US eCommerce stores are spending $0 on their imported goods from other countries by utilizing a smart system with Canada. All they have to do is have their products imported into a Canadian fulfillment center near the US-Canada border (rather than a US one), then send products to customers directly from the Canadian fulfillment center. Companies like stalco handling all that work for you.
What is Duty?
If you don’t know what border “duty” or “duties” are, let’s take a step back. In economics, a duty is a sort of tax that a state implements. It’s typically associated with customs, as the term is often used to describe a tax on certain items purchased abroad.
Duty Drawback Program
The Duty Drawback Program helps to effectively service US customers and eliminate duty cost(s). In recent years, drop-shipping has become massively popular, since you as a business owner don’t need to hold inventory and can focus instead on growing your business.
The Duty Drawback Program is beneficial because customers don’t want to wait a long time to receive items and you can save a lot of money on product costs by eliminating duty costs. Stalco is a Toronto based company that works extensively with this program to easily eliminate 100% of your duty costs for you, in a legal and compliant manner. Save thousands of dollars a year by using Stalco!
Importing Products to the USA
Importing goods to the USA (say from China) and paying duty when the goods land. The amount of duty paid is based on your Cost Of Goods (COG) x the duty rate. This is important from a legal perspective as falsifying the value of COGs can be criminal!
How to Eliminate Your Duty Cost
Let’s say that you ship inventory to Canada from overseas. Depending on the COGs they are duty free or may have a duty cost associated. Duty costs are actually paid to the Canadian Government upon their import.
Though you may be paying some duty costs, Stalco helps by pick-packing (from Toronto) and shipping directly to your US customers under Section 321 customs clearance. Under Section 321, US consumers can import up to $800/shipment free of duty, brokerage and sales taxes. Then, once your customers’ orders are shipped to the US, you claim back all duties paid in Canada, since the Canadian Government only wants the duty if the goods are sold to Canadian consumers.
A firm that works with Stalco has COGs of $13.25, the duty rate is 9.50%. The Duty cost per Unit is then $1.26. With Stalco you have a duty savings per unit of $1.26 then. If you have hundreds of thousands of units you’re saving that much!
How can it not cost more to ship to the US from Canada?
Using the same carriers to ship to the end consumer (DHL, UPSMI, etc.). The trucks leave Toronto and are in the US in an hour and a half. They drop the goods off to the different carriers, and it is as if the goods were shipped from the US with the same carriers.
How long does it take to get my duty back?
Wait until all items from shipment have been cleared. When they’re all shipped, Stalco files the Duty Drawback with the Canadian Government. 60 days from the file date the refund check is issued. Sometimes it can be sooner, but 60 days is the standard.
Are delivery times to my customer longer when products are shipped from Canada?
Stalco pick and packs every single day. The truck leaves every day at noon to make it to the US. It then reaches US carriers by the afternoon, so it is no different in that sense.
Do products ever get stuck at the border?
Stalco has been doing this for over 2 years now and has never had a truck get stuck at customs. Stalco does a customs pre-clearance, meaning that the paperwork is all submitted and cleared beforehand.
Are there any product categories that can’t cross the border?
Everything you can sell and buy in the US you can ship across the border, as Canada and the US are fairly similar. Occasionally there are products with lithium batteries, but generally speaking things can cross the border without problems or issues.
Why Expand into Canada?
Canada shares the largest unprotected border with the US and has over 35 million people. Canada has free trade between countries and there is no language barrier. The US and Canada have similar customer profiles (64% are affluent/have disposable income) and there is a lot of cross-border media influence as both use the same TV and media. Canada has a strong economy and a strong demand for international products. Currently the eCommerce market is booming, and Canadians are connected online.
Differences Between US and Canada
There are some cross border logistics differences in trucking, clearance and duties. Both countries do use a different currency, and there are different regulatory bodies (like Health Canada) to consider. There are different sales tax procedures in Canada and the US, and different packaging compliances (labelling, and the layout and info).
To get more information check out Stalco through this link. You can snag your free guide on their site and learn more about eliminating duty costs at the US border.
You can also check out their video at T&C 2019 here.