vendor management Archives

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.

Similarities exist between strategic poker play and negotiating or operating in private enterprise. Few have likely given it serious thought but if they did commit brain time to the subject, they’d see how table image, portraying yourself as stronger than your hand may be, body language, controlling the look in your eyes, displays of sincerity or weakness all are exemplified in both scenarios.

Negotiating the price of purchasing a business, negotiating with vendors, discussing sensitive matters with employees and a host of other things that regularly occur in business may also happen in many poker hands one engages in.

In my earlier years, the risks I took with a new business venture certainly had me all-in more than on a poker table. On a table your all-in move is limited to the chips in front of you. When I went all-in on a business, it would also include debt in addition to the available capital (as in chips) immediately accessible to me.

When negotiating for products or services with vendors, I’ve found many of the matters being discussed would contain pricing variables an astute business owner could avail themselves of if they try. In poker, nothing is cut and dry. Pocket aces get cracked, a full house on the turn can be surpassed by a bigger boat on the river and a check with a monster pair could give your opponent a free look at a card on the board that fills their hand with a pair-beating result. Similarly, in business, good timing and the right move can advance your position when played right and implemented at the optimum time.

Table banter makes the game fun but could reveal things about your game philosophy that an observant opponent could use later in a hand to relieve you of some of your chips. Likewise, the things a business owner may say in front of an observant employee could certainly rear its ugly head my way when dealing with a human relations-based employee issue. As a pivotal point in my autobiography, Tenacity, describes in graphic detail, my casual comments within earshot of someone who would later be found out to be a thieving waiter would result in some life-altering consequences for me.

Every word you say and every act you perform possesses the power to affect you in ways you’d never imagine. Being ever cognizant of the things you say and do on a poker game are as important as the profile one portrays in their business life every day.

Ron Coury is the author of Tenacity: A Vegas Businessman Survives Brooklyn, the Marines, Corruption and Cancer to achieve the American Dream: A True Story

Understanding Fulfillment By Amazon in Canada

most viewed today