E-commerce is explosive. It's transformational, and it's coming at us in almost a tsunami-like fashion. In fact, in 2018 there's going to be more than $2.3 trillion of goods crossing border on e-commerce alone.
It has nothing to do with free trade or even fair trade. And to address e-commerce, businesses are needing to rapidly introduce new supply chain and fulfillment strategies, and there is no one-size-fits-all strategy.
First let's understand that not all goods can cross the border using e-commerce into Canada or the United States. Certain goods are regulated by a Health Canada or Food and Drug.
Assuming you don't have regulated goods, direct to consumer goods can cross borders freely into Canada and the United States in a perfectly legal fashion, though having different rules and regulations as what relates to a business.
E-commerce shipments into Canada, for instance, are subject to one of three different tariff classifications: duty free, 8%, or 20%. If however you're a business, you have to choose from 5000 different tariff classifications.
For goods entering the United States, the deal is much better. Shipments going direct to consumer, worth less than $800, enter without brokerage, without duties, or any regulatory impacts or fees. This is known as Section 321, and this regulation has been in place since March, 2016.
Clothing distributers with known brands such as L.L. Bean should consider locating into Canada, where they could save a lot on customs duties, regulatory compliance, as well as lowering cost to the consumer.
In fact, Section 321 may be the single most important thing as Amazon looks to select where their next distribution center should be. Today's takeaway, talk to a certified trade compliance specialist to understand whether you're dealing with a regulated product and the tariff classification of that product.
Have a trusted relationship in place, because e-commerce and the rules of e-commerce are in constant change.
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