Practical Ecommerce

The Ins And Outs Of Importing

Importing can provide your ebusiness with cutting-edge products at rock-bottom prices. But it’s a complicated process, and not one you want to go through alone.

“Customs brokers and freight forwarders are your gateway into the world of international trade,” explained Customhouse Broker Don Hoffman of Everyonlineshoestore.com. “For commercial shipments, you’re legally required to utilize the services of a licensed broker. They’re the experts in getting the documentation and duty payments through customs.”

Getting good help

Since most freight forwarders employ brokers to handle customs issues, it’s a good start to contact a forwarder as soon as you make the decision to import products to the United States.

You can find a forwarder in the yellow pages or via search engines, but doing so is like playing the lottery — you have no idea what you’ll get. The real problem is sorting through third-party operators who pose as forwarders; they are really nothing more than middlemen, so using their “services” will mark up your end costs. The safest way to find a reputable forwarder is through trade associations or publications.

A forwarder can help calculate costs up front to determine if you can be competitive with a product. Your manufacturer should be able to give you the tariff number for your product; your broker will use that information to calculate the local U.S. duty rate. Once the goods have been cleared in the United States, you have 10 days to pay, but most companies pay within eight to give themselves a bit of margin in case of processing errors.

Bond options

When you import goods, you’re required to buy a bond that acts as insurance with customs, in the event you should default on duties; although the bond doesn’t shield you from legal repercussions should that happen. Bond companies underwrite the value of the shipment plus the duty, with either a single entry or annual bond. If you plan to import only once or twice a year, single entry bonds are more affordable. But if you’re receiving goods on a regular basis, the cost of an annual bond might pay for itself. You need to make your determination based on the number of shipments you plan to import.

A paper trail

Your manufacturer should send you certain papers:

  • A commercial invoice.
  • A packing list.
  • A detail sheet (depending on the type of product) that breaks down the components of a product and the way they’re manufactured so customs can determine the duty classification.
  • An airway bill or bill of lading.

When you pay duties to customs, you will need all these documents to prove what you owe; as the importer, you’re legally responsible to obtain and present them.

Delivery arrangements

Once you have the paperwork, let the people at your forwarding agency know the goods are ready. They in turn will contact the supplier, process the shipping bill, and book the shipment on your behalf. A forwarder should be able to price out your shipment in various ways to see which would be most cost-effective. Air shipping is often overlooked ⎯ the perception is that it’s too pricey ⎯ but often, it doesn’t require many of the minimums ocean freight does and may incur far fewer incidental charges.

Bringing commercial goods into the United States is an involved procedure, but don’t let the intricacies scare you. With qualified assistance, it can be a highly profitable undertaking. Says Hoffman, “It’s labor-intensive; you have to follow through with everything. The key is to get good helpers — they can really guide you through the process and ensure you’re in ship-shape.”

Practical Ecommerce

Practical Ecommerce

Bio   •   RSS Feed


email-news-env

Sign up for our email newsletter

  1. Legacy User November 24, 2007 Reply

    Trust me: The import-export business is not for the faint of heart. The variables, many links in the chain – whatever the metaphor might be – will kill you, especially if you don't have a competent and honest team on both sides of the ocean. You must control the product exclusivity, the market, the factory and quality control (Have fun in China), the money (up to 120 days before you get paid on money advanced via L/C, etc.) and the shipping. Most of this "Entrepreneur" magazine forgot to mention.

    — *Dennis*

  2. Legacy User December 11, 2007 Reply

    Great list of resources.

    I would add emphasis to the last paragraph. Don't get scared by importing or exporting. If your selling merchandise (rather than drop shipping) and you want to grow into new markets you will need to do it.

    If your moving product into the U.S. you need a tax id. It is not hard to get.

    If your moving product into Canada you need what is called a business number or business registration with the Canadian Revenue Agency. Again, not hard to get.

    http://shipwire.com has a few articles on this in their help center and they have partners set up to help with inbound and outbound freight. They even have partners to set-up these tax ids and help you untangle any tax issues in the U.S. and Canada.

    As the dollar weakens against the Euro and the Canadian dollar, get ready for more of your online buyers to be international. If you don't want to saddle them with huge shipping costs, you should consider moving some inventory internationally. An order fulfillment partner that has international warehouses can help you do this. Again http://www.shipwire.com is one such partner.

    Good luck and don't get scared…there is big money in this.

    — *nate*