What Every Brand Needs To Know About Shipping Costs, Duties, And Returns For Heavy Goods — Robert Khachatryan | Why Brands Should Go Global, Why Bulky Items Add Hidden Costs, Why Taxes And Duties Matter, How Packaging Affects Shipping Costs (#423)

Please support the show if you liked today's episode:

• If you love the podcast, please get someone else to listen, too!
• If you enjoyed this episode of the Ecommerce Coffee Break podcast, please head over to Apple Podcasts, leave a rating, write a review, and subscribe.
• Share the podcast with your family, friends, and co-workers.
• Tag the podcast on Instagram @clauslauter and let me know what you like about it.
• If you like the content and would like to support the podcast, you can buy me a coffee here.
• Become a guest on the show or sponsor an episode.

00:00:00:25 - 00:00:24:26
Unknown
With bulky items. Parcel is not available as a as an option, so it turns into an international freight trade defeats an international sale, especially. But even domestic sales, it's a freight shipment. So those tend to be a lot more complicated. There's a lot more at stake. Robert, what's the biggest mistake that you see when companies are brands trying to ship large or heavy products?

00:00:24:28 - 00:00:31:01
Unknown
I see a lot of companies.

00:00:31:04 - 00:00:51:03
Unknown
Hello and welcome to another episode of the E-commerce Coffee Break podcast. Today we want to talk about bulky shipping and shipping high ticket items. So if you're selling big, bulky and high ticket products like fitness gear, furniture, electronics, then you already know shipping can get messy very fast. Hidden costs, surprise duties, complex returns. That's easy to get wrong.

00:00:51:06 - 00:01:17:18
Unknown
And when that happens, your profits and your customer experience was that too? We'll take it. So today we talk about that. We want to dive deep into this. And as always, have an expert with me today. Joining me on the show is Robert Khachatryan. He is the founder and CEO of Freight Right Global Logistics. He started the company from his L.A. department during the 2008 crash and turned it into a global leader in shipping Big, big, bulky and high value goods.

00:01:17:21 - 00:01:46:11
Unknown
Robert is the trusted voice of logistics, a frequent speaker at top industry events and advisor to you as CEO, Global Supply Chain Institute. So let's dive right into it. Robert, welcome to the show. Thanks for having me close. Robert, what's the biggest mistake that you see when companies are brands trying to ship a large or heavy products? I see a lot of companies default to offering free shipping because they can't really figure out how to calculate shipping for big and bulky items.

00:01:46:14 - 00:02:06:03
Unknown
You see this in the United States for domestic sales, and you see this in international as well. People either don't offer it at all or it's some kind of a flat shipping where they often take it because it turns out to be more expensive than that. They caught on the shopping cart level. I would say that's the biggest pitfall.

00:02:06:05 - 00:02:39:06
Unknown
Let's talk about the cost structure, the hidden costs when it comes to big, expensive and bulky products. Where do we need to look at? Where does it start and what's involved in there? You know, when you sell small items that can be handled by parcel carriers like, you know, FedEx, UPS, DHL, it's very easy because it's just an API call, you know, some kind of an integration where you provide the carrier measurements of the box and the weight and destination and they return your rate and then basically they honor the trade with bulky items.

00:02:39:07 - 00:03:11:12
Unknown
Parcel is not available as a as an option, so it turns it to an international freight shipping trade. If it's an international sale especially, but even domestic sales, it's a freight shipment. So those tends to be a lot more complicated. There's a lot more at stake. If something's wrong, it's generally more money at stake. You know, if you think about it, the parcel, if it's not priced correctly, you might go from, let's say, $5 to $10 in shipping cost, whereas, you know, big, heavy item, you might end up paying hundreds of dollars more.

00:03:11:12 - 00:03:38:17
Unknown
If not, it's not thousands. Right. So the stakes are much higher just because of the cost of shipping is so much higher. You know, just a factor of the weight, let's say. No, it's not only the shipping itself. There's also taxes, duties and other things that come into play when you ship internationally. Talk about this a little bit more so that our listeners can understand what costs are actually coming to the sales price.

00:03:38:20 - 00:04:02:18
Unknown
Yeah, that's one of the biggest challenges. Again, to some extent it's a function of larger amounts because if you're selling larger items, bulkier items, they tend to be more expensive than, say, a trinket that fits in an envelope. So again, the mistakes are very costly, right? So if you're shipping something to the EU, for example, or U.K., you're talking about a 20, 21% VAT.

00:04:02:21 - 00:04:23:03
Unknown
So how do you calculate it? You know, how do you make sure it's calculated properly? And that's on the easier side because, you know, it's typically a blanket rate across the country, whereas if you're trying to calculate the import duties now, you're getting into all sorts of complicated customs classifications. And there you can have a lot of challenges.

00:04:23:10 - 00:05:03:08
Unknown
Think of all the recent news with tariffs in the United States. You know, how do you calculate the correct tariff? How do you collect it? That can be very burdensome. The problem is, you know, in the same category of products, you might have multiple classifications and then they might have different duty rates and when you're shipping something big and bulky, the last thing you want is arriving to the destination country and the customer refusing it because they get like an unexpected duty bill or, you know, either because you didn't calculate it or estimated to begin with, they have no idea they have to pay this or if you calculated it was incorrect.

00:05:03:10 - 00:05:22:09
Unknown
Right. So, you know, if you sell like a $10,000 machine to a customer in Europe and it arrives and all of a sudden they get a call and they're told they have to pay, you know, two, $3,000 in duties and taxes, that could be very shocking. Right. So I guess that's a it's a big challenge to solve. Mm.

00:05:22:12 - 00:05:39:26
Unknown
Now, I think our listeners can understand this is a lot of moving parts and they have to get this right at the end of the day. And it might be overwhelming and it might be not even within the expertise of a seller out there. That's where you come into play. How do you help brands out there to figure out how it works and to make it seamless?

00:05:39:28 - 00:06:03:26
Unknown
You know, there are generally well-established solutions for international sales and duty calculation even, and certainly tax collection and remittance. But again, for smaller items and smaller amounts, when you get into the world of large and expensive items, there's very few solutions that exist. So a lot of brands try to solve this themselves and it definitely can become burdensome.

00:06:03:28 - 00:06:39:27
Unknown
What we do is, you know, we believe we can sort of, you know, to use a cliche, we can democratize this process. We can make this available to smaller brands who don't necessarily have presence in all the countries. They don't have local, you know, taxable entities. Right. So what our company does essentially is will connect to a brand's shopping cart and will enable sales in 45 plus countries where we're able to calculate the instantly duty rates, tax rates, shipping rates, both, you know, economy options and export.

00:06:39:27 - 00:07:02:06
Unknown
That is, options. So if you want to let's say you're a US brand and you want to sell your exercise equipment in Singapore, we can basically our technology allows you to, you know, if the customer if the buyer is on your shopping cart and enter a Singapore address, we can instantly calculate to raise taxes and shipping, let's say, by air and ocean.

00:07:02:09 - 00:07:28:02
Unknown
Right. So, you know, they pay the check out and essentially you can sell, you know, Singapore now without having a Singapore entity, without having to collect taxes in Singapore, remits taxes in Singapore. And that's right now across 45 different countries. So typically when we talk to brands, that's a large items online. I mean, it's it's astounding. Almost none of them sold internationally because of these challenges, right?

00:07:28:05 - 00:07:52:10
Unknown
Like none, zero. The only ones that sell internationally are the ones that have distribution or they have distributing partners. They have established relationships or they have branches in those countries. And we wanted to mimic that for all the other brands that, you know, haven't reached that level yet or maybe don't want to have like taxation representation in a particular country.

00:07:52:13 - 00:08:13:00
Unknown
Now I can understand a lot of brands try break from this because it's a very complex process. I mean, you need expertise like you have to to solve this riddle issue. And I have somebody, a friend of mine, she's selling heavy furnitures and exactly the problem not going internationally while there's a big market waiting out there because of these complexities that are behind.

00:08:13:03 - 00:08:40:05
Unknown
Now, for a brand, if they think starting get selling internationally with these products, what's the first step to get started? I think some general research around their particular product or product categories and the destination countries, for example, you know, if you're selling electronics, you have different voltages in different countries, you know, power outlets and things like that. That would be the first thing to tackle.

00:08:40:07 - 00:09:06:09
Unknown
You know, we have American brands that provide adapters, for example, we do international shipments. But, you know, we also run into products that, you know, require a completely new, you know, electronics. Right. So it's a 110 volt thing that just doesn't work. You cannot just downgrade, you know, step down from toe to toe with the adapter. It requires a complete rework and it becomes a separate product.

00:09:06:11 - 00:09:31:16
Unknown
So, you know, that would be an extreme case of can you just can't sell your current product. There are you know, if you're selling items that have some kind of a brand licensing, you know, the a good place to look is do you have legally do you have the authority to sell that product in that country? You may have Disney licensing, for example, in the UK, which may not extend to Europe or may not extend to the United States.

00:09:31:18 - 00:09:59:21
Unknown
So you want to make sure basically you can sell your product for IP restrictions, trademarks and so on and so forth. And there's also, you know, compliance, right? So different countries have different compliance rules. There is, you know, the more sort of niche and technical the products, the more this may be relevant. Furniture, as an example, generally is a pretty easy thing to ship internationally.

00:09:59:23 - 00:10:27:05
Unknown
You know, regulations pretty standard. You know, U.S. and Europe have standards around how flammable something can be, but those generally are pretty standardized versus, say, let's say, cosmetics, which may require registration locally. And you know, might have different standards. So I would definitely start with some kind of research to understand can you actually sell your product in other countries and which countries are those?

00:10:27:08 - 00:10:45:29
Unknown
So you may be able to sell one product in one country, another product in another country. Our solution actually allows you to customize and say, I want these products enabled for this country, or, you know, I want to block this particular product in this country for whatever reason. Right. But that's that's definitely where I would start. Mm hmm.

00:10:46:02 - 00:11:12:10
Unknown
No, makes perfect sense. I mean, having a bit of market research and feeling a feeling of what's sellable in a country, it makes perfect sense. Now, who's your perfect customer? Yeah. So by design brands that so either bulky items or priced or so smaller items in large quantities to the same customer where it's basically amounts to a bulky shipment, I think unique items definitely that would be in demand.

00:11:12:11 - 00:11:38:17
Unknown
You know, the countries and brands that you know, have social media marketing campaign which results in international demand. Most importantly, I think brands that have the appetite and the ambition to go international but don't necessarily want to go the traditional route of, you know, finding a local distributor is going to trade shows, investing in inventory and doing that for multiple countries.

00:11:38:20 - 00:12:01:18
Unknown
So basically brands that want to expand internationally but are not looking for necessarily establishing international presence physically themselves, that's the ideal customer. I think there lies a huge opportunity for a lot of brands in the U.S. to expand internationally. And what was the partner like yours on the side who does basically the complicated stuff. It's a good combination.

00:12:01:20 - 00:12:26:23
Unknown
Now, how do you charge for your service? That's the beauty of it, because we are at our core a logistics company, right? So our services is actually the logistics, the movement of goods, the customs clearance processing, and that's where we make our money. So the brand basically doesn't pay for the solution. Right. So the buyer, when they pay for shipping, we arrange the shipping.

00:12:26:23 - 00:12:50:02
Unknown
So that's that's where we get our revenue from. So in most cases, there is no cost to the brand to to enable the solution, Right. Unless it's some kind of a, you know, custom integration or requires a lot of custom coating work then. But those would be very rare. You know, most shopping carts we can readily connect to without any any expense.

00:12:50:06 - 00:13:10:13
Unknown
Okay. But it's very straightforward. Then probably before our chat comes to an end, today's anything you want to share with our listeners that we haven't covered yet? You know, I would encourage brands to explore international markets. We very often talk to brands who see who tends to be a little bit timid about it, and we understand it's complex, it's scary.

00:13:10:13 - 00:13:40:04
Unknown
You know, there's regulation and compliance and things like that. But you know, with a solution like ours, we really make it easy. We we take over most of the compliance, the taxation, all of those things. And, you know, the brand is very shielded from any international exposure. So, you know, having all that fear, you know, at hand, I think, yeah, I definitely encourage brands to to explore expanding outside of their local markets.

00:13:40:07 - 00:14:15:01
Unknown
Mm hmm. Definitely a win win situation for the brand and for the customer. Where can people go and find out more about you guys? Freight rates dot com. That's freight f, r, e t or HGH t dot com. Everything about the companies there, you know, we do many other things. You can narrow down to the e-commerce section of the website and there's a lot of information there on how this works, you know, what problems we solve and you know ways to contact us or just, you know, subject matter experts in in all of those fields to to start a conversation.

00:14:15:03 - 00:14:32:24
Unknown
Perfect. I will put the links in the show notes. Then you're just one click away. Robert, thanks so much for giving us an overview of how you do big bulky and expensive item internationally and make it easy for everyone involved. And I hope a lot of people will reach out to you and expand their business internationally. Thanks so much for your time today.

00:14:32:27 - 00:14:34:02
Unknown
Thank you for having me close.