The ultimate guide to international shipping and cross border returns

Samir Kamnani

·

August 22, 2024

As your company grows, you might be considering expanding to international markets. By selling internationally, you can significantly expand your potential audience for your product—and especially if you offer something unique that isn’t available in foreign markets, you may see significant demand.

Increasingly, brands are focusing on a global consumer base, and shoppers are growing more comfortable seeking out wares from around the world: The U.S. Trade Administration forecasts that global B2C ecommerce revenue will grow to $5.5 trillion by 2027, at an annual compound growth rate of 14.4%.

But as you ship your goods to global locations, it’s important to map out a solid strategy for managing the returns that will inevitably come back to you. After all, international shipping is expensive. Plus, with today’s constantly changing tariff rates, failing to account for returns can lead to significant budget overages when products are moved between different countries multiple times.

When it comes to mastering international returns in 2025, here’s what you need to know.

Trends in international shipping and returns

Today’s consumers have a taste for the international: 59% of shoppers buy from retailers outside of their home countries, with 35% doing so on a monthly basis. The trend is highest among Gen Z shoppers, with 66% percent of them making online purchases globally, compared to 46% of Baby Boomers.

They won’t buy from just anywhere, though – when considering where to purchase goods, 70% of shoppers say they’ll only buy products from countries they trust. Topping the list? The USA, the UK, Germany, China, France, Italy, Canada and Australia.

The hunt for lower prices is the leading factor in choosing to buy across borders, though shoppers will also buy internationally if the product isn’t available in their country or they can tap into a wider product selection. Lower-ranking factors include cases where they’ve had a positive experience with the brand in the past, or they believe the products are better quality than they could buy at home.

And what’s stopping those who won’t shop internationally? Fear of fraud tops the list. Other deal-breakers include longer delivery times, customs charges, high return costs, and complex returns processes.

As the data illustrates, expensive or complicated returns processes are stopping a large percentage of your potential customers from making a purchase. By improving your cross-border shipping and returns experience, you’ll be able to deliver an enhanced customer experience for the global shoppers who are already loyal to your brand – and encourage new shoppers to try out cross-border commerce for the first time.

How to build a best-in-class global shipping and returns process

Here’s a step-by-step guide to help you build a streamlined shipping and returns process for your global customers.

Brush up on laws and restrictions

Shifting to an international market requires paying attention to e-commerce laws, customs fees, sales tax, import/export duties and restrictions or prohibited items. Ecommerce laws help protect both your company and consumers.

These laws can also prevent identity threat, fraud, and a leak of customer data. Some are set in place to safeguard shoppers from misleading advertising practices and data collection, especially when it comes to children. Staying abreast of these laws around data collection is key to preventing future legal issues. The California Consumer Privacy Act (CCPA) requires that sellers make shoppers aware of the type of information being collected, how it’s being used and allows consumers to opt out of their data being shared, delete the data, and face non-discrimination by exercising these rights. Learn more about a country or state’s rules before performing any data collection.

Restricted or prohibited items vary from country to country. Learn more about whether any of your products could fall under this list to prevent revenue loss or delays in international shipping. For example, alcoholic beverages, nail polish, perfumes, and CBD products have specific legal restrictions that apply to domestic and international shipping. The UPS website offers a list of country-specific rules and regulations. Be sure your item is not considered a “dangerous good.” If you’re using a local delivery service, you can also check with them.

For Del Mahabadi, International Marketing Manager for Psyched Wellness, understanding these restrictions was key to keeping business moving. Psyched Wellness is a Toronto-based life sciences company that focuses on the production and distribution of health and wellness products. Their flagship product, Calm, was created using the first legal Amanita Muscaria extract available for sale in the United States.

Since their product fell into the food supplement category, they were able to legally sell it online and avoid regulatory hurdles that companies often face with psychedelic products. Because Calm doesn’t create psychoactive effects, it allowed Psyched Wellness more freedom to expand its retail business using partners like Shopify. They also partnered with ShipHero to help expedite orders and address lags in efficiency. This benefited their customers in that they could receive products in just 3-5 days, even if it was an international order.

“International product returns are much easier with a great fulfillment partner,” says Mahabadi. “Before we had a fulfillment partner, shipping products and receiving returns was a much slower process. We have been able to grow customer trust and scale with someone who can work alongside us to navigate the international space.”

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Build a pricing strategy for shipping and returns

With rising inflation rates, many shoppers are more price-conscious. Offering products for prices that match their value will help prevent purchase regret.

When incorporating shipping fees into the final price at checkout, be transparent and offer options, including free shipping (where possible). These days, eighty percent of consumers expect free shipping when ordering a certain dollar amount of products, and 66% expect free shipping for all online orders.

Price your products sustainably

If you’re struggling to figure out how to price your products for international shipping, there are a few things to keep in mind. Find a rate calculator to determine the costs of shipping, depending on the carrier you use. Add that to the cost of your average domestic order.

Next, use the rate calculator for your lowest domestic order, then your highest. These three numbers can help you gain an understanding of pricing for cross-border shipping. You can also see what types of shipments might be higher than others.

Learn the ins and outs of mailing systems for the countries you’re shipping to so you can make sure to get the lowest price and most efficient shipping. Ship By Loop Worldwide helps you tap into global carriers with pre-negotiated rates, so you can save money on shipping and returns.

Provide transparent pricing to customers

It’s better to be upfront about the fees that will be included in a purchase, rather than having a surprise at checkout. Clearly stating who is responsible for duties and taxes should be a high priority when dealing with new shoppers.

If possible, offer several shipping options. Some consumers might be willing to pay more money upfront to receive their purchase faster, while others are more willing to wait if it means paying a lower price.

Offer a threshold for free shipping:

If you would like to offer free shipping but costs are high, you could set a minimum that buyers need to reach before they can get free shipping. 

Use local couriers:

Hiring a local courier service for last-mile delivery can also save you money, allowing you to offer even lower or potentially free shipping to shoppers.

Stay on top of customs fees:

Be sure to pay all customs fees ahead of time to prevent any delays in delivery. If you need assistance, contact the local import or customs office in the country of the order’s final destination.

Don’t forget to include any duties and fees you’ll be responsible for paying. Your customer is usually responsible for paying the fees on a shipment. This is known as Delivered Duty Unpaid (DDU) or Delivered At Place (DAP).

If you prefer to cover these fees, you’ll need to pay them before shipping the order. You should also include the required shipping labels and documentation, an invoice that includes the weight and value of the item, a packing list, and any other required information. Be sure to check to see all requirements for imports and exports to prevent delays.

Provide instant currency conversion:

Make currency conversion easy for people shopping on your website. You can provide this by using an international domain in the local language and currency. There could also be a feature on your website with country flags, which allows consumers to easily switch between currencies.

Encourage shoppers to offset their return shipping fees:

Offering free international returns isn’t likely to be financially wise for your brand – but by giving customers the opportunity to offset the cost of returns during the checkout process, you’ll be able to provide them with a low-cost option that ensures access to a convenient and free returns experience if they need it. Using Loop’s Checkout+ feature helps you capture revenue upfront that you can use to offset the cost of international return shipping and software fees.

Have reliable tracking and packaging

Once a purchase has been made, provide automated tracking to get the consumer excited about delivery. Loop provides branded order tracking via email and SMS channels, with accurate, real-time delivery estimates to help customers feel confident around their upcoming deliveries.

Make sure to use high-quality packaging to avoid damages and loss of revenue. If you’re shipping more delicate or valuable items, insurance might be worth the upfront cost.

Use 3PLs to simplify reverse logistics

As we’ve previously seen, supply chain issues can cause major delays and rises in shipping costs. If your cross-border shipping prices are higher than expected, you might want to consider utilizing third-party logistics (3PLs). 3PLs are vendors that will provide services such as warehouse space, packing orders and delivery. They come with a network of other companies and providers that they in turn work with. 3PLs can manage product sourcing, storage, management of inventory, fulfillment, shipping and transportation, as well as route optimization.

Using 3PLs or local companies can be a convenient solution to avoid rising shipping costs. They are often closer to the areas you will be sending international orders to, which helps avoid many tariffs or duties. They also can handle the return process more efficiently, allowing consumers to receive their money or exchange items quickly, ensuring satisfaction.

On the downside, it does mean releasing some control and putting your trust in an outside source. Be sure to do your research and make sure the company is reputable. Ask for references and visit in person if possible to be sure it’s legitimate. You can sometimes negotiate for volume discounts if you’re regularly sending large shipments so be sure to ask about this and other discounts.

When it comes to warehouse and fulfillment services, there are several options. Using a regional company cuts out the middleman that a delivery service involves. A private warehouse would be exclusive to your company. This can be ideal if you want full control and exclusive use of the space. A bonded warehouse would be a place where you can store your inventory before importing or exporting it, along with other companies’ items. A customs warehouse is run by the local government, and would allow you to ship items without paying tax or import duties.

You can also utilize distribution centers which are separate from warehouses. Distribution centers primarily manage fulfillment and packing orders. Whatever option you choose, be sure the company you work with isn’t violating any health and safety codes and are treating their workers ethically. You may need to adhere to certain storage requirements or provide equipment or technology, so make sure to find out what their needs are.

Automate your returns

As a final step, providing a seamless return process will be key to growing your company internationally. Make sure the shopper has received tracking information, delivery updates without delays and excellent customer service. These can mean the difference between a one-time customer and a return purchase.

Make sure you’re in constant communication with your 3PL or regional warehouse so you can provide up-to-the-minute information. Loop’s integration ShipBob offers free analytics and data reporting tools to track orders, maintain inventory, and provide insight into your fulfillment performance, logistics cost and more.

To prevent loss of revenue, rather than just offering a refund, suggest an even exchange for a similar style or color. You could also provide a credit that includes a discount if the shoppers spend a higher amount, often known as upselling.

Loop has partnered with the Shopify Fulfillment Network to make returns easy. Shopify’s technology hits on key touch points like return submission, label generation, and the refund process. Shoppers can instantly start a return, receive a label, and drop off their order to be returned. Loop creates automated return solutions that mean quicker return processes, less effort for customer support teams, and insightful data to understand trends in returns.

Want to improve your international returns system? Book a demo with Loop today.

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