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How to understand trading policies and overcome inventory related challenges in cross-border e-commerce?

Advanced technology has proved to be a boon by accelerating cross-border e-commerce in the last few years. Cross -border ecommerce between USA and Canada  has been going strong since a long time now. Same is the case with China as well.

Although cross-border e-commerce has spread across the globe, a lot of challenges still linger for buyers as well as sellers.

An online buyer once reported on Amazon to have received an electric kettle instead of a dinner set with the correct details including name and packaging.

Complaint on Amazon

Goof ups like these happen due to problems with the SKU code.

SKU management is one of the most important aspects when it comes to efficient inventory management.

Apart from this, sellers often face challenges while dealing with cross-border shipping, multi-currency management, taxation, inventory management in cross-border e-commerce.

When you are selling in the same country, your consumers are familiar with the tax system, currency, and shipping patterns. Hence, there are fewer chances of you facing difficulties.

However selling internationally is a tricky job. It requires for you to have a complete understanding of trade policies of other countries.

Understand trade policies for multiple countries

While maintaining business across borders, there are a number of formalities and documentation to be fulfilled. Each country has its own trading policy when it comes to cross-border e-commerce.

Apart from sharing the border, Canada and the U.S. have been maintaining a very healthy trading relationship with one another.

An agreement called North American Free Trade Agreement (NAFTA), signed between U.S., Canada, and Mexico allows these countries to trade products with the least rate of tariffs. However, this is allowed under one condition, that the product must have been manufactured entirely in one of these countries. Otherwise, the taxes apply accordingly.

Source: Stratfor

While importing, there are different taxes in Canada which include Goods and Service Tax (GST), Harmonized Tax, Provisional Sales Tax. While importing automobile air conditioners, certain passenger vehicles, fuels, tobacco and alcohol products are charged excise duty.

Understanding trading policies is necessary while trading cross-border because importing is a complex process altogether. Importing goods to Canada from any country requires obtaining a business number issued by Canada Revenue Agency (CRA), and preparing documents directly with Canada Border Services Agency (CBSA).

After determining the origin country of the goods and ensuring they are permitted in Canada. You will need a 10 digit tariff classification number followed by determining applicable duties and taxes for the products you are importing.

Similarly, importing goods from the U.S. to Canada requires the Pre-Arrival Processing System (PAPS) number. An entry must be filed at the time of arrival with the arrival notice and a commercial invoice before collecting or shipping to your address. The PAPS number is used as a Shipping Control Number (SCN) to clear shipments.

In order to import in the U.S. other than local taxes, the U.S. Customs and Border Protection (CBP) charge other taxes and fees on being goods imported into the U.S. Additional tax is charged based on the type of product. For example, Excise Tax is implied on fuel, tires, gasoline, tobacco etc.

Similar to the U.S. and Canada, European Union too has a very flexible and liberal trading policy under which they have right to export and import freely within Europe. The right to free trade also includes the right of free transit throughout the European territory.

VAT rates in Europe

Value Added Tax (VAT) is charged in EU countries. So if you are selling goods in Europe, you will require registering for VAT. The VAT rates vary from 4.5 % in Andorra to 27 % in Hungary.

Despite the product being manufactured outside the Europe, once it has entered the EU, it can freely be transported throughout the whole Europe.

Inventory Management

Online marketplaces like Amazon, Flipkart, eBay make it possible for smaller businesses to grow internationally. A service called Fulfillment by Amazon(FBA) makes it easy to expand and maintain your business internationally even if it is on the initial stage.

Along with providing a medium to make your product offer visible on Amazon, once the inventory is sent, they store the products at their own risks. The picking, packing, and shipping of the products are completely taken care of nationally and internationally.

International shipping companies take care of complicated procedures of shipping difficulties and make sure it is delivered successfully. It saves a lot of time and energy which you can utilize in growing your business.

If you ship through an international company like FedEx, they will take care of duties, taxes and levy a brokerage fee payable upon delivery. The process is rather complicated which requires your time and close attention.

One can have multiple warehouses in different cities no matter where he is based. Multiple warehouses in different countries cut down the time spent in shipping which leads to consumer satisfaction. Multiple warehouse management becomes even more efficient when you plug it to an efficient inventory control software.

Amazon FBA

Amazon FBA handles returns and provides customer service which allows businesses especially small businesses to focus on developing their empire without worrying about packing and shipping.

Use an efficient inventory management software

Amazon FBA does the hard job yet sellers may find difficulties if they are consistently present on multiple online marketplaces. At times like these, using better technology could be a better option in order to be organized and keep detailed records from orders to shipping including international shipping.

Orderhive is integrated with selling channels, accounting software, and courier companies. This helps to ease the complications. It can provide services to ship your products nationally and internationally, keep track of shipping, maintain the record of the quantity of the products shipped as well as stored in multiple warehouses etc.

Multichannel integration – Orderhive

You can know the accurate number of products stored in multiple warehouses, a number of inventories, packing, selling, importing etc. Consolidating the above factors, an efficient inventory management software can help you grow your customer base by more than two to three times. This information can help you take major decisions to expand your business.

Understand the importance of SKU code while managing multiple online marketplaces

A Stock Keeping Unit (SKU) code is a unique specification code to a product or store. It is used in warehouses, retail stores, catalogues, retailers, product fulfillment centers to maintain an accurate record, which can help the company keep a record of their inventory.

There are times when the consumer claims to have received a product he has not ordered. Such cases happen due to issues with the SKU code. If two products are registered with the same SKU code, it is natural to misunderstand identifying the product.

Companies selling the similar products or the same company selling different products must issue different SKU codes so that there is no misunderstanding. Each product must have a unique SKU code.

Online marketplaces allow sellers to address the global audience yet there are challenges they are more likely to come across. A better understanding of trade policies, SKU codes and use of technology can smoother the process. Facilities like Amazon FBA and Orderhive can help expand businesses in no time.

Hope you find the suggestions valuable. In the next post, we will come up with three major challenges faced by online sellers dealing with cross-border e-commerce.

Darshi Shah

Darshi Shah

Darshi Shah joined Orderhive as a Content Writer who is very enthusiastic when it comes to writing. In her spare time, she enjoys reading books, painting, baking and writing about life and experiences.

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