Customs failures inhibit cross border eCommerce

A Reuters report has revealed that nearly two thirds of manufacturers and retailers are currently conducting cross-border eCommerce, or planning to within the next year, with over 90% of them experiencing delays due to incorrect documentation, that are negatively impacting customer experience.

Reuter’s State of Cross border eCommerce report shows that just 6% find the process easy, while a massive 94% of supply chain respondents are encountering paperwork delays, which are “hugely costly” because, second only to price, their consumers value speed, convenience and reliability of deliveries.

The eCommerce cross border market has expanded massively in recent years, following the sky-high growth rates that were triggered by the pandemic and the market expected to expand by 18.67% by 2030, the opportunity is vast, but so too are the operational challenges.

The strategic move from domestic sales to international customers is considerable and this can create issues for sellers and buyers, as the new cross border shipper has to consider 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 respondents said that they found the cross border eCommerce environment challenging, with four specific challenges highlighted: 

 – Shipments delayed in customs 43%
 – Customs regulatory compliance / HS codes 41%
 – Supply chain costs 41%
 – Costs of tariffs and duties 37%

The share of consumers liable for customs fees has risen considerably since the pandemic, from 10% pre-2020, to almost 20% in 2023 and it is this customer experience that needs to be improved by adopting a Delivery Duty Paid (DDP) model, where shoppers pay any taxes during the checkout process.

Cross border transactions account for 28% of sales from companies engaged in eCommerce trading and there are two primary areas of DDP attention that will reduce complexity and cost for them, while enhancing and simplifying their customers’ experience. Which is critical to build loyalty and trigger repeat purchases. 

First. Simplifying and automating HS classification, duties, tax calculations and the preparation and filing of customs declarations will improve compliance with changing rules and regulations, reduce workloads for employees and streamline documentation processes, with less errors and customs issues.

Second. 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.

The majority of businesses are selling internationally, many via eCommerce transactions and this number will rise in the short term, as more companies react to growing demand and particularly in developing markets. 

Metro are innovating international trade, creating a more effective environment for cross border eCommerce, with digitally-driven international trading and customs compliance solutions.

Drawing on databases and automation, the CuDoS customs platform instantly interprets the terms of trade and maintains a consistent pathway from seller to customer that minimises the costs and simplifies the crossing of international borders.

To learn how we can simplify and automate customs declarations for your businesses, please EMAIL Andy Fitchett, Brokerage Manager, to review the options.