How to start trading profitably and effectively with overseas customers and vendors—without being strangled by shipping logistics
If you want to put your company on a trajectory that will lead to rapid growth, you're probably already considering both buying and selling (BusinessWeek, 4/16/08) in large quantities overseas. But how do you start planning if you haven't done much business outside the U.S. before? And what are key problem areas to keep in mind when it comes to shipping and logistics? To help you strategize, I reached out to Jordan Colletta, vice president of customer technology marketing at UPS, who prepared six tried-and-true tips. Edited excerpts of Colletta's tips follow.
1. Look before you leap. Little things count. Before you ship a single product, you need to fully understand the rules and regulations that apply to transporting your products outside the U.S. You also need to understand what all of those involved in the shipping process are responsible for, and you must know the total cost of delivering your product across borders. Don't commit and then be surprised by ballooning shipping costs.
Keep in mind that if your product falls into a larger-load category, or does not fit into a standard-size box, shipping charges can end up exceeding the cost of the actual product. Also, if you don't indicate package dimensions, the total shipping charges can show up on your bill after the customer has already received the order, leaving you stuck with the additional charges. For high-end products, determine the options available from shipping companies so you can offer your customers quality service from beginning to end. You may want to ship via air instead of ground, or require a signature upon receipt.
2. Automate and integrate. When your customers trust you, your brand flourishes. But establishing that trust often hinges upon being able to deliver products to customers on time, without error. That's no small task domestically, much less internationally! I shudder at the number of times shipments of our training materials have been trapped in customs en route to Canadian clients. Use technology to ensure that when your customers place an order, information about it is shared between your business systems, your shipping provider, and your customers. Electronic data will not only help you trade more efficiently, it will help keep your cash flow steady by reducing exchanges and refunds for incorrect or tardy orders.
3. Maintain visibility. The ability to look up and down the supply chain to see where an order is and where it's headed is called visibility in the shipping and logistics business. Visibility is achieved by synchronizing the transmission of information with the movement of goods. Use vendors that can provide secure, up-to-the-minute online tracking of goods—no matter how many third-parties are involved. Your customers will be able to determine where their shipments are at all times, giving them peace of mind and reducing calls or e-mails asking you for shipment status. You'll also free up your staff from having to answer order-tracking inquiries and manually fill out forms and labels.
4. Be transparent about all shipping-related costs and tie deliveries to payment. Don't lose customers by surprising them with unexpected charges. That said, the best way to ensure you get paid quickly is to collect on—or just before—delivery. Some carriers offer c.o.d. services on both domestic and international deliveries, taking the risk out of doing business with unknown overseas clients.
5. Give clear shipping instructions to your suppliers. Work with your overseas suppliers to enforce the same shipping standards that you follow (or should be following) in your own business. Provide your suppliers with guidelines on how you want your freight packed and protected. Learn the difference between shipping using pallets vs. shipping individual packages. It might cost more to get your supplier to package with greater care, but what you receive in return—a satisfied customer whose order arrived safely and damage-free—far outweighs the costs entailed in shipping properly.
6. Stay in control of your shipments. Let's say you discover, after a shipment has gone out the door, that your customer's credit has taken a turn for the worse and you're now afraid your invoice won't be paid. With the right carrier, you can easily intercept the package and have it returned to you. Or imagine you sent the wrong item to a customer but realized the mistake only after your carrier has picked up the package. Some logistics providers have the ability to intercept that package, have it returned to you, and then send the customer the correct item. Depending on the situation, intercepting shipments can save you money and cut down on the risks associated with global trade.
You're taking on risk when you buy and sell overseas—reduce it by following my simple rules. Good luck!