Profiting Abroad

While we may be divided between Euro-sceptics and enthusiasts, and each of us might love or hate our American cousins, my experience is that once someone takes their credit card out to buy something, no-one much cares where these customers come from. From this I take it as read that most people with an online store would like to make overseas sales. So let's look at some of the tips and tricks of selling internationally – and also look at things to watch out for like tax, shipping and fraud.

 

Credibility

The first point to make is that in selling from the UK we have an advantage. Surprising as it is to those of us who live here, the UK still has an excellent reputation around the world. So if we've got it we should flaunt it. Clearly let the buyers know that you're based here.

 

Marketing

Above all else, the internet is a fantastic communications medium, so maybe it's biggest impact is going to be in the area of international trade. The good news is that much of the same expertise needed to get visitors from the UK to check out your site, in search engine optimisation (SEO) and pay-per-click advertising (PPC), can be equally effective in attracting overseas visitors. 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.

 

Shipping

Shipping abroad is surprisingly easy. Many ecommerce merchants do it, and without any problems. Using recognised major carriers such as UPS, Fedex or DHL will greatly reduce problems, and they can advise you of any issues. A customs declaration must be completed, but this should not pose a problem as long as what you are selling is not illegal in the country that you're sending it to!

 

Tax

Like every area of business these days, ecommerce is surrounded by a maze 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 will be a good place to start.

From a tax viewpoint, 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 EU rules. It's not the same when handling US buyers. 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 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 wildly successful and you are 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.

If your customer is a non-UK business in the EU and is registered for VAT in their own country, they are 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.

 

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.

For wholesale trade sales there are different procedures, so you would need to investigate these if you are operating in this field.

 

Payment issues

If you're on holiday in Spain, have a meal out and you pay by credit card then the restaurant will be paid in Euros. Your card company will automatically translate this into pounds and that is what will appear on your statement, with the original currency and amount as a small note item. When people buy across the net the principle is the same. They 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. So there's no need for a multi-currency system in your web store. However, it is useful to have a conversion facility so that you can provide an indicative amount in prospective buyer's local currency.

 

Fraud

Fraud is possibly the biggest problem to consider when selling abroad. Unfortunately it's true that orders from some countries seem to be much more likely to be fraudulent. Generally, ones from Western Europe and North America are the 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 particularly interested in small scale fraud, and even less so when the crime is committed outside their jurisdiction.

There are a number of ways that fraud can be experienced. If the buyer 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. The goods, of course, are long gone. Even someone who genuinely ordered and received the goods can dispute the charge. As a merchant, it's hard to resist charge backs and there's virtually no come-back for you.

There are a number of tricks to help avoid fraudulent orders. Some indicators of fraud are:

• 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

Some of the ways to check whether an order is fraudulent is to ask for a fax of a copy of the back strip of the credit card; to ask for proof of name and address to be faxed; or you make a call to make sure that the phone number is genuine. Most fraudsters give up at the first hurdle and you don't hear from them again.

 

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".

Happy selling!