Let’s face it. You live in a very global world where pretty much anything is available while you lounge in pyjamas. You click a button, give your credit card and in a few weeks, a package arrives at your doorstep… usually. But, it’s never that easy.
Being a web-store, with customers on every continent, Phidgets has learned a few things about shipping. So, if you’ve ever wondered why a package never gets to you, or why it takes so long, or why it costs so much, or how to ship packages from your own web-store, then read on. We have stories for you.
Missing Packages Don’t Just Affect Customers
The first anecdote we have to share recounts a shipment worth $110,000 that almost got snatched by a freight company in China.
The shipment left an electronics warehouse in the States, destined for a factory in China via Hong Kong. The electronics warehouse insisted on putting down both the addresses of the final destination in China and the intermediate stop in Hong Kong, even though the freight company was only needed to take it as far as Hong Kong. First mistake. When the freight company got the shipment, they entered the China warehouse address and off it went.
When it got to the freight office in China, they tried delivering it to the factory, but the company had moved. They marked it as delivered while the huge $110,000 shipment sat in the Chinese freight office and they waited for someone to complain about it. Yup, as far as we knew, it was at the destination. However, the factory was still waiting for their parts to assemble the boards that we needed.
We decided to investigate and sent someone in China to investigate. We found it never went through Hong Kong and that the building where our factory was supposedly housed, had changed hands twice since the shipment left the States. Finally, the freight office was found, but denied having the package, claiming either that it was lost or had been delivered.
Not willing to accept those answers, the CEO of Phidgets called them up, delivered some mean threats and said he’d fly out there to find it himself. Within 15 minutes the shipment was located and on its way to the factory.
The Mysteries of Worldwide Post
Let’s go back a bit and talk about shipments to customers, because that’s what you’re most worried about. At the beginning, we thought using the federal postal service was fine. It wasn’t long before we were dealing with packages that took months to arrive, packages that went completely missing and customers that were understandably quite upset. Unfortunately, once the package left Canada, there was no tracking on them, so we didn’t even know how far they got or where they ended up.
Two of the most notorious destinations are Eastern Europe and China. For Russian customers, it is almost always an easier option to ship the order to Finland and pick it up from there. No exaggeration. UPS even advises customers not to ship any dutiable items to individuals outside major cities in Russia. For this reason, Phidgets only ships to customers with valid business licenses in Russia.
China also tends to be difficult due to their customs agency. If you, or the person you’re shipping to, know the ins and outs of the Chinese customs process, then it may be possible to get the parcel through, but otherwise it usually gets ensnared somewhere along the way. The best way around this, we found, is to ship to Hong Kong and have them get it through to where you need in China, wether you’re using the postal system or a courier.
Somewhere in the middle of best and worst cases is Australia. Canada and Australia both seem to have pretty reliable postal services, but the package still has a long way to go. Using basic ground shipping will take 4 to 6 weeks. The quicker you want it to get there, the more expensive it will be.
Basically, you may get a decent rate using post, but it runs the risk of never making it to the destination or taking a very long time.
Which Courier to Use
On top of federal postal services, there are a few big players in the courier arena: FedEx, UPS, DHL and TNT. As mentioned above, there are some huge downsides to the postal services. Any of the couriers will allow you to electronically upload a digital invoice, which will automatically be processed and passed off to customs without delay. They’ll also track your package so you know when it arrives at its destination.
For us, in Canada, UPS has proven to be the best option. UPS offers the most competitive deals, giving discounts to their smaller customers, like Phidgets. Their ground shipping is also priced low, although you won’t get any discounts on it. On the customer side, UPS seems quite favoured in North America. On top of attempting deliveries to your address, they also have UPS Stores in major cities across Canada and the United States, which will hold a package for you, making it easier to get than travelling to the airport (as one might have to do with other couriers). One of the big complaints about UPS is the extra charges, like brokerage and storage fees. A few customers have been shocked to find a steep bill a couple weeks after receiving their package.
In Europe and Asia, DHL seems to be the big player, but in North America, it’s a bit weak. If you’ve had any good or bad experiences with couriers, please share in the comments.
Fees, Taxes and Tariffs – Oh My!
Since we ship with UPS, brokerage fees are included with the normal shipping charge until an order exceeds $200 (when shipped by ground – UPS Standard service) and any air shipment. For this reason, we strongly discourage ground shipping on orders over $200. This isn’t guaranteeing that customers won’t get hit with import duties and taxes, so make sure you contact your local customs office if you’re concerned. You can read our shipping policy online for more information about these, and other, fees.
But, there remains one question that perplexes many eBay shoppers, is how can products and shipping from China be so cheap? We can’t claim to have the definitive answer, but there are some speculations out there.
- The raw material cost is very low, as is the cost of assembly. Chinese factories produce such huge quantities of these items. A seller could acquire the finished products for very low cost and still be able to mark them up significantly without it being expensive, by any definition.
- With the huge number of shipments leaving China each day, a broker could get a box of shipments on a Pacific cargo ship for next to nothing.
- Although evidence for the Chinese government providing direct subsidies for shipping is hard to find, “China’s central and provincial governments have long fed its major state-owned and private companies a steady diet of subsidies to boost growth,” (wsj.com) which would contribute to easing the burden of large shipping costs.
When you look at the rest of the world, certain countries impose exorbitant tariffs on imports. The reasoning usually has to do with developing commerce within the country, but it can be frustrating when there’s no equivalent and you’re faced with paying an extra 60% of the cost, after shipping.
South American countries can be problematic for this reason. The sum of the fees can often be in excess of 50%. With Brazil for example, having taxes and tariffs totalling up to about 60%. That’s not just 60% of the item’s cost, but also the insurance and freight.
Americans can also be surprised by the experiences of international shipping, mainly because of how infrequently they need to order from other countries. This means that when an order of Phidgets products shows up it may come with some unexpected duty charges. Luckily, this duty fee is usually in the single digit range as a percentage. For US customers, Phidgets pays any of these fees on ground shipments under $200 and air shipments under $2000.
The last issue we encounter with international shipping is the rising expectations of our customers due to their experiences with major online retailers like Amazon. Amazon has mastered international shipping, and set up arrangements so that your parcel will not even need to be inspected specifically, but clear customs as a ‘mega-shipment’ with everyone else’s order. They even have arrangements to ensure that the custom clearance fees are covered, and that the package will never require additional payment on delivery. Sadly these arrangements only come with tremendous shipping volumes, and really don’t make economic sense for a company of our size. Still, it’s easy to only order things from large online retailers. They seem to stock everything these days. It’s no wonder people get used to the idea of international shipping being so hassle free.
If you’re opposed to the high costs and wait times, you can try local dealers. They may look more expensive at first, but after taxes they can turn out to be cheaper. Also, the Phidgets will get to you quicker than if it’s shipped from Canada.
If you’re in Canada, Solarbotics (based in the same city as Phidgets) will ship via Canada Post, and they usually have a lot of Phidgets in stock.
The big lesson is that shipping is expensive and it likes to take its time (if you’re anywhere except China). UPS has worked really well for us, and we’d recommend for any small sized business in Canada or the United States, but there are definitely other options out there. Share your stories or tell us what you’ve found to work in the comments below.