Importing – Over the last five years there has been increased interest in Section 321 from e-commerce businesses across the nation — especially with the rise in online shopping that has come with the onset of the pandemic.
But the real question — is it worth pursuing?
Any good e-commerce entrepreneur has a thorough understanding of risk. They are hesitant to pull the trigger on a large decision too soon, because one wrong move could very well mean the end of their online business.
Which is why we want to provide some much-needed insight on the topic.
Does section 321 save you money when importing?
The concept of Section 321 is a somewhat simple one.
You purchase your overseas products in bulk as normal — however, you don’t get them sent to your “normal” place of business.
Instead, you get them sent to a third party based in Canada known as a “Canadian Fulfillment” company. And these companies provide a service that allows your shipments to gain that much desired Section 321 classification.
In short, these Canadian based companies have several large warehouses situated close to the American border. This allows them to store large amounts of your stock. Then, when you receive an order online, they ship them to your customer on your behalf.
And because each individual order gains Section 321 classification, you no longer have to pay importation costs when it crosses the border.
Now, there is an obvious benefit here — because you no longer have to pay the tariffs and duties associated with importing overseas products into America, you see an immediate reduction in costs, and a subsequent rise in profits.
However, this is not all profit.
Obviously enlisting the aid of a good quality Canadian fulfillment service comes with an associated cost, and this cost does bite into the money you save from importation.
Most fulfillment companies charge by the hour, or per unit of product shipped. And although this does mean that your expenses increase as your business grows, it typically costs less than the initial cost of importation.
And this becomes more profitable when you consider the money you save on warehouse space, shipping staff, and other general shipping costs.
Section 321 and the Intangibles
The other thing that should be included in the Section 321 discussion relates to those somewhat intangible benefits that come with enlisting a Canadian fulfillment company, rather than opting for direct imports.
And the first intangible?
Time.
As any e-commerce business owner knows, a large part of your day can be spent processing, packing, and shipping orders. While these jobs are unquestionably important, they do not contribute to business growth or development.
However, taking the Section 321 approach frees up a notable amount of time every single day, which can be spent on things like marketing, planning, and business building — all of which contribute to business growth.
Secondly, I know of numerous small businesses who actually saw an increase in customer satisfaction after taking the plunge and choosing Section 321 over direct imports.
Because most large fulfillment companies have several distribution centres located around Canada, they can get your products out to your customers faster than you can. And when you combine this with the high quality insurance they provide on all their shipments, you have a recipe for success.
Talk about winning.
The Rise of Section 321
Over the last five years the number of businesses taking advantage of Section 321 has increased rapidly. This has made it more challenging for businesses using direct importation to compete — especially with the rise in online shopping that has come with the pandemic.
In short, there has never been a better time to get involved in Section 321 and save a lot of money in the process.
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