Why going global may be the best response to COVID-19
Overcome new challenges and gain global clients.
Mere months after the emergence of the new coronavirus (COVID-19), nearly 90% of the world economy was under some sort of lockdown to help slow its spread. Global interconnectedness makes it challenging to contain COVID-19, but as we move forward, that same interconnectedness could help businesses thrive.
Ecommerce sales worldwide reached approximately $3.5 trillion in 2019. By 2023, global ecommerce is expected to surpass $6.5 trillion. Businesses that tap into the global marketplace have a lot of room to grow.
With consumers largely unable to shop in stores, some retailers saw online sales surge in recent months. Others experienced a drop in demand. For the latter, expanding to international markets could provide a much-needed boost in sales. Ultimately, it could even increase revenue.
Yet selling across borders has some inherent challenges, notably customs duties, import taxes, and transaction taxes (e.g., sales tax, value-added tax).
In addition to getting sales or value-added tax (VAT) rates right, international sellers must take tariffs into consideration. Every item that crosses a border must be classified with a Harmonized System (HS) code, a “universal economic language and code for goods.” Customs agents use the codes to quickly identify the products passing under their noses.
HS codes also correspond to country-specific duty rates. Get the code wrong, and tariffs could be too low or too high. Unexpected tariffs can cause customers to reject shipments, especially if they’re asked to pay what they owe in order to release shipments held at customs.
On the other hand, rewards can be great for retailers that successfully negotiate the hurdles of international compliance. There’s a world of customers out there.
Gain insight into the challenges and opportunities of cross-border ecommerce and learn how one retailer overcame obstacles and found new customers selling abroad in an upcoming webinar hosted by Digital Commerce 360 and sponsored by Avalara: Overcoming the New Challenges to Gain Global Clients. Watch the webinar on demand.
Stay up to date
Sign up for our free newsletter and stay up to date with the latest tax news.