Your Business Could Benefit From NAFTA Changes—Here’s How
The U.S., Canada, and Mexico recently reached a new NAFTA deal (titled USMCA) that will impact duties and tariffs for foreign goods. These changes could be beneficial for online retailers in the U.S., allowing foreign shoppers to spend more at a time before they incur additional costs paid to their country of residence, Canada, or Mexico.
If the new deal goes into effect, both Mexico and Canada will increase their de minimis shipment values, which is the minimum value of an imported shipment subject to duty collection and customs documentation. Mexico is raising its de minimis threshold to $100 from $50 and Canada is doubling its threshold to C$40, up from C$20 now.
Canadian consumers also won’t have to pay duties for cross-border purchases that are C$150 or less. Mexican consumers won’t have to pay duties for international purchases that are $117 or less.
By comparison, the U.S. has an $800 (USD) threshold that is applied to e-commerce.
It’s Easier Than Ever to Take Your E-commerce Business Global
These changes could have a big impact on U.S. businesses, because many of them are shipping to Canada. For those who aren’t, the new changes could incentivize them to expand their business north of the border.
Data analyzed in Shippo’s platform finds that in 2018, more than 20 percent of its small and medium-sized businesses used its platform to export to Canada. Shippo serves more than 70,000 online retail business, a vast majority of which are based in the U.S., but also Canada, Europe, and Australia.
To compare, in 2015, Shippo’s first full year of business, fewer than 2 percent were exporting to Canada. By 2017, retailers shipping to Canada reached 17 percent. Over the last few years, we found that the highest velocity growth has occurred in the smallest businesses segment, those with just 1-10 employees.
Should the new NAFTA terms become finalized, small online retailers should prepare for an increase in orders from Canada and Mexico. This would make it an ideal time to consider expanding your business internationally. There are more potential customers, and you’ll have a bigger marketplace to play with. But it’s just as important to consider the right strategy when it comes to shipping abroad.
Give Buyers Choices When it Comes to Shipping
Since cross-border shipping can get expensive and take a long time to arrive, it’s important to give customers the option that best fits their needs when checking out. Not only will that increase your sales and customer experience, it may increase your margins depending on how you decide to charge for shipping.
You can easily do this by diversifying your shipping profile to include multiple carriers to take advantage of the services they’re best optimized for.
Affordable, But Slower
Try USPS Priority Mail International. Especially for smaller, lighter packages, USPS offers the most competitive rates.
It’s important to note that the USPS is a U.S. government entity. So when shipping internationally, the package is handed off to the local postal service provider in that country. Your USPS tracking can be spotty as a result, depending on where you’re shipping.
Consider Spending More for Faster, More Trackable Service
For those who are willing to pay for fast service, and want a more accurate, trackable method, consider integrating with a few private carriers like DHL eCommerce, UPS, and FedEx to check their rates and options. All of these carriers have international fleets that are much more sophisticated for tracking information.
When expanding internationally, remember to take a look at who your customers are and what service levels they are expecting. By giving them the option to select what they need, you’ll be able to increase both your sales and customer service reputation.