As Canada’s e-commerce sales keep growing—expected to hit $39.22 billion by the end of 2020—American retailers see a new opportunity in Canada. Whether your business is based here or in the U.S., the key to capturing the market is gaining access to services that enable businesses to store and ship goods locally while operating virtually.
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Today, U.S. eCommerce entrepreneurs are spending $0.00 on imports from other countries by taking advantage of Canada’s smart system.
All you need to do is have goods imported through a Canadian fulfillment center close to the United States-Canada border and deliver products directly from the fulfillment center.
What is Canadian Fulfillment?
A fulfillment service is a warehouse that specializes in preparing and shipping orders from its fulfillment centers. Canadian Ecommerce fulfillment services are an excellent option for businesses that either have outgrown existing warehousing capabilities or would rather not deal with shipping.
For a business that’s scaling fast and wants to optimize its fulfillment strategy, partnering with a fulfillment center offers optimal flexibility.
Some fulfillment providers have multiple centers, enabling them to serve different locations faster and ship to a diverse customer base.
Using a Fulfillment Service to Benefit from the Canadian Duty Drawback Program
This program effectively services U.S. consumers and eliminates duty costs.
In essence, a duty is a form of tax that a state implements, typically associated with customs on items purchased abroad.
Over recent years, drop-shipping has gained popularity since entrepreneurs don’t have to hold stock and can instead focus on doing what they are best at – growing businesses. The duty drawback program also reduces delivery time and customers don’t have to wait too long to receive goods. And you’ll also end up saving a ton of money on shipment costs.
How Much is it to Import Products to the USA?
The amount of duty you’ll pay importing goods to the US will be based on the Cost of Goods Imported (COG) x the duty rate. From a legal perspective, this is crucial since a false COG value can be criminal.
A fulfillment service will charge you per unit/pallet or by the hour. Providers sum up the receipt, storage, packing, shipping, returns, and custom packaging costs.
Eliminate Your Duty Cost with Section 321
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When shipping goods to Canada, the COGs will dictate whether your inventory will be duty-free or dutiable. Duty costs are usually paid to the Canadian Government once an import is made.
While you could be paying some duty costs, a Canadian fulfillment Service can help you pick, pack and ship directly to the U.S. under the Section 321 customs clearance.
Section 321 allows U.S. customers to import as much as $800-worth shipment free of sales taxes, duty and brokerage. This is a type of informal entry that benefits importers by reducing paperwork for low-value goods, thus allowing faster clearance processing.
Upon shipping your customers’ orders to the U.S, you can now claim back paid duties in Canada. This is because the Canadian Government only asks for duties on goods sold to Canadian consumers.
How Long Will It Take to Get Your Duty Back?
All shipped items should first be cleared. After this, you can file the duty drawback. You will receive a refund check 60 days after the filing date. Often, this takes less time, but 60 days is the standard wait time.
Won’t Shipping from Canada to the U.S. Cost More?
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The best bet to have your costs minimal is using the same carriers to ship your inventory to the end consumer (UPSMI, DHL, etc.). Trucks leave Toronto and get to the U.S. in less than two hours. Goods are dropped off at the different carriers, and at the end of the day, it will be as if the goods were shipped from the U.S. through these carriers.
Concerned About Your Inventory Getting Stuck at the Border?
Upon total compliance, your goods will not get stuck at customs. A Canadian fulfillment service provider will do pre-clearance for you, implying that all paperwork is fully submitted and cleared beforehand.
Better, everything that you can buy and sell in the U.S. will ship across the border. While there have been some cases of products with lithium batteries being denied access, items flawlessly cross the U.S.-Canada border all the time.
Bottom Line
International trade is constantly subject to the whims of government regulations. Customs can be a pain, but this doesn’t mean that businesses have to bite the financial bullet. Using provisions such as Section 321 allow small businesses to succeed.
Sometimes, the best approach to reducing shipping costs and scaling a business is going the Canadian fulfillment way.
If Canadian fulfillment seems too complex for you, or you lack the resources to handle imports yourself, working with a reputable fulfillment center will ease the hassle and give you all the time you need to focus on growing your eCommerce store.