No risk. No reward. This universal business truth applies to many situations, but there’s nowhere it matters as much as in the world of cross-border compliance and sales.
Global ecommerce has expanded in the past few years as more consumers shop the globe. Success for retailers who answer the call is just as important. The 2015 U.S. Small Business Global Growth Report, commissioned by eBay, showed that while export-oriented small and medium-sized businesses in their marketplace grew their businesses by 91 percent from 2010-2014, those who focused only on the U.S. grew by just 58 percent.
Many organizations know that shipping and compliance management for cross-border sales can be complex, but the opportunities are too valuable to ignore. If you address and plan for these potential pitfalls, you’ll be well on your way to crafting a winning cross-border compliance strategy.
Pitfall #1: Not keeping abreast of changes in the landscape
In today’s fast-moving world, there’s very little left that you can just “set and forget.” Compliance is no different. As an exporter, whether you are a retailer, manufacturer or entrepreneur, you need to be aware of what your obligations are. Don’t assume that a purely export perspective will cover you.
You also need to be knowledgeable and aware of what regulations are applied in the country of destination. The regulatory landscape is complicated and varies on a country by country, or even a regional basis. There are changes happening on a regular basis that every exporter needs to be aware of. The good news is that there are resources, tools and partners that can help ensure that you’re always making decisions with the latest regulations in mind.
Pitfall #2: Assuming that someone else knows
The priority of compliance should be the export process and understanding export requirements. If you understand your obligations as an exporter, it can help grow your business and keep you moving in the right direction. When you sell and ship, also think about the consumer, but you also need to know that you can export your product without any additional licensing or declaration.
Pitfall #3: Not knowing your end consumer well enough
While it’s always a good idea to know your customer, when it comes to compliance, it’s a legal necessity. It’s extremely important to make sure that your end consumer is not on a denied or restricted party list.
The US Treasury, State Department, and Department of Commerce all maintain lists of entities, individuals, or companies who are restricted from buying goods exported from the US. These lists are consolidated into a database that helps exporters ensure they are not selling their products to anyone illegally.
While the information is available in a database, the data is constantly undergoing updates and changes. It‘s important to rely on service providers who can help businesses stay fully compliant. It all comes down to knowing your end customer and checking that person against the relevant lists.
Use the DOC Consolidated Screening List API we have embedded here.
Pitfall #4: Not knowing your product
You may think that you know all there is to know about your product, but do you know the pertinent information for a smooth export process? You’ll need to identify things like material, country of origin, and harmonized tariff systems (HS) code.
You’ll also need to declare the transactional value of your shipments—which means if you have multiple products in the same shipment, you’re taking the total value of the shipment into account. If your transactional value exceeds $2,500 per-commodity HS code, then you’ll need to declare it to the government and you may be subject to more scrutiny.
While there are inherent complexities in moving a physical object across borders, cross-border shipping doesn’t have to be challenging when you invest the time to get it right. With proper preparations, research and mindset, cross-border shipping can be a reality for any business of any size.
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This video and audio interview series and all content provided on this site are intended to provide a resource to U.S. exporters. Our content is continuing to grow, expand and adjust based on the changing and evolving market dynamics. It is not comprehensive. Inclusion does not constitute an endorsement or recommendation by the U.S. Foreign Commercial Service or the International Trade Administration. The Commercial Service and its collaborators have performed limited due diligence research; but we strongly recommend that you perform your own due diligence investigation and background research on any company or service we profile in this series. We assume no responsibility for the professional ability or integrity of the information and concepts described throughout our content.