Ten provinces, three territories, and over 34 million
inhabitants. It is the world’s second
largest country by total area, and the shared border between our two nations is
the longest in the world. It sure sounds like a great business opportunity to
market to these guys. But professionals
in the fulfillment industry could add a note of caution. The customers are
there and their dollars can provide a much-needed boost in this economy.
Problems can arise however when your product is ready for shipment, and since
the root of the problem lies in a complex array of government regulations,
asking if it’s worth it is good business sense.
Zappos, the shoe and accessory giant, should know. This month it will close its online doors to
Canadian customers due in part to the logistical challenges of getting products
into Canadian hands. (See http://www.internetretailer.com/2011/03/25/zappos-closes-its-canadian-storefront
for the full article).
What makes it so hard? You pack a box, slap a shipping label
on it, and everyone’s happy. Right? But first the package must make it through
Canadian Customs, who can slap the same package with hefty duties and taxes. If that package is among the many that are
opened for close inspection, your package can be seriously delayed and the
result is an unsatisfied customer through no fault of your own. Customs also
routinely disputes the reported value of the products, presumably to increase
the amount of taxes that can be assessed. And if that isn’t enough, a mountain
of complexity and cost can be incurred in the form of finding which of tens of
thousands of harmonized trading codes (HTS) apply to your products. Telling
Customs there’s a t-shirt in the box isn’t enough; they also want to know what
it’s made out of, what kind of style it is, the country of manufacturer, the
size, and more. Each of these pieces of data helps determine the amount of
taxes that must be paid before the product can legally enter the country. Invest in discovering the right codes and
your product may slip through Customs smoothly; but pick the wrong one and the
package is stopped in its tracks. Don’t want the hassle of finding out the HTS
code? Customs is usually happy with that too, they’ll be glad to assess the
product at a higher tax rate.
Then there’s the
question of who pays duties and taxes – is it you or your customer? Will they really pay $15 in duties and $20 on
shipping for a $30 product? You could of course use a cheaper shipping option,
but here at FSI we field constant complaints from customers whose USPS package
was lost and there’s no tracking available. But the USPS provides guaranteed international
tracking, right? Surprisingly the answer is no. A tracking number may be
created, but once it leaves the United States, the visibility of that package
often disappears. Using a major private carrier such as UPS all but eliminates
that problem, but the full tracking capabilities can come at a steep shipping
cost.
A great fulfillment provider is an essential component of
your international sales strategies, and indeed FSI has invested in the systems
to make international shipping (especially to Canada), as easy as possible.
From supporting the HTS codes to using technologies that often reduce the
amount of paperwork required for international shipments, we can be an even
greater asset to your business. Even so, shipping-related labor costs to handle
Customs requirements can have a detrimental impact on bottom lines.
Ultimately, each business must weigh the costs and benefits
of offering products to our northerly neighbors. Just be sure to set realistic
expectations when determining your strategy.
FSI is an Atlanta,
Georgia based provider of quality fulfillment services. Founded in 1996, it has
shipped millions of packages to nearly 160 countries worldwide.
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