8 Tips for Profiting Abroad
Anglophile, Euro-sceptic or xenophobe – whatever your feelings towards the rest of the human race, I’ve found that most people forget about someone’s origins when they see the colour of their money. Web store owners are no exception and most would like to make overseas sales, but this can seem a scary prospect. So here we’ll look at a few tips and tricks on international sales as well as areas to watch out for like tax, shipping and fraud.
1) Establishing Credibility
Firstly, surprising as it is to those of us who live here, the UK still has an excellent reputation around the world. This means we have an advantage. So if we’ve got it we should flaunt it – make it clear to buyers that you’re based here.
2) Global Marketing
Above all else, the internet is a brilliant global communications medium, so its potential impact in the area of international trade is huge. The good news is that much of the expertise needed to get UK visitors to check out your site, in search engine optimisation (SEO) and pay-per-click advertising (PPC), can be equally effective in attracting visitors from abroad. Yet this can all be organised from the comfort of your own office chair. This is really different from the past, and overseas marketing has become an order of magnitude easier.
3) Taxing Matters
All areas of business these days, including ecommerce, are surrounded by a labyrinth of red tape, rules and regulations. Here we will just look at the international dimension. The tips on tax issues shouldn’t be taken as definitive – it’s your job to comply with the law – but they are a good place to start.
Fiscally speaking the world is divided into two camps: countries in the European Union and those outside the EU.
We’re in the EU so we are bound by its rules. It’s not the same when handling buyers from the USA. Individual US states might want to charge sales tax on your sales, but it’s their responsibility. You don’t have to charge this "use tax" which is between the buyer and the state where they live. So the good news is, as a UK business you can sell into the US tax free.
Generally speaking, when you sell into the EU you charge VAT at your usual rate. But there are some exceptions. Not many people know this, but if your online store is starting to turn over serious bucks selling into other EU countries, you hit some additional regulations. If you exceed the individual VAT threshold for Germany, France, etc. then you should charge VAT at the appropriate country VAT rate when selling into that country, not the usual UK 17.5% rate.
Also, if your customer is a non-UK business in the EU and is registered for VAT in its own country, the buyer is allowed to quote their VAT registration number to you in order to be exempted from tax. If you can’t accommodate this, those customers are likely to look elsewhere.
4) Payment Issues
If you’re eating out in France and you pay by credit card then the restaurant will be paid in euros. Your card company will automatically translate the amount into pounds and that is what will appear on your statement, with the original currency and amount noted alongside. Buying across the net is exactly the same – there’s no need for a multi-currency system in your web store. A customer abroad can pay by credit card and you will be paid in sterling, but the payment will be translated into their local currency when it appears on their statement. One handy tool however, is to have a conversion facility so that you can provide an indicative amount in the potential buyer’s local currency.
5) Fraud Prevention
Possibly the biggest problem to consider when selling abroad is fraud. Unfortunately it’s true that orders from some countries seem much more likely to be fraudulent. If in doubt, sticking to those from Western Europe and North America is safest.
Orders from abroad are more likely to be from scamsters simply because it’s easier for them to get away with it. Generally the police are not interested in small scale fraud, and even less so when the crime is committed outside their jurisdiction.
There are several ways that fraudsters work. If the person was using stolen credit card details, the amount is likely to be charged back to you once the true owner becomes aware of the charge. Even someone who genuinely ordered and received the goods can dispute payment. If you use one of the online payment service providers, ask if they operate a merchant protection scheme. Otherwise you can reduce your liability by implementing 3DSecure (Mastercard Secure / Verified by Visa).
Fortunately, fraudulent orders often stand out from the rest and are quite easy to spot. Look out for these indicators:
- They tend to use the most expensive shipping method available
- They tend to choose the most expensive products
- They tend to use free email addresses such as Yahoo or Hotmail
In addition you can check whether an order is fraudulent by asking for a fax of a copy of the back strip of the credit card; asking for proof of name and address to be faxed; or you can telephone to make sure that the number is genuine. Most fraudsters give up at the first hurdle and you don’t hear from them again.
Shipping abroad is not so daunting. Many ecommerce merchants do it, and without any problems. You can make it easier by using a recognised international carrier such as UPS, Fedex or DHL, who can advise you of any issues. Completing a customs declaration is a must; but as long as what you are sending is legal in the country that you’re selling it to, this should not pose a problem!
7) Customs and Import Duties
Most of the retail world leaves customs or import duties to the purchaser. They are responsible for any of these charges, so you can ignore them. However, it is worth saying explicitly in your terms and conditions that any charges are down to the buyer. There are different procedures for trade sales, so you would need to investigate these if you are operating in this field.
8) Go for it
Finally, assuming that you are legal and decent, let the world know. Anything that adds to your credibility will help online. So why not list all of the things that you have done under the heading "We comply with the following legal and tax regulations".