eCommerce is growing consistently. The COVID-19 pandemic catapulted this growth even further, with brands seeing an increase in sales and growth.
In a technology-driven world, it’s not uncommon for businesses to offer their products on the international market. However, with this kind of rapid online growth comes a lot of responsibility in the form of laws, both domestic and international.
So, what should you consider before you start selling overseas?
Selling overseas is a great way to expand your customer base. Instead of being limited to local markets, you have the advantage of the international market, too. The first thing that needs to be considered is the value of the item or service you’re selling.
Do your market research and find out if there is a demand for your product on the global market. It’s also vital to ascertain what the value of your product or service is outside of where you’re used to selling – this can differ depending on location. Once you’ve figured this out, cater your services and goods to the market you are targeting.
For example, is there as high demand for your product in the UK as there is in Australia?
But, of course, you also want to remember your legals. Protecting your business is crucial no matter where you run things, so there are a number of documents we recommend having in order first.
If you’ve branded your business with a trademark, logo or any other kind of intellectual property you would like to keep, then you need to consider international trademarks. An Australian trademark registration only provides protection within Australia, and there is also the issue of whether copyright is valid internationally.
For your trademark to be recognised overseas, you can submit an application to another country directly and follow their internal processes.
Alternatively, you can file an application to have your trademark internationally recognised with the World Intellectual Property Organisation. It’s known as the Madrid System and can protect your trademark in up to 126 countries.
Our lawyers can provide you with advice on your options for trademark protection.
Another important factor is dealing with international currency. Having various card options is common practice, such as Visa and Mastercard. You could also consider using third-party payment options such as Paypal and Apple Pay.
It’s easier for customers to shop in their own currency. Shopify, an online marketplace, noted that according to their internal statistics, a staggering 92% of shoppers preferred to shop in their own currency.
As a seller, it could be worth considering using online marketplaces that automatically convert the currencies for you. If you’re using your own website, it’s always an option to look into methods to convert pricing automatically.
When setting up a business online, have a look at the payment methods that are popular in the region you wish to sell to and work on including those in your website.
Laws Of The Destination
When selling overseas, you are not just expected to follow the laws of your own country, but also the destination country. It’s vital to consider the laws of the country or various countries you will be shipping out to. The last thing you want is your business in trouble because you decided to ship something that was illegal in another country. In addition to this, sanctions need to be respected, international laws and trade tariffs if they are applicable.
If you have a business where you sell wine and want to expand to Asia, then you will be impacted by China’s tariffs on wine from Australia. Instead of risking violating a tariff placed by China, a savvy business owner must always stay up to date with current affairs that can impact their venture.
In addition, if your business is engaging the global market then it is your responsibility as a business owner to ensure all of your practices do not violate any human or environmental rights agreements. This is particularly important when using a third party business – ensure you know everything you can about where your products are coming from and how they are being shipped.
If your business offers shipping worldwide or to a select few countries, then you need to be familiar with the customs rules and regulations for each destination. This includes customs declaration forms, items that can enter the country and packaging requirements. It is essential to keep an eye on these regulations as well – they tend to be subject to changes.
Taxes will vary depending on the destination country. If your business does not physically operate in a country, then it is likely you will not need to pay tax for simply selling to the destination.
If your business’ profit comes from eCommerce, then you may not need to register for Goods and Services Tax (GST) in Australia. This will depend heavily on the functions of your business and turnover income. It will also depend on your business module (whether you are selling directly to your customers or there’s a third party business). As this situation is unique to the business, it’s advisable to seek the advice of a legal professional.
Having an eCommerce business still requires the regular documentation of a physical business. This will include business registration forms, relevant tax declarations, Employment Contracts, vendor contracts, business agreements and internal policies.
These are just a few of the many things you’d need to consider as an eCommerce business.
If you’re an online business, then your website will need to adhere to the privacy laws which apply to the personal information you collect. For example, if you’re selling to the EU, and collect personal information from EU residents, you need to comply with the General Data Protection Regulation (GDPR).
- What kind of data is being collected
- How the data will be used
- For what purposes the data will be collected
- How long it will be retained for
You also want to make sure you’re aware of your privacy obligations under the General Data Protection Regulation (GDPR).
What Are Some Other Considerations?
If you shop online then you may have noticed huge walls of text that include shipping information and declarations. If you’re selling overseas, you will need to cater information on your website that speaks to your international customer base. It can include matters such as:
- Disclosing shipping costs: Shipping overseas is more expensive than shipping locally. You will need to make the shipping cost available to your customers on your platform – nobody likes getting hit with unexpected charges at checkout.
- Disclaimer for international shipping: There’s a lot out of your control when shipping overseas. The carrier will be local to the customer and therefore, it’s important to have a disclaimer to avoid responsibility for matters that are out of your control.
- Return policies for international buyers: At some point, a customer may wish to return an item. Every good business has a return policy in place and for an international business, you will need to have a plan in place from when a customer overseas wants to return something.
Setting up a business overseas requires a lot of careful planning and considering a multitude of factors. At Clearpoint Legal, we aid businesses that are looking to expand into the global market regularly. If you would like a consultation on your options going forward, you can reach us here.