn); personal electronics ($6.0bn); computer hardware ($6.0bn); jewellery, gems and watches ($5.8bn); and home electronics ($5.4bn).
Listings: Make them look good and infomative
Your listing, and your product, must appeal to your customer when they’re looking through different marketplaces, and assuming that your price point is right, the customer needs to feel that they will get the described product in a timely manner, and without too much hassle. Typically, and you can see this iterated time and time again, high resolution photos are a must, with a white background, (regardless of where you’re selling), good quality, clean listings (no animated gifs, please), and proof read English are the most important features. You also need a clear returns process for when there is a problem, which will often be dictated by the marketplace.
Trust will be a problem for you, as there are numerous tales of bad service when buying abroad online, and unfortunately the ubiquity of the Indian call centre has already queered your pitch by association, so get these points right and you will have already overcome some negative preconceptions.
Your prospective customer has decided to make the purchase, but they’ll first check where the products are shipped from. You have two options in this regard, and it does depend upon what marketplace your selling on. If you’re selling on eBay, you can consider sending items individually, however you can also use many domestic fulfillment services available in the UK. Alternatively, if you’re selling on Amazon, you can use ‘Fulfillment by Amazon’ (FBA), which gives you prominence in search listings against non-FBA sellers. If you decide on the former route, shipping items individually, you have to concern yourselves with how you will process refunds. ‘Bad’ buyers will know that you’re shipping from India and claim that the item received is not as described, you will then have to ship another and write off the original. Time and cost is another consideration; where shipping items in bulk will inevitably be cheaper.
Customs and Taxes
Now, for the boring bit; your tax responsibilities for importing into the UK. For that I will look first at individual item shipments to multiple recipients, and then for bulk shipments to a single recipient (e.g. your fulfillment house).
For a buyer receiving items from outside the EU, they will have to pay duty upon items received which are more than £15 in value (around 1360 Rupees). The way to get around this is to declare all items as less than £15 in value, however if it gets lost in transit you will only be insured for that much. Alternatively you can declare it as a gift and send it for less than £36 (Rs 3270). Bear in mind that Her Majesty’s Revenue and Customs (HMRC) are not stupid so if you do this frequently it will be picked up. You don’t need any other paperwork apart from a CN22 or CN23 form which you will need to affix to the package. All the relevant information is on the HMRC website. You can also prepay import VAT.
My preferred way, as you may now have been gathering, is to ship your items in bulk to a fulfillment house (e.g. a single consignee). You can then get a discount upon any duty that is payable by following the LVBI scheme (low value bulk import). For this you will need to be approved by HMRC, however in the long run I feel that it will make you a more profitable and sustainable business. You can then seamlessly handle returns, reduce shipping time, and avoid the buyer paying import duty as a separate cost. Quoting from HMRC:
If you regularly declare bulk low value imports to several consignees you can apply to HMRC to bulk your imports. This is known as the Low Value Bulking Imports (LVBI) concession and prior authorisation from HMRC is required.
LVBI allows a single import entry declaration to be made to which is supported by a manifest identifying the individual items in the consignment in sufficient detail for Customs control purposes.
Import declarations to HMRC for low value goods must be entered to us on Form C88/SAD (or electronic equivalent) using the correct Customs Procedure Code (CPC) for the imported goods.
You may of course be stung by the Indian export commission for shipping in bulk, as you will have to make a declaration of export, and attach the ‘processing of shipping bill’.
I couldn’t find a list of dutiable free goods, or rates of duty, so I will keep looking. We talk to many fulfillment houses and drop-shippers in the UK, so we’ll be doing a part II on this subject which fleshes this part out a bit.
Start small, experiment
If I’ve convinced you to start selling in the UK, I’d suggest a few simple steps. Open up a couple of listings on foreign sites, I’d suggest eBay UK to start with, for primarily lower value items (less than £30 or Rs. 2700). Develop your listings properly – invest some time and money to get a good listing sorted (there’s no point in doing an experiment if you’re not committed to it). Try out a few different products and see what sells. Ship the items individually, and just see how things go.
Let us know how your international expansion is progressing in the comments.