Since the inception of the internet, US based online entrepreneurs have been making money importing high quality goods from overseas and then reselling them for a profit.
In fact, this has been one of the most profitable business sectors across the last two decades.
Although its profitability has somewhat dipped over the last few years…
In 2016, the US government opted to introduce a number of import duties and tariffs that ultimately increased the cost to import goods from China.
Implemented with the intent to increase consumer reliance on locally manufactured goods, it also ended up forcing e-commerce entrepreneurs in the US to increase the cost of their products to try and maintain a dwindling profit margin.
Not only did this make it exponentially more difficult for entrepreneurs to make a living, it also resulted in a reduction in consumer confidence in the market.
And while there was hope that these tariffs would be removed when Biden was elected in 2020, they were, surprisingly, upheld — making it harder than ever for business to turn a sustainable profit in the US.
Well, until now, that is.
Over the last few years a growing number of American businesses have been seeking the aid of a Canadian fulfillment center to help return profits to pre-2016 levels.
And now you can do the same.
What is a Canadian Fulfillment Center?
A Canadian fulfillment center provides an order redistribution service to US businesses.
In essence, they receive large shipments of overseas stock on your behalf and store them in their own Canadian based warehouses until you receive an order. Then, when an order is received, they ship them directly to your customers.
And while this may seem like an excessive amount of product handling, there is a clear benefit that comes with this approach.
When the cost of importation was increased in 2016, the De Minimis value for overseas goods was coincidentally increased to 800 USD. This threshold describes the maximum value (USD) at which an overseas shipment can be imported into the US tariff and duty free.
Then, in what can only be described as a stroke of good luck, the De Minimis value was published under a list of Section 321 exemptions by US customs. As a result, any goods imported into the US valued at less than 800 USD could do so free of charge, as long as they fell under a single order.
It was this step that opened the door for e-commerce businesses in America to avoid import costs through use of a Canadian fulfillment center.
The Canadian Fulfillment Center Solution to Import Costs
Canada does not have the same importation costs as America. As a result, you can ship your overseas goods into Canada at a much lower cost than you can into the US.
This immediately lowers a business’s running costs.
Moreover, once a shipment of goods reach a Canadian fulfillment center, they are stored as individual items and broken up into individual orders. Because these orders then sit below the new De Minimis threshold, they get shipped to consumers in the US free of charge.
E-commerce retail sales in the USA increased from 598 billion dollars in 2019 to 792 billion dollars in 2020 — and this has largely been attributed to the success of Canadian fulfillment centers.
Finding a Canadian Fulfillment Center
How can you enlist the aid of a Canadian fulfillment center and remove your import costs for good?
Over the last couple of years there has been a steady increase in the number of Canadian fulfillment centers entering the market. This has made it fairly easy to find one that fits your needs.
However, there are a few considerations that are worth addressing.
Firstly, you should find one that ships with all the major US carriers and has their distribution centers close to the border between Canada and the US. This will ensure maintenance (and maybe even an improvement) in delivery times.
Secondly, do some research and stick with those companies that have a long history of good reviews. Those companies that have provided a quality service for more than 12 months should be your first point of call.
Lastly, ensure you have a clear understanding of the associated costs.
Canadian fulfillment centers do not provide their service for free. And although you can be confident that partnering with one will increase profits, you should have an understanding of how they make a profit.
Some charge a flat fee, while others take a percentage of your profit — find out what works best for your needs, and stick with that.
Final Thoughts
There is a reason that online businesses in the US have been taking advantage of Canadian fulfillment centers — because it is a surefire way to increase profits.
The key is finding a good one.
But once you do, there is no better time to start than now.
