The US market is saturated with entrepreneurs and small business owners trying to make a buck. And while many would argue that there is more than enough business to go around, I firmly believe that being ahead of your competitors is always the best place to be.
The hard part is actually setting yourself apart from the crowd.
Depending on your business model, there are a number of ways to approach this. You can try and improve your customer service. You can try and offer customers a unique service. You can try and differentiate yourself through the products you sell.
Or, you can sell your products at a lower price point than the rest of the market -- which is arguably the best option to take.
The negative here is that this can mean reducing your profit margin on each product sold, impacting the viability of your business. Which is why I personally like finding ways to reduce running costs first, rather than immediately slashing prices.
And one area where running costs can easily be cut relates to shipping.
The Cost of Importation
Over the last couple of years, we have seen several import tariffs introduced that have made it much more expensive to import goods from overseas.
This has obvious implications for businesses based in the US, because it increases their running costs significantly. In fact, it has been estimated that these tariffs have affected more than 500 billion dollars of shipments since their introduction.
Moreover, it is believed that these costs have been passed onto consumers to a value of around 57 billion dollars each year.
Is it any wonder that consumers have lost trust in the economy and the market has been getting more and more competitive?
Now, as they like to say, every cloud has a silver lining.
In this scenario, there is the potential to separate yourself from the rest of the market if you can reduce the cost of importation. These savings could then be passed onto your consumers without you losing out on any profit.
And the silver lining exists in the form of Section 321.
What is Section 321?
Any product that enters the USA gets a classification -- and one such classification is Section 321.
With this in mind, Section 321 is simply a type of good that passes through American Customs and Border Protection every single day.
But the key thing here is that any shipment that crosses onto US soil classified as a Section 321 does so completely tariff and duty free. This means that if you can get your goods Section 321 classification, you can slash your importation costs in a big way.
However, I should note that not all goods can gain Section 321 classification.
For any single shipment of goods to get classified as a Section 321, it must be valued at less than 800 USD. And for those of you who think you can break your order up into smaller packages to get this classification, think again.
Any shipment that is covered by a single order or contract will not be categorized as a Section 321 if the total value of that shipment is more than 800 USD -- even if it is divided up into a hundred individual packages.
But there is a way around it…
The Magic of Canadian Fulfillment
Since these import tariffs were introduced, we have seen the development of several Canadian fulfillment companies.These companies have been designed for the purpose of helping you avoid import tariffs by using Section 321.
To provide an example of how this works, I am going to use the Canadian fulfillment company Stalco.
Since 2018, this Toronto based company has been offering a service to US businesses that allow them to redirect shipments of goods through Canada. Stalco then stores these goods, and fulfills orders for you by sending them off to your consumers here in the USA.
Because each product they send is considered to be a new shipment, it will gain Section 321 classification, eliminating the normal cost of importation.
Now obviously these companies charge you for this service, but it does save you a lot of money in the long run. Moreover, companies like Stalco have their distribution center close proximity to the border, offer same day fulfilment on all orders, and use all major US carriers -- which means that you tend to get faster shipping in the process.
If you are interested in using Canadian fulfillment and Section 321 to stand out from the crowd, there are a couple of things you need to know.
If your goods require inspection before release, regardless of their value, they will not gain Section 321 classification. Neither will any goods subjected to anti-dumping or countervailing duty, or those are considered “quota-class”.
Additionally, any goods 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 either.
So if you deal in any goods that meet these criteria, you should probably look elsewhere.
If you want to get ahead of your competitors, the easiest way to do it is to lower your costs -- however, you want to do this without losing profit. Which is why using Section 321 and Canadian fulfillment is the perfect way to reduce your importation costs and get ahead of the competition.