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Understanding Fulfillment By Amazon in Canada

Understanding Fulfillment By Amazon in Canada

The ubiquity of Amazon.com and its various international marketplaces is undeniable.

The online retail giant now represents half of all e-commerce in the United States. Last year, Amazon’s product sales amounted to just shy of US$142 billion. But what’s often missed in discussions about the growth trajectory of Amazon is the contribution of third-party sellers to Amazon’s overall sales figures.

In 2018, third-party sellers generated US$42.75 billion, representing 52% of paid units in Q4. That’s almost double the percentage of 2007 when third-party sellers represented only 26% of paid units.

The reason for the sharp upward trajectory in the participation of third-party vendors is simple – Amazon provides unparalleled access to a massive marketplace of consumers. Fulfillment By Amazon (FBA), which is the process through which third-party vendors reach consumers, has seen particularly acute growth amongst smaller vendors looking to leverage Amazon’s reach and exposure.

More recently, U.S. businesses have been looking beyond America’s borders, with hopes of taking advantage of Amazon’s international marketplaces, which offer attractive growth potential for those willing to take the plunge into global commerce.

Perhaps one of the most sought-after Amazon marketplaces is Canada’s Amazon.ca. America’s northern neighbor offers a range of opportunities and benefits for third-party sellers looking to enhance their sales potential. There is, of course, geographic proximity, but Canada also boasts one of the highest e-commerce adoption rates globally. In fact, by 2020 e-commerce sales in Canada are expected to reach C$55.78 billion. By 2021, there will be an estimated 23.7 million e-commerce users in Canada, representing two-thirds of Canada’s total population.

Canadians’ attraction to e-commerce is clearly evident in 2018 Amazon Prime sales, which more than doubled in volume from the previous year, demonstrating a growing appetite for the e-commerce giant’s member-based, expedited delivery service.

Still, many U.S.-based third-party Amazon sellers tend to shy away from international markets, fearing the complexity of going global will be overwhelming and/or eat into their profitability.

While it’s true that selling into Canada through Amazon does come with additional layers of complexity, most international-trade considerations can be easily overcome with careful planning and attention.

Tax Implications

U.S. businesses shipping into Amazon’s Canadian fulfillment centers to sell to Canadian consumers are considered Non-Resident Importers (NRIs). By virtue of holding inventory in Canada (through Amazon) a third-party Amazon vendor and Canadian NRI must register and file federal taxes with the Canada Revenue Agency, but does not have to file taxes to the province in which Amazon’s fulfillment center is located.

Customs Documentation

These businesses will also have to ensure they obtain the necessary permits, as well as complete and provide the required customs documentation. Canada’s customs agency carefully scrutinizes products coming into Canada to ensure compliance with regulatory standards and trade agreements, but also for duties or tariffs that may need to be paid.

Customs documentation that is incomplete can result in the import being refused into the Commerce of Canada, leading to delays at the border and, in turn, delays in arrival at Amazon’s fulfillment centre.

Most U.S. businesses use a Canadian customs broker to facilitate the customs transaction with the Canada Border Services Agency (CBSA) and to ensure the documentation is complete and sent to the CBSA in advance for seamless clearance at the border.

Customs Classification

As part of the customs process, products will also need to be properly classified. Canada uses different classification codes than the U.S. and ensuring the right codes are being applied to products being sent to Canada is critical to avoid potential customs infractions. Misclassified goods could lead to expensive and time-consuming audits. Should those audits reveal chronic misclassification, businesses may be required to pay retroactive duties, taxes and interest, and possibly significant penalties.

Labelling Requirements

Canada is an officially bilingual nation. That means certain products must be labelled in both English and French to comply with Canada’s language laws, while others may not require bilingual labelling. This is true for every province, not just in Quebec. Failing to comply with language laws could result in significant penalties and potential loss of distribution rights.

These requirements may seem daunting at first, but most of them are easily addressed and over time will become a natural and integral part of the business process. For most businesses, understanding the requirements in advance and putting in place the information and processes necessary to fulfill them will usually result in a seamless import process and minimal burden over the long term.

Danny Cipollone is vice president of strategic alliances and e-commerce at Livingston International, a customs broker and trade services firm specializing in freight forwarding, global trade management and trade consulting.

World Distribution Services Announces $6.2 million Warehouse Renovation

Driven by a vision for infrastructure upgrades, technology enhancements, and new machinery, supply chain solutions provider World Distribution Services announced plans to refurbish and build 320,000 square feet of warehousing space at a facility in Virginia Beach. The added space will be solely dedicated to manufacturing and retail goods with 20,000 square feet specifically dedicated to food grade space.

“Our new warehouse will feature a top tier Warehouse Management System (WMS) with RF scanning technology. Our WMS gives our clients 24/7/365 access to their inventory data, and seamlessly integrates with their ERP systems,” said WDS SVP John Morrow. “What this means is that we can easily handle inventory management and order fulfillment services for our clients, and provide them with extremely accurate tracking, tracing, and reporting that fits their needs.”

Artistic rendering of the future World Distribution Services warehouse at 1537 Air Rail Avenue in Virginia Beach. The refurbished warehouse will be 320,000 square feet with 20,000 square feet of dedicated food-grade space.
Credit: World Distribution Services

With an estimated completion date for March 2020 and a prime location within 15 miles of Port of Virginia’s container terminals, the renovation will also bring 35 new jobs to the region.

“This company will be nearly doubling its warehousing space [in Virginia], which speaks to its success and its expectations for the future,” said VBDA Interim Economic Development Director Taylor Adams. The VBDA approved an EDIP grant of $35,000 for WDS based on the number of new jobs it will create.”

“We are very excited to be expanding our warehouse operations into Virginia Beach in 2020.  We wanted to bring high quality facilities close to the Port of Virginia to better serve our customers and to improve the work environment for our employees. Thanks to the Virginia Beach Department of Economic Development, we were able to find a facility that will meet both of those objectives,” said Duncan Wright, President of WDS.

 

Supply Chain Professionals: Boxzooka International Ecommerce & Fulfillment

Located on the east coast, Boxzooka Fulfillment and Global Ecommerce provider takes managing client requests to the next level through a one-of-a-kind tailored approach offering back office operations for online retailers, order fulfilment for both direct consumer and direct B2B wholesale order fulfilment, while providing automated, customized solutions. Through this approach, Boxzooka not only creates and maintains competitive advantage as a leader in managing the flow of goods, the company boasts an impressive volume of loyal clients who don’t have to seek outside sources to get their needs met. By taking the extra step out of the process, Boxzooka provides an all-in-one solution. The company isn’t afraid of investing more into their customer needs, as they look at the long-term impact it has on their customer base. In other words, customers always come first.

“We’ve accomplished building and maintaining a business with near 100 percent client satisfaction rate,” Founder Brendan Heegan said. “Most warehouse 3PL operations have an 80/20 rule where 80 percent of the revenue is coming from 20 percent of the clients – those are the ones that get the VIP treatment, if you will, and the other 80 percent of their clients get scattered support where some days are good, and some days are bad. They get a lot of client complaints and we don’t have that because everybody’s getting an equal amount of support and attention, just what they need and more. We don’t lose clients.”

Boasting their very own technology, the integrated game-changing capabilities built into their platforms provide customers with an unmatched global reach, eliminating the need for assistance from an outside source or 3PL. The company’s custom technology platform serves as a major differentiator among competitors and as a significant driver behind their robust customer base and retention strategy.

“We own our own technology and we developed everything in-house. Our systems are comprised of a warehouse management system that handles inventory management movements, receiving and shipping out orders. We’ve also built-in a transportation management system (TMS) – companies might use ShipStation or Stamps.com, but we have all that built in to our warehouse management system so there’s no need for a secondary system in order to perform that function,” Heegan explained. “The platform also enables retailers to open the doors to the global market with the turnkey solution that we provide. “

Beyond automation, Boxzooka fosters an environment where employees aren’t limited to one silo. By fully integrating the ins and outs of operational processes, the company fully utilizes the talents and abilities of each employee.

“We cross train everybody, all the time, on every function so that all of our people can do anything at our warehouse. They’re constantly being thrown at different things. That probably decreases our efficiency and increases internal costs a little bit, but we look at it through the perspective that if we lose a team member, then that function doesn’t break and it allows us to shift labor around, making us operationally very competitive. We have a great service because everyone can do everything in our warehouse.”