Canadian Fulfillment: What You Need to Know

Photo by Guillaume Jaillet from Unsplash.com

Who would want to spend an additional 25% in taxes on their imported goods? No one can think of a single entrepreneur who would agree to that expense—even begrudgingly. Yet, this same mastermind behind a blossoming eCommerce business has secured an excellent deal with a manufacturer in China who can craft the necessary products at an affordable price. Therefore, a solution for this predicament is in order, which is to partner with a Canadian fulfillment company as a means to avoid paying the steep taxes on Chinese imports. However, the business owner needs to know everything possible about this organization before the collaboration begins.

At first glance, utilizing Canadian fulfillment appears to be an additional expense on top of the 25% percent in tariffs, storage, packaging, and dispersal of the merchandise. On the contrary, an American business would likely save money by integrating this service into their operation. To begin with, a Canadian fulfilment logistics specialist would possess extensive knowledge of import regulations, more specifically Section 321. By correctly categorizing items that are imported from China as exempt from duties and taxes, a Canadian fulfillment company would save a business that 25% tax. Moreover, the company’s specialists would know exactly how to qualify a retailer’s order for this exemption. As an example, they would make absolute sure that the shipment is carefully planned in such a way that multiple orders each arrive on separate dates. The reasoning behind this relates to Section 321 where the items can’t be worth more than $800.

Yet another positive sign to watch for when talking business with a rep from a Canadian fulfillment company involves a deeper knowledge of shipping regulations other than timing, quantity, and value of the imports and their arrival. Again, these aspects relate to the eligibility to categorize a shipment as eligible for Section 321 status, but the logistics specialist possess a strong awareness of which products aren’t eligible. These include tobacco and alcohol products, items that would be regulated by more than one agency, such as the FDA or the USDA, and some other substances that call for an inspection before sending them off to their destination. For instance, if an entrepreneur specializes in cleaning products, then he or she can expect the fulfillment company to be open about a more expensive cost for dealing with these chemicals, depending on what they are.

Likewise, entrepreneurs would also have to consider the transparency of a Canadian fulfillment company, just the same as any other service that a business needs to procure. In other words, the organization will only charge for services provided including storage, completing, and checking the forms that invoke Section 321, and shipping if they are going to send the products directly to the customer. Another consideration is if there’s a charge for sorting and packaging to prepare the goods for shipping. Basically, a potential client would need to ask these questions of the Canadian fulfillment rep and request an itemized quote if possible.

Furthermore, the company’s representatives would also be upfront about whether they’ll opt for filling out the manifest forms on hard copy or (most likely) electronically. The latter option would further cut costs, take less time, and guarantee zero delays in shipping the goods directly to the customer.

Another factor for business owners to watch for is how much the Canadian fulfillment company will help the eCommerce retailer to expand into a more global market. This part of the service can involve insight into the registration process for an import-export program account with the CRA in Canada. Or even if a business owner had to go it alone with this part of the process, the Canadian fulfillment company could still offer reduced costs for shipping directly to customers in Canada and allowing for the option of paying for overhead costs in CAD as opposed to the American dollar which decreases costs overall. Not only is the owner looking at expanding the customer base but also at decreasing expenses for such a sizeable step toward expansion. Plus, with the revisions made to NAFTA, both parties would benefit from reduced costs. Overall, a representative of a Canadian fulfillment operation would stay abreast of these developments—along with any obstacles imposed by the pandemic—and be able to create a strategy for the entrepreneur to avoid expensive tariffs and include more area in his or her customer base.

When considering whether or not to use a Canadian fulfillment partner, there are yet more cost-saving benefits that should be thought through. For example, if you are having your goods imported into Canada and shipped direct-to-consumer to fill an order, you won’t need to have warehouse or storage space. And without any warehouses, you won’t need the staff and equipment to run them. How great is that? Someone else can spend the time, money and effort sorting out supply chain logistics and order fulfillment details, leaving entrepreneurs and ecommerce vendors free to focus on their core business.

To dive a little deeper into the benefits of having a third-party handle logistics, some natural concerns arise when you consider more complex operations. Let’s take for example, an ecommerce business that imports from several countries, and ships internationally. Most Canadian fulfillment partners can handle this level of partnership and flexibility. They can offer inbound product importation services that can pick up inventory anywhere in the world and have it shipped to the facility in Canada. From there, integration with CRM’s for order receipts, tracking passback, and real-time inventory counts provide a next-level of service that’s hard to ignore.

Thus, a continuous working knowledge of regulations, like Section 321 and the rules instituted by the “new” NAFTA along with a sound strategy for expanding service area, and transparency into services and pricing are three of the primary components of the ideal Canadian fulfillment company. Taking the time to ask the right questions is well worth the time if it means partnering with the right company that can serve the unique needs of a small to medium-sized business.