LandedCost: You Don't Have to Be a Giant to Go Global
- Value Added Tax
- February 1, 2016 | Amy Morgan
You no longer have to be a giant to reach customers across the globe.
Internet technology has opened up global trade for sellers of all sizes. Yet, tax compliance can block smaller online retailers from taking full advantage of global markets. This is because tax compliance on cross-border sales is far more complex than many realize.
And getting it wrong can cost you customers.
Research from PayPal shows that lack of clarity on the total cost of a sale is a key driver of online cart abandonment. In Italy, 27% of shoppers abandoned a shopping cart from an overseas seller because they were “not clear how much duty, tax, or customs fees they would have to pay.” In Canada, 42% have done so.
So it's vital to give customers an accurate total cost for a purchase, including taxes and fees. In other words, you need to get the landed cost right.
Landed cost is the combined cost of getting a physical product from point A to B. It usually refers to sales made between countries. And it can be wickedly hard to calculate.
Here are just some of the elements that go into a landed cost calculation:
- shipping costs,
- customs costs, and
- duty rates.
You have to find and apply rules and rates for each of these elements on each product you sell, in each country where you sell it—and no two countries’ tax codes are the same. Multinational companies have entire tax departments to help them manage landed cost. In fact, many will hire a full time employee just to manage one or two components of landed cost, like duty rates and tariff codes.
Small to mid-size sellers don’t have an army of accountants.
Many lack the resources to navigate the maze of international tax codes and correctly calculate landed cost. This can stand in the way of global growth. Some sellers even decide it’s not worth the risk of getting the taxes wrong so they decide not to engage in cross-border trade.
At Avalara, we believe tax compliance should never stand in the way of you taking your business global. You shouldn’t need an army of accountants to do business across borders.
That’s why we’re thrilled to announced Avalara LandedCost, which enables small and mid-market ecommerce merchants to determine in real-time the duties, taxes, cost of goods sold and shipping costs for all global commerce transactions. In short, we’ve built a technology that handles the maze of international tax codes and calculations for you. This will free you up to focus on reaching, and keeping, new customers in markets around the globe.
With Avalara LandedCost, you can present the total price of a sale with confidence, so there are no surprises or hidden costs for you or your customers.
Do what you love. Leave the taxes to us.