There it is, an item you’re slavering over on a “Black Friday” or some other blockbuster sale on a wonderful U.S. website.
You whip out your credit card and start typing in the information, quivering to make the order, only to discover that the site won’t ship outside the United States or refuses to complete the transaction because it think your Even Yehuda zipcode means you actually live in Rock Island, Illinois. But relief for your frustration is at hand, Dear Reader: services that take delivery of your package in the United States and forward it to you in Israel.
These forwarding services become your virtual address in America for online retailers or bricks-and-mortar stores, catalogue operations or magazine subscriptions and regular mail, for that matter for free. When your order reaches the warehouse of the delivery service, you receive a notification.
That’s when you pay for the site’s services shipping to Israel, customs clearance and delivery to your home. You can also choose to insure your package, for a fee of course.
The virtual U.S. address industry began to perk up recently, after global shipping company TNT Express launched its Worldshop service (“You buy it, ship to your U.S.A. address, we ship it to you”). Within hours Mustop, which has been offering the service since 2000, had upgraded and launched a colorful new website. UShops, active since 2007, has also been laboring for some months on a relaunch online that should go live in a matter of days.
“Our activity in 2010 doubled compared with 2009, which proves that the business of shopping abroad is hot, and developing,” Mustop Israel CEO Ronen Ikonikov said. A main reason is the growing awareness of online shopping.
The typical Israeli client buying products on U.S. websites is male (61%), younger than 35 (54%), secular (69%) and college-educated (66%), according to a MarketWatch survey commissioned by UShops in late 2009.
Of the respondents, 78% reported buying over the Internet at least once; 18% said they did so often. 40% of those who answered the poll said they had made purchases on U.S. websites, and 70% said they had run into problems when they tried to buy from sites that don’t ship to Israel.
When asked how they solved the problem, 50% said they had the order shipped to a friend or relative living in the United States, who forwarded it to them; 8% waited until their next U.S. visit and 42% decided to forgo the purchase on that site.
“We identified a need for a service,” UShops CEO Yaron Ben-Eli related. He says the sector is still in its infancy, and that few people are aware of the service. “I estimate that the sites using this model bring 25,000 to 30,000 packages a month to Israel. That’s nothing,” Ben-Eli said.
Differences in price and speed
The competition between the sites doesn’t end with the price of their basic service. The cost of insurance is also key.
Mustop, UShops and EZbuyUS don’t charge to insure packages with a value of less than $100. Over that amount, the insurance premium costs 1% of the price of goods at Mustop and UShops, and 1.25% to 1.5% at EZbuyUS.
TNT Express charges a blanket 2% of the purchase price.
On purchases of $1,000 or more the extra expense starts to become significant, even with a delivery service whose shipping fees are lower than its competitors.
EZbuyUS charges a fixed amount to ship certain items, such as laptop computers, bicycles, baby carriages and LCD screens, which usually makes it cheapest for such items.
The power of a major player like TNT lies in the option of express service: You can get the package at your home three business days after it arrives at the TNT site in the United States. The other sites promise a week from arrival at their U.S. sites.
TNT also handles customs clearing and delivery in Israel. Its rivals forward packages from the United States but farm out customs clearing and local delivery to other companies.
TNT’s vertical integration means it collects payment only after the goods arrive in Israel.
UShops offers the option of cheaper, but slower, surface shipping. The seaborne method can take 21 business days, but saves about 50% on shipping. That’s good for patient customers and heavy items.
Mustop and EZbuyUS require your credit card details merely to assign you an American mailing address, even before you use their forwarding service. They won’t charge your card at this stage, but some users may be deterred by the demand to relinquish such sensitive information.
Not having an international credit card isn’t an insurmountable problem: Some forwarding services will pay the retailer for you and charge your Israeli credit card, for a fee. EZbuyUS charges 4% of the order price or $10, whichever is higher. Mustop charges 5% or $10. TNT doesn’t offer this option.
A question of weight, and taxes
All the sites have online calculators to help you estimate costs. Air freight costs are calculated according to either the cargo’s actual weight on one hand, or its dimensional, or volume weight, on the other whichever is higher. The DIM, or volume weight, is obtained by calculating the length times the height and width in centimeters, divided by 6,000. But since retailers don’t typically cite the volume weight of their packages, you can’t actually do that. Also, some retailers use packaging much bigger than the item, which can set you back a lot.
Fixed shipping prices such as those offered by EZbuyUS for certain items can spare you unwanted surprises due to bloated packaging.
UShops took the original step of presenting the final price of shipping certain popular products to the home, sparing you complicated calculations of volume and weight, customs clearance and insurance. One attractive example is a MacBook Pro 17” at a final cost of NIS 10,999, on which you save NIS 1,600 compared with its price in Israel. If you are prepared to wait an extra 21 business days, you can save another NIS 1,000 from that price.
“The products it pays most to bring using the American address service are expensive electronics that aren’t heavy,” says Udi Caspi, CEO of TNT Express. Because weight is low the element of shipping isn’t high compared with the price of the product, which will probably cost a lot more in Israel. There’s also the option of bringing things not available in Israel even Purim costumes, says Caspi: There’s a vast range of options out there that you can’t find here.
Beware of local taxes
But before you make your choice, note this. In the United States, any shipment made within a state from a New York address to another New York address, for instance incurs local sales tax. In the specific case of New York, the tax can run at 8% to 9%.
The snag for TNT and EZBuyUS is that the favorite retail site of Israelis, Amazon, has its warehouses in New York.
Therefore, if you shop Amazon and have your goodies sent to a New York address TNT or EZBuyUS, you pay the tax. If however you shop Amazon and have your things sent to a UShops or Mustop site, you won’t pay the tax, because they’re in New Jersey. (Of course if you buy from a New Jersey site and have it shipped to you through UShops or Mustop, then you pay New Jersey sales tax.)
Clever consumers will factor the origin of the product they’re buying into the equation when considering which forwarder to use.