Entrepreneurs running an online business in the US walk a fine line between making substantial profit and barely scraping by. And between supply chain issues, economic fluctuations, and import tariffs, it can be a hard line to walk.
However, that doesn’t mean it can’t be done.
And the key to edging closer to substantial profits?
Improving business efficiency and reducing avoidable business costs — which is why, as an online entrepreneur, you need to know how to claim Section 321.
Death by Importation
Online business owners across the nation are feeling the financial crunch more than ever.
Since 2016, a variety of importation duties and tariffs have been making it increasingly more expensive to get overseas products onto American soil. And when this is combined with the current pressure on global supply chains and the greater shipping expenses associated, you have a recipe for disaster.
It is for this reason that nearly three quarters of small business owners in the US are reporting issues generating revenue in the current climate.
However, a large chunk of this can be avoided by using Section 321 to your advantage.
How to Claim Section 321 and Reduce Import Costs
Any shipment that enters the US from international soil gets allocated a specific classification.
More often than not, these are based on the types of goods entering the country. However, they can also be based upon who is receiving the goods (for example, a government shipment is classified differently to a private shipment) or based upon their perceived value.
Which is where Section 321 enters the discussion.
Section 321 describes a specific type of shipment classification that is given to those overseas orders valued at less than 800 USD. This is important, as goods that receive Section 321 classification enter the country without incurring any of the normal import costs associated with international orders.
Which means that as a business owner located in the US, if you can get your orders classified under Section 321, you completely remove import tariffs — something that has an obvious impact on your profit margins, and more extensively, on the success of your business.
However, there is some nuance to claiming Section 321.
As you would know, it is a rare occurrence when you order a shipment of goods from an international seller that is valued at less than 800 dollars. This simply wouldn’t be smart business.
It is for this reason that a significant portion of US businesses are seeking aid from third-party order fulfillment companies to make it work.
Third-party order fulfillment companies are Canadian-based companies that receive large orders of overseas goods on your behalf. They then store them in their warehouses, and ship them directly to your customers when you receive an order.
But here’s the kicker.
Because they send out your products in the form of a new customer order, it is classified as a “new” shipment by US customs and border protection, which allows it to gain Section 321 classification (well, as long as it is under 800 USD, which most will be).
And this is where the magic happens.
The Benefits of Section 321
This ability to obtain Section 321 has a clear impact on your business expenses by reducing importation costs. This can help improve profit margins and increase confidence in your ability to turn a profit despite uncertain economic conditions.
But it also has some other very valuable effects that deserve some attention:
- Taking on a third-party fulfillment company reduces the need for warehouse space and shipping staff, which further reduces business costs.
- Because most of these companies are located close to the border and have very good distribution networks, it can yield an increase in shipping speeds.
- Because you no longer have to receive, pack, and ship customer orders, it frees up time that can be spent on other important tasks, including advertising, marketing, and business development.
All of which drives business growth in a big way.
The Closing Comments
One could argue it has never been this difficult to turn a profit as an online entrepreneur in the US. However, being proactive and implementing strategies that improve business efficiency can make a big difference.
Which is exactly why taking the steps outlined in this article and ensuring your imports gain that much desired Section 321 classification is integral to turning a profit.
Seriously, take that first step — you won’t regret it.