How to avoid abandoned and rejected packages
October 28, 2022
How to avoid abandoned and rejected packages
If your business sells goods internationally, you probably already know that abandoned and rejected packages are often a source of frustration. Unfortunately, too often, international customers reject or refuse packages based on the difficult issues that come with cross-border shipments; those issues can include difficulty in calculating correct duties and taxes, surprise fees upon delivery, and incorrectly assigned HS codes. Luckily, you can control these factors with some knowledge and technology—or as one might call this combination—tecknowledgey.
If you made it past that cheezy pun, thanks for still being here. It will be worth it! This blog will equip you with a comprehensive understanding of abandoned packages, including the following:
- What are abandoned and rejected packages?
- Why do package rejection and abandonment occur?
- What are the consequences of package rejection and abandonment?
- How can you avoid package rejection and abandonment?
For international shipments, abandoned packages result from the consumer rejecting the delivery or customs not clearing the package. What you, as the sender, do next determines whether or not a refused package turns into an abandoned one.
When customs or a customer rejects a package, you will need to decide if you should have the package returned to you or abandon the package. While the obvious answer would seem to be to have the package returned, more retailers than not just decide to abandon the package to avoid paying any return duties, taxes, shipping, or other fees to import the item back to their country because it often costs more than what the goods are worth. Some countries will not export rejected packages back to the originating country; in that case, a rejected package always turns into an abandoned package.
Now that you have a basic understanding of rejected and abandoned packages let’s discuss why they occur.
Well, you know that abandonment happens as a result of rejection; so why does package rejection happen? Before discussing the reasons, let’s remember that consumers or customs officials can reject packages.
Here are the main reasons for package rejection:
Consumer rejection causes
- A “surprise” bill with the delivery (duties, taxes, and fees) - Many international shoppers are either not aware that they have to pay customs duties, import taxes, and fees (such as brokerage or carrier fees), or they know they will need to pay them but don’t know how much it will be. When the carrier presents this additional bill, the buyer may be unpleasantly shocked and reject the package because they are unwilling to pay the extra costs or may feel the retailer was not upfront about the price.
- The package took too long to arrive and is no longer needed - Cross-border delivery takes longer than domestic; that’s just the way it is, and it’s not likely to change any time soon. Some factors, such as customs holdups, can contribute to an extra-long package arrival time. When a package arrives late, the consumer may not need it anymore because it was for a past event or they found another way to get the goods they needed. The consumer may also be upset about their poor experience caused by the delay and reject it for that reason.
Customs rejection causes
- Compliance issues - Customs officials are known for being stringent about import regulations. Therefore, if a package contains restricted or prohibited items, if there is any missing documentation, or if there are any other trade regulation infractions, a customs official can reject the package. For example, in March 2023, packages entering the European Union by air without the pre-arrival data required by Import Control System 2 will be rejected. Another significant compliance issue is keeping up with and managing low-value tax schemes. For example, any low-value item entering the United Kingdom requires VAT to be collected prior to importing, and the retailer must have a tax ID and remit the VAT to HMRC, the UK's tax authority.
“The consumer already paid me, so why should I care?” Well, here’s why:
Package rejection = return expenses:
If a consumer rejects a package and the retailer decides to have it shipped back to their warehouse, they must pay to ship and import the items back into their country. If duties, taxes, and fees apply to the items in the return country in addition to the shipping cost, having the package returned can be more expensive than abandoning it.
In fact, the import cost can be double the original export cost, depending on the originating and destination countries. If returning the package costs more than the original order, abandoning it is the obvious choice, which is why it is so common.
Profit loss + product cost:
If a consumer refuses the package and requests a refund, depending on your international shipping policy, you may fulfill that request. However, if customs rejects the package, you’ll likely want to reimburse the consumer. Refunding the consumer means you’ve lost the value of the product, shipping, and the profit you would have gained from the sale. One rejected package might not be a big deal, but they add up!
Reduction of customer lifetime value (CLV):
When an international customer has a poor experience and doesn’t return to your business again, you may have lost an important recurring revenue opportunity for your business. You never know—they could have been a loyal customer who would have brought in future revenue and potential leads to other customers, or even a famous influencer who can make or break your brand.
Take a breath! We’re done with the negative. Now that you know what abandoned and rejected packages are, why they occur, and why they’re so detrimental to business, let’s talk about solutions for your international customer and your business:
Provide cost transparency
As mentioned earlier, surprise fees are a major cause of rejected packages. If international shoppers do not see the duties, taxes, and fees when checking out on your website, they may not realize they have to pay these costs upon delivery, let alone that they exist! There are businesses that absorb the entire landed cost for international shipments, so it’s understandable when customers assume their bill is paid in full at checkout.
The solution is transparency. Having the entire landed cost displayed in your checkout, especially with the ability for the shopper to pre-pay it and avoid a second bill upon delivery, provides transparency and an overall positive cross-border shopping experience.
Stay compliant with international trade regulations
Keeping up with international trade compliance—like international low-value tax schemes; paperwork and labeling requirements; and item prohibitions and restrictions— can be challenging, but it’s essential in order to avoid customs delays or rejections.
For example, if a shipment is sent with missing or incorrect paperwork, customs may hold it until the documentation is corrected, or they may reject it for incorrect labeling or failing to comply with the country’s prohibited items policy. There is a myriad of reasons customs can hold or reject a package, both of which can result in abandoned packages.
The solution? Find a technology solution that manages international compliance for you so that you don’t have to worry about non-compliance and its consequences.
Zonos Landed Cost guarantee manages global trade compliance for you without the headache, so you can avoid holdups or rejections at customs.
Yep, package rejection and abandonment are painful, but the good news is that you have control over it! Remember, tecknowledgey is power.
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