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Two Burning Questions About Shipping





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Here at Small Business Trends we like to discover what’s on the minds of small biz owners and entrepreneurs. So at the recent GrowCo conference April 6-8, 2011 in Las Vegas, I knew what I wanted to ask Luke Mauricio, Small Business Marketing Manager for UPS (pictured below), when I had the chance to sit down with him.

My question was simple: what do small business owners attending the conference want to know about? In other words, what’s on their minds when they talk to a company like UPS?

Las Vegas at night from the Cosmopolitan Hotel

According to Luke, not many people had questions about basic shipping services. Most people seem to have a good handle on that. Instead, the questions were about:

(1) How do you ship internationally?

(2) How do you save money on shipping?

Well, seeing as how I had Luke’s ear, I sat down with him for a chat to get some information about these questions.

On shipping internationally…

The reason this question comes up so much is that “You’re dealing with unknowns when shipping to another country,” according to Luke. You’re probably not familiar with local customs regulations.  Business practices may be different.  Currencies are different.  Even the language may be unknown to you.  It’s natural to feel out of your element.

When it comes to international shipping, Luke says “UPS wants to inspire confidence” — confidence that items will be delivered and that someone will help them slice through the red tape. For instance, Luke pointed out that UPS has partnered with the U.S. Commercial Service (part of the U.S. Department of Commerce) to help give businesses information about exporting.

UPS also makes available an online resource library with information about shipping internationally. There you will find a downloadable international shipping guide (PDF).  The guide explains things such as the documentation used in international shipping — example, the Certificate of Origin document.  Another useful feature on the UPS international resource library is the country snapshots.  These snapshots are concise documents giving you facts and figures for doing business in specific countries.  Countries include Canada, China, Brazil, Vietnam, Poland and India.

Luke Mauricio, Small Business Marketing Manager, UPS

On saving money …

According to Luke, a goal should be to create an efficient and effective supply chain. That can have a direct impact on your customers’ experience.

“An effective supply chain is not so much about cutting expenses, but about your customer’s experience.  There are a lot of paybacks from an effective supply chain.  It becomes a comparative advantage for your company.”

And sometimes the bigger issue businesses face is a cash flow issue, i.e., having to wait too long to get payment in hand.  “Not a lot of people know that UPS has a finance subsidiary called UPS Capital.  We actually give out small business loans,”  says Luke Mauricio.  Loans are designed to bridge a short-term situation a business may face, such as the gap between delivering products and getting paid for them.

UPS is itself an entrepreneurial story.  It was founded 104 years ago in Seattle by two teenagers who took out a $100 loan.  According to Luke, “Their first business model was very very simple.  They were bicycle messengers who delivered customer purchases from Nordstroms, the department store.”  The two young entrepreneurs saw a need and expanded to meet that need for package delivery services.

For additional coverage of Growco, see Why You Should Never Define Your Financial Goals as Revenue.

Photos above: (1) View of Las Vegas from my hotel balcony at the beautiful Cosmopolitan Hotel, at night. (2) Luke Mauricio during a few quiet moments at the UPS Lounge at #GrowCo.  Note:  UPS subsidized my attendance at the conference.

9 Comments ▼

Anita Campbell Anita Campbell is the Founder, CEO and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses.

9 Reactions
  1. Hi Anita.

    When I worked in China one of the issues for us re delivering/shipping items from the US/Europe was theft as the value of the items was often higher than the couriers’ salaries.

    One way we managed to reduce this was partnering with a Chinese distribution company who would be the last leg of the shipping. This worked as the Chinese firm made sure that the goods were delivered – otherwise they didn’t get paid.

    So, partnering really helps esp in countries where the cultural dynamics are so different.

    Regards,

    Ivan

  2. Great item, Anita. We are an international forwarding company and we work with UPS to provide international shipping solutions to small businesses and entrepreneurs. A lot of small business owners are reluctant to offer their customers international shipping because of concerns about customs, logistics, and even fraud. Letting a forwarding company like ours fulfill international orders solves all of those problems and lets entrepreneurs reach larger international markets. Our relationship with UPS is fantastic and we’re glad to have them on our team.

    We’ve linked to this article on our company blog, in which we discuss the international shipping services we can offer small businesses in more detail. Take a look and let us know what you think! http://bit.ly/h3U5Lk

    • Hi Reid,

      I am delighted you referenced this article and found it helpful.

      As your post points out, if you don’t ship internationally you can be leaving money on the table, especially on the Web. Visitors to your website don’t necessary observe country boundaries. Nice use of Twitter tweets in your post to demonstrate buyer disappointment when international shipping is not available.

      Anita

  3. Martin Lindeskog

    Anita,

    As an experienced purchaser and an individual interested in supply chain management, this blog post is music for my ears! 🙂

    Did Luke Mauricio mention which export markets that are growing? Have UPS seen an increase in international deliveries due to the “favorable” USD currency compared to other currencies at the moment?

    I remember when I imported 3.5″ floppy disks from Taiwan R.O.C and Hong Kong during the ’90s, how many things you had to check in order to buy (advanced payment by bank transfer / check), ship and import (plenty of paperwork) products from Asia.

  4. Anita,

    Thank you for highlighting shipping and thanks to UPS marketing for footing the bill for some important questions for the small business market.

    Couple things come to mind for both these questions.

    I. How do you Ship Internationally?

    In many cases, the business owner is actually asking, “How do I grow international sales?”. I’ll give my $.02 on both these.

    When you are shipping international, a few tips to think about.

    1. Tracking, Tracking, Tracking. Don’t forget to ship a method that you have the tracking. This will help you if the shipment is claimed lost by the buyer. UPS does this.

    2. Price shop and check for the extra charges. For example, shipments going into Canada from some carriers can have some pretty heavy brokerage charges. These often are not disclosed to you unless you dig. So ask your carriers for all the costs for your common shipping channels (USA-Canada, USA-UK, etc)

    3. Make sure you have the payment, the customer knows they need to pay the tax and you ship the right product. Do this before you ship it. Because International returns are such a hassle, most sellers abandon product if the buyer challenges. The buyer that is surprised by a TAX bill with the shipment can sometimes refuse it and force the seller to have to pay for the return OR abandon.

    As you can see, shipping international and growing international sales are NOT the same thing. Shipping international is how you test big markets and delivery products to markets you have small sales “density” in.

    If you are intent to GROW international sales, look to the model of the top retailers. Put some of your best selling products into an international warehouse. Why do this?

    A. You will look like a local seller
    B. Local shipping costs and times. Don’t worry, UPS can still ship from your local warehouse; but, the cost will be local and the time for the buyer to get it will be MUCH shorter.
    C. Buyer doesn’t deal with Tax or customs.
    D. Local returns!

    II. What about Saving Money?

    Shipping costs are going up my friends. Guess what, they do every single year. It is so common, that the main carriers have created a name for it. The GRI – General Rate Increase. Sounds like something a politician would come up with right? Nope. Google it or ask Anita to post a write-up on it. She can use our blog posts for the past 4 years. Like I said, it happens every year. The GRI is a two step dance. Step 1: Announce a rate hike, offset by a slight reduction in the fuel sur-charge. Step 2. About 5 months later, announce fuel surcharge increases to keep up with fuel costs

    So, how do you cut shipping costs? Very simple.

    A. Ship shorter distances. Store inventory closer to buyers, especially international. Look into an overseas warehouse in your largest markets.

    B. Focus on major markets, and keep your best sellers stocked in those markets. People always say; but, it takes money to get the inventory there. Yup, but it is MUCH less because you ship in bulk and clear customs 1 time. ONLY do this for your best sellers, not your entire product line.

    B. Rate shop most or all of your orders. Plug into multiple carriers for local and international shipments. Manage two contracts. Big hint from the big boys: If you have some decent volume split your shipments 80/20 between the major carriers and negotiate with the carriers every year. The loser won’t lose all your volume and you can bet next year they will come back with a better offer.

    C. Sign up with a 3rd party service to audit your shipping bills and go back to the carriers for any shipment they missed their delivery SLA on.

    I hope this gives you a bunch of ideas. Just because you are a “small business” doesn’t mean you can’t play the game like the big businesses.

    Think about your buyer. They want shipments FAST and preferably FREE to become one of your repeat buyers.

    Nate Gilmore
    Vice President
    Shipwire Order Fulfillment

    • Nate,

      Thank you so much for weighing in and adding to the conversation. Great advice for small business owners and shipping/logistics managers.

      Anita

  5. Anita,

    We <3 the SMB

    (emoticon for heart)

    We've fought tooth and nail to try and give them the shipping muscle of the major players.

    Cheers and thanks for posting.

    Nate
    http://www.shipwire.com
    Global warehouses for your global business

    [Edited to remove links]

  6. Anthom Shipping Services Thailand

    Nice post Anita. I’m also working for a shipping / Freight forwarding company in Thailand and we work with UPS as one of our partners.
    I can understand small business owners are worried about shipping abroad : customs formalities, differents languages, logistics, etc. But, they should know that freight forwarding companies are devoted to make it easy. Here at Anthom Shipping Services, we belong to an international shipping agent network, so when my customers need to ship some goods somewhere in the world, I know one of my shipping agent partner in this country will be there to receive it, deal with the customs and provide his local expertise to give my customer the best shipping experience.

    Getting supplies abroad as become a real competitive advantage for many companies and delegate the shipping constraint to freight forwarder companies can be a solution too widen one’s business bondaries.

    I discover your blog today, and it seems full of informative posts 🙂 bookmarked !

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