Building an Effective Strategy for International Returns

In the ecommerce market, cross-border transactions represent a huge opportunity for U.S. retailers to grow their businesses. According to eMarketer, there are more than a billion digital buyers spending about $1.5 trillion dollars online. In addition, nearly two-thirds of the world’s purchasing power is outside the U.S.

However, retailers face many unique challenges when selling online to international markets. For example, U.S. merchants need to know what imports are prohibited; when to apply import duties, taxes and tariffs; and how to comply with country-specific forms, country-specific product coding, and local shipping rules.

And then there are the complexities associated with international returns. Establishing a process for documentation, cost-effective shipping and returns back to the U.S. is only part of the challenge. Organizations must also clawback the duties and taxes paid to foreign governments.

To help successfully build an effective international returns program, U.S. retailers should consider the following:

  • Clear policy on returns: Consumers expect online shopping to be simple. Therefore, it is essential to offer a clear and easy-to-understand returns process and after-sales service.
  • Product restrictions: Not all goods can be returned back to the U.S. so it is important to understand what items require additional information or permits to be returned.  For example, there are many rules and regulations from the FDA, EPA Forms and TSCA that make the clearing of certain goods much more onerous and require a different clearance model then the rest of standard goods you are returning.
  • Assessing the value of goods: Depending on what you sell, you may or may not want to ship goods back to the U.S. Re-importation is expensive due to transportation costs, import taxes and duties. Therefore, high-value items are typical candidates for international returns.  If you have smaller, inexpensive items, you can also opt to liquidate returns in country and reimburse buyers. You’ll need to think through your policies, establish a process and bake returns costs into your ROI.
  • International carrier options: To help reduce costs, try to leverage a postal return service. Returning items via a postal solution can also be less complex due to simplified paperwork requirements.  However, time in transit using a postal return service will be longer than an express service.

While it may not be feasible for you to build all of these capabilities or expertise in house, you can provide a positive customer experience by working with experts in cross-border shipping and liquidation services.

There are several options retailers can select if they choose to not ship returns back to the U.S. including disposal, donation and liquidation.

  • Disposal may be best for lower value items or items that offer little resale value, but do come at a cost.
  • Items like books are a good candidate to donate to local schools or charitable organizations.
  • Liquidation is usually dependent on critical mass within the type of commodities. For instance, if you have a high volume of specialty goods, such as automotive or electronics, specialty brokers can often provide a higher return than a general broker.
  • With moderate volume or with less homogeneous goods, a small return may be possible through a general broker since they can leverage volume from other retailers in a wider returns program. For low volumes, disposal may be the best option for mid- to lower-value goods.

Local regulations can be quite complex. Therefore to exercise any of these options, you must clearly establish who has title to the goods and when.

Looking ahead, international returns will continue to be an important component of the global buying experience. By following best practices to help build the right program for your business, you can satisfy international buyers, enhance your reputation and more effectively manage costs for your global retail operations.