Forum Moderators: buckworks
However, I remembered something from the back of my head about additional charges fedex will try to collect from m y customer. I just want to make sure and clarify this...
I'm no expert but many others here probably are.
If so at what point does customer pay for this VAT? Is it collected from them directly? do I have to worry about it?
Thank you!
Sadly, that was the last time we shipped to Canada.
Does anyone know where I can find these information on how much tariff could be?
Thanks
With UPS and DHL (I think FedEx is the same way), if you use their express shipping (UPS has Worldwide Express and Worldwide Expedited, DHL has air) it is treated the same way as the post office. If you use their cheap shipping (both have a ground option), there is also a "brokerage" fee (something like $20 or $30). When I ship internationally it is actually cheaper for the consumer to get express service than it is to get ground service because of the brokerage fee.
Plus, if you ship by courier, such as UPS or FedEx, you will have to pay the Customs Brokerage fee. This money goes to the courier companies brokerage arm. It is usually in the 20 to 30 dollar range.
The third charge, as was already mentioned, is any tariffs for product produced outside of North America. All textile products are subject to tariffs too, they are not covered under NAFTA.
Free trade does not really exist, despite what the politicians say. It may be a good system if you are General Motors, but bad if you are a small company.
The only solution, other than warning your Canadian customers in advance, is to set up a fulfillment center in Canada for your Canadian orders. Because the brokerage fee is the same for one box as it is a whole truckload.
We've found that UPS/FEDEX/DHL are not cost effective due to the brokerage commissions they tack onto their orders. (Order size is in the $100-$200 range)
The Post Office is less expensive (I believe that even they charge a $5 brokerage fee, but I've never been able to confirm), but they sometimes operate at a glacial pace. A small, but still way-too-large, percentage of our orders bound for Canada get stuck at the border for weeks.
If you do enough business with Canada, there are companies that will accept bulk shipments, escort them across the border (clearing customs, paying taxes, etc), and then put the individual orders directly into the Canadian mail stream. I believe its cheaper and quicker, but requires a certain volume to make work.
If returns are a fact of life in your business (like in, say, apparel) then you have another complication. If your customer returns a product to you for exchange, the new product you send them is going to be taxed again. As far as I can tell, border officials only acknowledge zero-value shipments into Canada if there is a customs broker there with a stack of documentation - which isn't worth it for most consumer orders.
Our prices in U.S. dollars were the main thing that attracted Canadian orders.
Yes, I believe that is correct. I was hit with a 5 dollar postal brokerage fee for stuff I ordered from the Grateful Dead about a month ago. Now this does not happen every time, only about 1 in 3 packages for me over the last year.
The other service you were referring to, where they import the goods, store it and then ship it, is a fulfillment service. You do have to have volume to justify it and spread the costs over hundreds of shipments. The biggest company for this is called Marco Sales in Brantford ON, but I believe UPS Supply Chain is in the business as well.
<mods> delete the names of fulfillment companies if you must </mods>
I ship world-wide (95% of my sales are still US domestic ) and I've found a very simple solution. Since taxes and duties vary from country to country, and also vary depending on the goods shipped, I've found that it is easiest to put this responsibility on the customer.
USPS, FedEx, UPS, and larger trucking companies will provide a SHIP charge to the location. This is the price that I quote to my customer, then I tell them that there may be additional taxes, duties, etc, and NO, I can't estimate what they will be. Then, with the customers permission, package is shipped with these charges collect.
In 5 years of e-commerce, I have not lost 1 sale because of this procedure. Most people know what is going on in thier backyards, and if they don't, they can find out more quickly and accurately than you can. Sometimes, they can even help with shipping. For instance, if I send a 2-cycle engine to Canada labled as bicycle parts, rather than agriculteral goods, there is no tax to customer. ( Yeah, you can put an engine on a bike ) Thanks to one of my Canadian customers for that tip. ( On the other hand, agriculteral goods to Trinidad have no tax, while bicycle parts are taxed to the max. )
The customer tax responsibility ensures your saftey in terms of returns and having to pay the difference on a mis-quote.
Keep it simple, honest, and straight to the point. If your customer is truly interested in your product, they will make the 1-2 phone calls to have an accurate idea of what it will cost for them to receive it. ( This can be a good way to filter out scam orders as well. )
That is the best way to do it if you are just sending a few orders over the border. If you actually want to become a player in the Canadian market, you will need a permanent solution. Keep in mind the Canadian market is only 10 per cent of the size of the US market. So need you need to have economy of size to justify the investment.
Welcome Zombie, to the best webmaster and ecommerce board on the net :-)
I have quit shipping Fedex Ground UPS Ground just for this reason. I got stuck with duties unpaid. I could sometimes go back and charge their credit card but this takes too much time, they get pissed off I did the charge so I just quit shipping to canada. If I do ship it is by mail they have to pay the duties to the post delivery. Just a hassel to go to the post office so I really don't do much of that either.
100.00 package can run 18-25 bucks in duties use to know the tarriff charges but quit a year or so ago and can't recall now.
If you ship Express the charges are figured in but very expensive and not worth it as far a cost to the consumer.
I have not lost 1 sale because of this procedure.
How can you possibly know that?
I know that the conversion rates for my Google campaigns targeting Canada are less than 1/3 of what they are for those targeting the United States.
Some of that can be ascribed to US-only pricing and some to nationalism but as I also have strong suspicions that the cross-border shipping hassles are part of the equation. (Its actually more than a suspicion, its a common concern I hear from my customers in Canada when I talk to them.)
You are absolutely correct. I personally have heard dozens of stories from friends, relatives and customers about ordering from the US and getting stung with brokerage and taxes. Often people say that they will never order from the States again.
I have a close relative who rents a mailbox (called a "Suite") in an American border town to accept orders from US companies. Now they are the exception because they are close to the border and have a high disposable income.
But for the most part, this protects Canadian retailers. Amazon, desparate for marker share, set up a warehouse near Toronto to handle Canadian business. They only carry books and music on the Canadian version of their site, no hard goods and no third party retailers. This was clearly done because of the problems discussed here.
We can ship from Canada to the USA, up to $200 dollars US worth of goods, under Section 321 (which basically says its not worth the hassle to collect the miniscule duty on small shipments).
However for American Conpanies shipping to Canada, a Canadian Customs agent will spend $25 worth of their time to collect 3$ worth of duty. Really Stupid.
They should raise the Canadian Limit to $200 as well to make the whole cross border game fair.
I have seen Canada Customs Agents, who have let $30 to $40 shipments cross in the mail system, without collecing duty, but there are far more Canada Customs Agents, who follow policy rather than use common sense.
It does seem stupid. Free trade is bull****. There is no such thing.
Before 9-11 I was shopping over the border all the time. Now crossing is more of a hassle. So we only shop on the other side if we have several reasons to go over. If you declare 50 bucks in groceries, a 12 pack of beer and a tank of gas when you return they will let you pass 9 times out of 10 without charging GST.
Duty is only charged on mailed items entering Canada that are over $20 Canadian. Duty is 15% for almost everything mailed, since alcohol and cigarettes aren't usually mailed.
Fedex is a RIPOFF for shipping to Canada, unfortunately it tends to be the most popular for American sellers due to their cheap prices, they don't know about all their hidden costs for buyers once it gets here. And it's not Canada Customs agents that charge $25, Fedex has their own Brokerage for all fedex shipments where they charge $30-40 dollars (it's gone up recently from $25) + the 15% of the items cost for tax.
UPS WORLDWIDE EXPRESS is the ONLY WAY TO GO when shipping to Canada items more than $20! It's usually only a few dollars more which I'm always glad to pay since it includes customs clearance and brokerage. On top of that it is guaranteed next day delivery! UPS has fantastic service in Canada.
Being a customer, I just got a bill from them for the first time which also includes $7.00 advancement fee, which I yet to figure out what it is. There is another fee too. It's retarded. Here is the breakdown:
Declared product value: $34.98
Canada GST: $2.45
Ontario PST: $2.80
Advancement Fee: $7.00 (have no idea what this is)
GST on ADV/Ancillary Service Fee: $0.49 (have no idea what this is)
Total of extra "fees": $12.74 (more than a third of the product value, insane!)
I did ship through fedex and got bills in the mail for big $$ for that stupid (don't trade with Canda) tax. We even had a $600 credit card fraud order and I got a bill for the tax from fedex.
No more, I let Uncle Sam take it in there (they use Fedex anyway). Your package is on the same truck but they will never send you a bill.
That's my 2 cents.
Mike
