Hot take - If cutting shipping costs isn’t at the core of your global expansion plan, you’re already behind.

With global eCommerce expected to hit $7.4 trillion this year, cross-border shipping costs remain a top challenge for brands that are looking to expand internationally. 

So what’s driving high cross-border shipping costs?

• Rising fuel costs
• Volatile global trade policies
• The complexity of the current geopolitical climate

With supply chain disruptions and shifting international trade agreements, shipping costs have soared in recent years. However, the brands that navigate these waters with the right cross-border shipping strategy can take advantage of new international opportunities without sinking their profit margins.

Efficient logistics, smarter tax and duty strategies, and leveraging technology will allow your brand to scale and thrive without the heavy burden of shipping costs holding you back.

Let’s look at how you can achieve this.

2. Start Small: Test International Markets with Cross-Border Shipping Before You Scale

Test before you invest.

Before investing in costly infrastructure, start with cross-border shipping to test international markets and validate demand affordably. This approach allows you to validate demand in new regions without significant upfront costs.

Key Benefits:

• Domestic Fulfillment: Use existing fulfillment centers to handle cross-border shipments. Services like USPS, FedEx, and DHL offer competitive rates for individual international orders.
• Market Validation: Shipping individual orders helps you test demand and understand regional preferences before investing in larger-scale fulfillment.

Nike doesn’t launch new products blindly. The brand first ships small batches of new sneaker designs to select athletes in target regions. This allows them to test demand, gather real customer feedback, and refine the product before committing to large-scale production.

Key takeaway:
Start small. Test the market with cross-border shipping to assess demand before scaling with local fulfillment.

3. Optimize Operations with Distributed, Local 3PLs

Once you’ve validated demand, optimize your logistics with local 3PL providers. This move significantly reduces shipping and last-mile delivery costs while improving customer satisfaction.

Why Local 3PLs Work for Global Expansion:

• Cost Savings: Shipping costs decrease when using fulfillment centers closer to customers instead of international shipments from the U.S.
• Faster Delivery: Customers receive their orders faster, increasing retention and satisfaction.

Case Study:
Bloom Nutrition, a US based brand, was able to open local warehouses in 4 countries in just 90 days. Their collective strategy has helped them improve conversion rates by 40%.

Key takeaway:
Once demand is established, partner with local 3PLs to reduce shipping costs and improve delivery efficiency.

4. Tax and Duty Optimization Strategies

The way you understand and manage duties and taxes is a key strategy for cutting cross-border shipping costs.

DDP vs. DDU Shipping Costs:

Additional Considerations:

• Harmonized System (HS) Codes: Ensure proper classification of products to avoid overpaying on duties.
• Duty Drawback Programs: Certain countries allow refunds on duties paid for exported goods.

Nike leveraged offshore tax structures to optimize international tax obligations, setting up operations in low-tax jurisdictions to reduce overall tax liability. This strategic approach saved Nike billions in import duties and taxes.

Key Takeaway: Proactively managing duties, taxes, and compliance can lead to significant long-term savings for cross-border ecommerce brands.

5. Use Technology and Data to Optimize Cross-Border Shipping

The right tech can help brands automate cost-saving processes and gain visibility into real-time shipping costs.

Key Tech Tools:

• Shipping Rate Comparison Tools: Platforms like ShipBob and EasyShip let you compare shipping rates from multiple carriers in real-time, helping you find the most cost-effective options.
• Route Optimization Software: Tools that analyze shipping data and suggest the most cost-efficient routes, reducing delivery time and cost.
• Compliance Automation: Automating tax, duty calculations, and compliance checks reduces errors and speeds up processing.
• Consolidation Shipping: Instead of shipping individual parcels, consolidation services bundle multiple orders into a single international shipment, reducing per-unit shipping costs and improving customs clearance efficiency. 

Bambu Earth has managed to reduce its shipping costs by a whopping 70% by leveraging OpenBorder.

Key takeaway:
Use technology to streamline processes, optimize routes, and cut costs across the board.

6. Offer Flexible Shipping Options to Balance Costs and Customer Experience

Customers want options. Offering multiple shipping options, such as economy and express, lets you balance cost and service quality.

Best Practices for Flexible Cross-Border Shipping:

• Tiered Shipping Options: Offer varying delivery speeds at different price points to cater to different customer preferences.
• Clear Communication: Set clear expectations about delivery times and costs to avoid customer frustration.

Renowned fashion brand H&M offers tiered delivery options, allowing customers to choose between faster delivery or cheaper, slower alternatives. This helps balance customer satisfaction and cost.

Key takeaway:
Offer flexible cross-border shipping options to optimize costs while meeting customer needs.

7. Ship It Like It’s Hot - Simplify Cross-Border Shipping 

Cutting cross-border shipping costs serves more than trimming your budget. It optimizes your strategy to scale internationally without sacrificing customer experience. 

Key strategies to reduce cross-border shipping costs & scale quickly

• Start small – Test new markets with cross-border shipping before committing to local fulfillment.
• Optimize global eCommerce logistics – Use distributed 3PLs for lower shipping costs and faster deliveries.
• Reduce tax burdens – Implement smart duty & tax strategies to save on fees.
• Leverage technology – Use shipping automation and AI to cut costs and improve efficiency.
• Provide flexibility – Offer tiered shipping options to balance cost and speed.

OpenBorder can help you simplify your cross-border shipping strategy, providing the tools and expertise you need to scale efficiently and cost-effectively. Get in touch.