You already know that having an eCommerce business means you have to learn to adapt not only to supply and demand but also to ever-changing tax and customs laws. This is especially true if you buy and sell goods outside the United States.
One such law that has changed how we do business is Section 321.
What is Section 321?
Congress passed Section 321 in 2017 primarily to allow tourists returning from foreign countries to bring home expensive souvenirs costing up to $800 without paying tax on those goods.
The law is not limited to bringing home souvenirs, however. It also allows oversea companies to ship items that total under $800 directly to customers in the US without paying the tariff tax of 25%.
How Section 321 Changed the Way We Buy and Sell
Traditionally, companies would buy goods in bulk from China or other countries where manufacturing was cheaper. They would then house the products in warehouses in the US, and once sold to the customer, and they would have to pay the import tax.
Section 321 now allows companies overseas to sell products primarily online and ship them directly to customers in the US. As long as the product is valued under $800, custom duties do not apply.
This adjustment in customs laws now allows US customers to buy goods for less because the company can sell for less, not having to take into consideration the otherwise high import fees.
What Does Section 321 Mean for You?
If you own an eCommerce store, you might wonder how these new adjustments affect prices, your customers, and your overall business plan.
Some businesses have found that they can’t compete with the low prices global companies offer to US customers. It is more expensive now to buy in bulk and ship within the country than to ship single items directly from outside the country to the customer.
The good news is that you can stay ahead of the competition and not get “out-bid” by overseas companies. You just have to use Section 321 to your advantage.
Using Section 321 to Your Advantage
Section 321 might seem to give global companies an advantage over the US market since they can ship directly from affordable manufacturers to US customers without paying the 25% tariff.
The truth is that there is an easy way to utilize Section 321 to benefit your own business, but it will require some restructuring of your business plan.
The most popular solution to the tariff dilemma is to hire a Canadian fulfillment service. Doing so allows you to ship goods from China, or wherever your products are manufactured, to Canada in bulk without the hefty import tax.
Your items are then stored until a customer makes an online purchase, at which point the items are shipped directly to the customer. As long as less than $800 worth of goods is shipped in a day, you can bypass the tariff into the US altogether.
What Can a Canadian Fulfillment Company do for You?
A Canadian fulfillment company gives you the same advantage as other global companies of shipping directly to customers without paying tax on bulk items.
Canadian fulfillment receives your shipments from the manufacturer, stores them in a Canadian warehouse, prints labels, packages products, and sends orders directly to your customers.
Not only do you save money on tariffs, but you no longer need to have your own warehouse or packing facilities in the US.
Use Section 321 to Grow Your Business
Section 321 will affect how you do business. To keep from falling behind the competition, start laying the groundwork now by working with a Canadian fulfillment company. You’ll be able to keep up with the competition’s prices and offer products to a global clientele.
When you keep your business framework flexible and ready to adapt to whatever changes come next in eCommerce, you stay ahead of the game and continue to expand your reach.
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