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Owning a business and selling overseas products online has become the primary business model for entrepreneurs across the globe.
And really, why wouldn’t it be?
Smart individuals are finding high quality products doing well in overseas markets, getting them for a steal, and then selling them on to US consumers for a profit. It is a win-win for all people involved.
However, over the last few years we have seen a rise in the number of import tariffs here in the USA, which has made the entire process much more expensive — and it is killing small businesses.
Which is why many entrepreneurs are looking to Canadian Fulfillment and Section 321 for answers.
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What is Section 321?
Section 321 describes a classification of goods by American Customs and Border Protection that are allowed to enter the country tax and duty free. In short, any import that obtains Section 321 classification does not incur importation costs.
The kicker is that not all imports can gain this Section 321 classification.
For a shipment of goods to qualify, its total value must be less than 800 USD. And, unfortunately you cannot break a larger order into smaller shipments to get around this. Any shipment that is covered by a single order will not be categorized as a Section 321 if the total value of that order exceeds 800 USD — even if it is broken up into smaller packages.
But there is a better way to get around it known as Canadian Fulfillment.
What is Canadian Fulfillment
Canadian fulfillment ultimately describes the process of getting large quantities of imported goods shipped to Canada, where they are then broken up into smaller packages and shipped straight to your customers.
These smaller packages can then gain Section 321, eliminating import costs in the process.
While this process could be done at an individual level, over the last few years we have seen a number of different Canadian fulfillment companies enter the market. These companies provide a service that lets you redirect any shipments of foreign goods through Canada.
Think of them as a middleman who receives orders on your behalf, before shipping them off to your customers here in the USA.
Top 5 Tips for Importing Under Section 321
If you are interested in getting your shipments classified as Section 321, then there are a few things you want to do before you get the ball rolling.
- Find a good company
Since 2018, there has been a pretty rapid increase in the number of companies offering Canadian fulfillment services — and like anything else, some are much better than others.
We would suggest that look for a company that’s primary focus is Canadian fulfillment, rather than one that offers it as an additional service. This will ensure that you are getting the best service possible.
Our company of choice is Stalco.
These guys were one of the first Canadian Fulfillment companies on the scene and were created entirely for the purpose of helping entrepreneurs gain Section 321 classification on their imports.
I should also note that because their distribution center is right on the Canadian – American border, and that they offer same day fulfillment to all their customers, there is no delay between your customers making the order and receiving their products.
- Make sure your goods can be classified as Section 321
It is important to note that most imported goods that do not exceed 800 USD can gain status as a Section 321 — however, there are a few exceptions.
If your goods require inspection before release, regardless of their value, will not gain classification. Similarly, neither can any goods subjected to anti-dumping or countervailing duty, or those are considered quota-class goods.
Finally, any goods that are regulated by the Food and Drug Administration, Food Safety Inspection Service, National Highway Transport and Safety Administration, Consumer Product Safety Commission, or the United States Department of Agriculture, cannot gain Section 321 and therefore will not be suitable for Canadian fulfillment.
In short, if you deal with any of these goods, don’t worry about it.
- Maximize communication
Once you have settled on a company and know your goods can be classified as a Section 321, you need to make sure you keep a near-constant channel of communication with your Canadian fulfillment company.
If you are going to be relying on someone else to store and ship your products, you need to know how much of that product you have in stock at all times. You also need to be able to communicate your shipping needs to them at regular intervals.
Simply put, you need to place a premium on communication to ensure that your business continues to run smoothly.
- Adjust your shipping costs
While you will no longer be facing import tariffs, there is an associated cost that comes with opting for Canadian fulfillment (I mean, they are a business too). This means you need to make a decision as to whether you increase how much you charge your customers for shipping, or not.
We know plenty of people who actually started spending less money once their import costs were removed (even despite using Canadian fulfillment), and they passed these savings onto their customers.
On the other hand, we also know of companies who pocketed the import savings and increased the shipping costs to match those of their fulfillment company as a way to increase profit.
There is no “right” way to go about this, but it is something you still need to consider.
- Stop putting it off
If you are an entrepreneur who is losing money importing goods into the USA, it is time to make a change.
You can sit here, deliberating over the decision to get involved with a Canadian fulfillment company, or you can bite the bullet and start saving money as soon as humanly possible.
Really, it seems like a no-brainer.
Take Home Points
Using Canadian fulfillment and getting your imported goods classified as Section 321 offers the most effective way to cut import costs and increase profits — ensuring your business continues to grow long term.
However, you want to make sure you do it properly.
Using the tips listed in this article you can get organized and start using Section 321 to your advantage — so what are you waiting for?
About Carson Derrow
