Cross-border e-commerce has witnessed exponential growth in recent years, driven by technological advancements, improved logistics, and the increasing globalization of consumer preferences. In Indonesia, businesses are looking to international markets to sustain growth and compete globally.
According to Oberlo, there are 2.71 billion digital buyers worldwide, an increase of 70 million from the previous year. In Indonesia, the online shopping market is experiencing rapid growth, with the number of digital shoppers expected to surpass 220 million by 2025. In addition, Statista predicts that e-commerce shoppers in Indonesia will reach 99.1 million by 2029.
McKinsey & Company explains that this growth is fueled by two predominant models: e-commerce platforms and social commerce. Platforms like Tokopedia, Shopee, and Lazada lead the online shopping space, generating 60% of sales. On the other hand, social commerce involves buying and selling goods through social media platforms like Facebook, Instagram, Line, and WhatsApp.
Integral to this growth, and reflective of cross-border trends in e-commerce, is international shipping, which enables businesses to expand their reach, deliver products across borders, and meet the rising demand from global customers. This article explores the essentials of international shipping–from customs requirements to product packaging.
Understanding international shipping
International shipping refers to transporting goods from one country to another, including sea, air, or land. Unlike domestic shipping, which operates within the boundaries of a single country, international shipping involves a more complex logistical framework. This includes navigating different legal systems and customs regulations.
The key difference between domestic and international shipping is regulatory complexity. Domestic shipping follows a single set of laws, while international shipping must navigate multiple countries' regulations, often at higher costs due to taxes and logistics. Despite these challenges, international shipping offers e-commerce businesses significant opportunities to expand their market, diversify their customer base, and increase revenue.
Selecting the right shipping partners
In international trade, shipping is far more complex than in domestic markets. The stakes are higher due to longer transit times, multiple touchpoints, varying regulatory requirements, and the potential for unforeseen disruptions such as customs delays or natural disasters.
This can be addressed by partnering with a reliable shipping partner. International shipping service providers like DHL Express ensure smooth cross-border movement of goods from Indonesia and help you navigate the complexities of e-commerce logistics globally.
Here are the factors to consider when choosing the right international shipping partner:
- Global reach: A strong global network with local partnerships ensures seamless international shipping and a deep understanding of regional customs, logistics, and customer preferences.
- Tracking technology: E-commerce shipping companies that leverage advanced tracking systems provide you with real-time visibility. This allows for proactive management of potential delays, informed decision-making, and improved overall supply chain efficiency.
- Customer support: Shipping issues or questions can arise at any time, especially with international shipments across different time zones. Having round-the-clock support ensures you can get help whenever you need it, thereby minimizing delays and disruptions.
- Value for money: E-commerce international shipping can be expensive due to distance, customs duties, and fuel prices. A partner focused on value ensures competitive pricing and transparent cost structures and helps you identify opportunities to optimize expenses.
- Compliance with regulations: A compliant shipping partner ensures that your international e-commerce shipments adhere to all relevant laws, minimizing the risk of delays, fines, or even legal action.
Customs and duties: what you need to know
When shipping goods from Indonesia, e-commerce businesses must navigate the customs and duties regulations to ensure compliance. Here's an overview of what to consider:
- Export procedures: Any goods leaving the country’s customs territory are classified as exports. While the export of taxable goods is subject to a 0% Value Added Tax (VAT), certain commodities may incur export duties to protect domestic industries. The specific products and the rate at which they are taxed are determined by the Ministry of Finance (MoF) and are updated monthly.
- Calculating export duty: Export duties in Indonesia are calculated using either an ad valorem method, which applies a percentage tariff to the standard export price, or a specific method, where a fixed amount per unit of goods is applied. The applicable tariff or specific duty amount is then multiplied by the quantity of goods and the prevailing exchange rate to determine the total export duty payable.
- Customs declaration: Before exporting, businesses must submit a customs declaration form known as PEB (Pemberitahuan Ekspor Barang) to the relevant Customs Office. This form should be accompanied by essential documentation such as a commercial invoice, bill of lading, packing list, and insurance details. The PEB should be filed no more than seven days before the goods are exported and must be submitted by the time the goods enter the customs area.
- Export duty payment and deferral: For goods subject to export duty, payment must typically be made upon submission of the PEB. However, exporters can request a payment deferral for certain goods up to 60 days post-departure, subject to specific conditions. In cases where an underpayment of export duty is identified, the Customs Authority will issue a collection notice, and the exporter has 30 days to settle the underpayment.
- Export duty regulations: Export duties primarily aim to safeguard domestic resources and maintain market stability. The maximum export duty tariff can reach up to 60% of the export price, particularly for commodities like crude palm oil, rattan, wood, and mineral ores. The Ministry of Finance determines which goods are subject to these duties, and exporters must stay informed of any changes to avoid penalties.
Packaging for international shipments
Given the extended transit times and multiple handling points involved in e-commerce international shipping, adhering to the following best practices in packaging can reduce the risk of damage and loss.
- Select appropriate packaging materials: Choose packaging materials that are strong enough to withstand the rigors of international shipping. Double-walled corrugated boxes and high-quality bubble wrap are recommended for added protection.
- Fill empty spaces: Any voids within the packaging should be filled with cushioning materials such as foam peanuts, air pillows, or crumpled paper. This prevents items from shifting during transit, which can lead to damage.
- Secure items within the package: If shipping multiple items in one box, ensure each item is individually wrapped and secured to prevent movement and collision. Use dividers if necessary, especially for fragile items.
- Seal packages properly: Use high-quality sealing tape, applied across all seams, to ensure that packages remain closed throughout their journey. Reinforce any potential weak points with additional layers of tape.
- Use durable materials: Durable packaging is essential for international shipping, as packages may face harsh environmental conditions and rough handling. High-quality materials reduce the risk of damage to the contents.
- Label packages properly: Ensure clear, legible addresses and special handling instructions (e.g., "Fragile," "Handle with Care") help prevent misrouting and mishandling during transit.
Additional guidelines for handling fragile and perishable items
Fragile and perishable items require additional protection due to their vulnerability to environmental factors. Fragile goods should be packed with foam inserts, bubble wrap, and double-walled boxes with clear "Fragile" labels to ensure careful handling.
For perishable items, businesses must adhere to strict temperature control by using insulated packaging and cooling agents like gel packs or dry ice. Worldwide express shipping with experienced carriers will go a long way in preserving product integrity during transit.
Managing international shipping costs
Several factors influence international shipping costs, including package weight and dimensions, shipping distance, delivery speed, and customs duties. Moreover, fuel surcharges, insurance, and the choice of carrier can significantly affect overall expenses.
To reduce shipping costs, e-commerce businesses can consolidate shipments to benefit from bulk rates and collaborate with reputable international shipping companies to minimize expenses related to returns and delays.
Tracking and insurance for international shipments
Tracking shipments is a critical component of cross-border e-commerce logistics. It provides real-time visibility into the location and status of goods as they move through various stages of transit. However, the unpredictable nature of international shipping—such as accidents, environmental factors, or handling errors—means that goods can still be lost, stolen, or damaged en route.
This is where shipment insurance comes in. Insurance acts as a financial safety net that covers the value of the goods in case of such unfortunate events, thereby protecting businesses from potentially significant financial losses.
Dealing with returns and refunds
International e-commerce returns pose challenges for businesses due to higher costs, longer processing times, varying regulations, and increased risk of damage. A clear and comprehensive refund and return policy mitigates these issues, thereby setting expectations, streamlining processes, and fostering customer trust.
Customer experience and communication
Clear and open communication is important in providing a positive shipping experience for international e-commerce customers. By offering accurate shipping estimates and setting clear delivery timelines, you help manage expectations and minimize uncertainty.
Navigate through Indonesia’s international e-commerce shipping
As e-commerce continues to thrive, business owners are confronted with the complexities of international shipping and the rates that come with it. To navigate this, DHL Express helps Indonesian e-commerce businesses export their goods easily. With our extensive international network spanning over 220 countries, you can seamlessly connect with global customers, enhance operational efficiency, and drive business growth.
Start leveraging e-commerce international shipping solutions. Open a DHL Express business account today and unlock opportunities for success in the global market.
