Many companies started as small online stores that grew into very successful businesses. Although some of these may be unicorns when it comes to sales growth, every small online retailer hopes for just a sliver such success when they build their business plans. If you are one of those entrepreneurs, one factor to keep in mind is scalability. You may be a small importer now, but what happens when your goods start selling in large quantities? Ensuring your supply chains and import processes are agile in terms of volume is imperative. In this blog, we will share 4 tips on how to ensure optimal logistics scalability for your ecommerce business.
The consumer of today has grown used to shopping on ecommerce sites for some if not all their needs. Ecommerce has made it easier for consumers to shop around and find the right product at the right price without leaving their home. Consumers want speed and the best value for their money. Ecommerce retailers must ensure that their shipment is timely and cost efficient or they will lose their customer in the blink of an eye.
The ecommerce world is very competitive and a customer can be literally a click away from becoming your customer or moving on to someone else. At the same time, you as the retailer, while growing your business must be cost efficient and effective and one of the management requirements of a successful ecommerce business is to have in place a good manager of your cross border trade requirements.
Choose Logistics Providers That Can Pivot
Shipping and order fulfillment is a core element of customer service which if not done well will cost you loyalty and reputation. As you scale your ecommerce business you are going to enter into new markets in different locations meaning that you will need a reliable logistics partner for efficient shipping.
Choosing a Freight Manager experienced in shipping worldwide can be a beneficial resource for you. They will help you map out your supply chain and take away the burden of organizing your multi-model shipping needs. Freight managers are different from freight forwarders in that they participate in the overall management of shipping and logistics. Shipping, pick and pack and warehousing can all be organized by a Freight Manager. They will take these duties off your hands so you can focus on running and growing the business.
Freight Managers differ from single mode asset based carriers in that the Freight Manager works with a large network of carriers in all modes of transportation (highway, rail, air, ocean, courier). This allows for agility as your business grows. Changes to shipping lanes and modes of transport are easily adjustable when working with a Freight Manager who has an expansive, global network of carriers to choose from.
Prepare For Duties And Tax
If your market is international you will need to manage the collection of duties and taxes and the many regulations surrounding the import of products in and out of the US or Canada.
If you sell products in Canada, you are responsible for paying any applicable taxes and importing duties before the product can be sold to a Canadian resident or stored in a fulfillment center. You or your designated agent must act as the Importer of Record and be reported as such on customs declarations.
Want to import into Canada but you're not a resident? Learn more about the Non-Resident Importer Program.
Most imported goods into Canada are subject to a 5% federal tax known as the Goods and Services Tax (GST). If duty is applicable, it is added to the value of the goods and the GST will apply on the duty-paid value of the shipment (i.e. 5% GST x (value of goods + duty paid). It is your responsibility to comply with all Canadian customs and taxation laws and regulations, including applicable duty and tax requirements.
Consider A Customs Broker That Offers Courier Services Over a Courier That Offers Customs Brokerage Services.
Many small businesses rely on courier companies to get their goods from point A to point B as it provides the most cost effective shipping option for small shipments. If crossing international borders, the payment of Customs duties and taxes is typically wrapped into the bill for this shipping service or if under a certain value, not applicable.
Courier transport can be fast and efficient, but caution is advised when using their “all-inclusive” customs brokerage services. Couriers transport large volumes of shipments across the border. Any advantages you may gain in freight rates or speed of service can be very quickly wiped out by costly tariff errors that are usually not identified until there is a customs post-release verification audit. In addition, when you use a courier to ship small expedited parcels for your company whether they charge or offer free customs brokerage equates to using multiple brokers. The perils of using more than one customs broker was explained in our blog The Downside of Using Multiple Customs Brokers.
However, many countries including the US and Canada offer courier company specialized import processes that limit the need for formal declarations with Customs provided they are not on a list of regulated products and under a certain dollar value (de minimis).
Once the value of the shipment exceeds a certain value, a formal entry will be required. Therefore, when setting up your import accounts into Canada or the US it’s a good idea to think BIG and open an account with a Customs Broker who provides courier shipping and import services as well as helps you import larger shipments at higher values.
At What Point Should An Ecommerce Entrepreneur Contact A Customs Broker?
The best time to contact a customs broker would be in the planning stages, prior to entering into international contracts. The long-term success and growth of your ecommerce business, big or small, depends on the ability to understand and execute cross-border contracts with your suppliers and customers. By getting involved in the early stages, customs brokers may be able to provide advantageous advice on terms, also countries of origin to source from, regulations and prohibitions from participating government agencies, tariff classification and entry types to assist in the decision-making and compliance process so that at the end of the day you are more competitive in the marketplace and gain a more positive relationship with both US Customs and Border Protection and Canada Border Services Agency.
Contact one of our Trade Advisors today to get you started on the right foot.