Expanding into international markets creates exciting opportunities, but it also introduces added complexity. Duties, taxes, compliance requirements, and carrier rules differ widely between countries. This guide walks you through preparing your catalog at the product level, setting order defaults, and making thoughtful decisions about which markets to serve.
1. Choosing the Right Countries
It’s tempting to enable worldwide shipping right away, but that approach can create unnecessary risk. Each country has its own customs rules, paperwork, and potential pitfalls. Even a single order to a “difficult” destination can result in major delays or unexpected costs.
We recommend enabling international shipping only in countries where you already have a customer base or a clear marketing strategy. Many merchants start with Canada, the UK, and the EU before expanding into Asia or Latin America. This phased approach allows you to gain experience and refine your workflows before scaling.
Before adding a new country, it’s important to go deeper than demand alone. You should review the customs policies of that country and understand how your specific products will be treated. For example, supplements, cosmetics, or food products may require special labeling, registration, or certification before they are allowed through customs. Electronics may need safety approvals. Even apparel can face different duty rates depending on fabric composition or country of origin.
Each country also applies its own duty and tax structures by product category. A product that ships duty-free into one market may incur significant import taxes in another. Taking time to research these requirements in advance can help you avoid unexpected costs, refused shipments, or compliance issues.
Merchant Action: As you expand into new countries, review both the demand potential and the regulatory environment. Confirm product-specific rules, labeling standards, and duty rates before enabling sales to that market.
2. Product-Level Setup: HS Codes, COO, and Customs Values
The foundation of smooth cross-border shipping is accurate product data. Every SKU should include:
- HS Code (Harmonized System Code): A global classification that determines duties, restrictions, and admissibility.
- Country of Origin (COO): The country where the product was manufactured, which may impact tariff rates and trade agreements.
- Customs Value: The declared value of the product, usually the transaction price, used to calculate duties and taxes.
These fields should be set up in advance at the product level. Missing or inaccurate information can lead to delays, fines, or even shipment seizures.
Another factor to consider is product naming. The way you describe your products in invoices or customs data can trigger additional scrutiny. For example, labeling a shirt as “charcoal” to indicate its color may cause customs systems to interpret it as containing actual charcoal, which can flag the shipment for inspection. Descriptions should be clear, accurate, and unambiguous to avoid confusion.
Merchant Action: Use plain, straightforward product names and avoid terms that could have multiple meanings when interpreted by customs officials.
3. Incoterms and Order Defaults
Once your catalog is configured, the next step is deciding how duties and taxes will be handled. By default, all orders ship as Delivered Duty Unpaid (DDU), also called Delivered at Place (DAP). In this model, customers pay duties and taxes when the package arrives at their country. Merchants may also choose Delivered Duty Paid (DDP), where duties and taxes are prepaid by the merchant or collected at checkout. This creates a smoother customer experience but requires more setup.
Manifest Default: All orders transmit as DDU unless otherwise specified. Merchants may configure DDP for all orders or apply it selectively. For a deeper dive on the differences between these Incoterms, see our article: International Shipping – DDP vs DDU.
To make DDP more effective, many merchants use duty and tax calculators at checkout. These tools estimate the exact duties, taxes, and fees that will apply to an order and present them to the customer in advance. This allows the customer to pay the landed cost upfront, eliminating surprise fees at delivery and reducing the risk of refused shipments.
4. FTR Exemptions
If you ship from the United States, some orders may require filing in the Automated Export System (AES). When filing is not required, you must apply a Foreign Trade Regulations (FTR) Exemption code. The most common is NOEEI 30.37(a), which covers shipments under $2,500 per Schedule B code (except restricted items).
Manifest Default: Exemptions are applied automatically where possible, but merchants may override them on a per-order basis if needed.
5. Importer Tax ID Requirements
Some countries require a customer’s Tax ID before customs will release a shipment. Without this, packages may be delayed or returned. ShipHero now automatically transmits Importer Tax IDs to FedEx and UPS for shipments to:
- Mexico (MX) – RFC
- China (CN) – Tax ID + Type
- Brazil (BR) – Tax ID + Type
This expands on existing support for Shippo, FedEx FIC, DHL eCommerce, and Asendia. Orders must have the Tax ID and its type correctly assigned. If you use Shopify’s native tax type collection at checkout, these values flow automatically into ShipHero.
6. Address Verification & Contact Information
Accurate delivery details are critical for international shipping. Invalid or incomplete addresses are one of the leading causes of customs delays and failed deliveries.
To reduce risk, we require:
- Address Verification: All international addresses should be validated at checkout to ensure they follow local postal formats.
- Customer Contact Information: A valid phone number and email address must be included on every order. Carriers and customs agencies often use this information to resolve clearance issues directly with the recipient.
Why it matters: Without valid contact details, shipments may be delayed, returned, or destroyed if customs cannot reach the importer.
7. Duty Drawback Programs
Merchants that import products into the United States and later export or destroy them may be eligible for a Duty Drawback refund. This U.S. Customs program allows you to recover up to 99% of the duties, taxes, and fees paid on imported merchandise.
Examples where duty drawback may apply include:
- Goods imported into the U.S. but later shipped to international customers.
- Inventory that is imported and then destroyed instead of sold.
- Components imported for manufacturing in the U.S. where the finished product is then exported.
Merchant Action: Duty drawback claims require detailed recordkeeping that matches import and export data. Merchants should work with a licensed customs broker or drawback specialist to evaluate eligibility and file claims.
Why it matters: If you’re regularly fulfilling international orders from U.S. inventory, participating in a duty drawback program can significantly reduce your overall landed costs.
Recommended Setup Flow
- Country Strategy: Enable only countries with proven demand or planned marketing investment; roll out gradually.
- Catalog Prep: Assign HS Codes, Country of Origin, and Customs Values at the product level.
- Order Defaults: Keep DDU as the baseline; configure DDP for certain markets if needed.
- FTR Exemptions: Apply automatically by default, override when necessary for U.S. exports.
- Tax IDs: Collect and transmit importer IDs for countries that require them (e.g., Brazil, Mexico, South Korea, Italy).
- Customs Documentation: Generate commercial invoices; confirm if ETD is supported or if paper copies are required.
- Address Verification: Validate international addresses at checkout and ensure each order includes a valid phone number and email for customs or carrier contact.
- Duty Drawback (Optional): If you import into the U.S. and later export or destroy goods, evaluate participation in a drawback program to recover duties and fees.
- Testing: Run trial shipments to new destinations before a full rollout.
Best Practices
- Keep product data current: Regulations change; update HS Codes, COO, and Customs Values regularly.
- Communicate clearly at checkout: Let customers know if duties/taxes are prepaid (DDP) or due at delivery (DDU).
- Use DDP selectively: Consider DDP in high-value or high-duty markets to improve customer experience.
- Require contact details: Always collect a phone number and email to avoid customs delays.
- Check carrier & country rules: Confirm whether destinations support ETD or require paper invoices, and review restricted items before shipping.
- Plan for returns: Decide whether to support international returns; if so, set clear policies and workflows.
- Consider insurance & fraud screening: Protect against loss, damage, and fraudulent orders, which are more common in cross-border shipping.
- Evaluate duty drawback: If eligible, work with a customs broker to reclaim duties on exported or destroyed imports.
✨ Next Step: Review your setup with your Account Manager before enabling new countries. Careful preparation reduces risk and ensures a smoother experience for both you and your customers.