eCommerce sales have skyrocketed every year since merchants started prioritizing the maximization of revenue and minimization of logistics costs. In this context, Section 321 de minimis comes of help, especially when you are shipping goods from overseas. Let’s delve into Section 321 in more detail and see how it impacts your eCommerce business.
eCommerce stood the test of time and kept growing amidst disruptions. In fact, it accelerated after the recent global pandemic when consumers felt it was safer and more convenient to order goods online. Online sales are expected to continue on an upward trajectory, taking a larger chunk of the retail pie. It is thus not surprising that global eCommerce sales are expected to reach $6.33 trillion in 2024. To participate in that sales surge, you must optimize your supply chain operations to save on logistics costs and maximize revenue.
That’s what most eCommerce merchants are prioritizing currently. However, reducing logistics costs while shipping products from overseas can be a challenge due to the respective customs, duties, and taxes. Here’s where Section 321 de minimis comes into the picture, a shipment type by the US Customs and Border Protection (CBP). It can help you cut some of the taxes you pay while importing some goods. It surely has a significant role in driving the growth of US eCommerce sales to reach $1.1 trillion in 2023.
Let’s uncover Section 321 de minimis here and explore how it works, what you need to know, and its benefits.
Understanding Section 321 for Efficient Cross-Border Trade
What is Section 321 de minimis? Most of us know that Section 321 permits low-value shipments to avoid taxes and duties, making it affordable for merchants to ship products to the US.
It is a CBP shipment type that permits qualifying goods to clear customs tax and duty-free with less paperwork. It exempts low-value shipments provided they comply with the de minimis threshold of $800 or less. De minimis states the value of the shipment imported by a single person that can be entered into the US soil in a single day free of levies. The de minimis value was changed from $200 to $800 by the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA).
Thus, in a nutshell, Section 321 enables you to reduce the shipment cost and speed up cross-border shipping into the US so long it meets the following benchmarks:
- The fair retail value of your imported items should be less than $800
- The shipping country qualifies for Section 321 coverage
- All the paperwork is thorough and organized
Discussing this with your legal counsel before implementing Section 321 is better if you handle your supply chain operations with an in-house team.
3 Essential Facts About Section 321 Every eCommerce Seller Must Know
To leverage Section 321 effectively, you need to comply with some of the rules and conditions that come with it. Otherwise, you can be at a potential risk of paying serious fines. Here are three key conditions you should be aware of:
• US Customs and Regulations – You should know several US customs regulations before implementing Section 321. It requires that the imported goods be valued within $800 in the country of shipment, and CBP is quite particular about checking these values. Apart from that, CBP also restricts the following goods per administrative ruling:
- Products that require custom inspection, such as harsh chemicals, clinical supplies, and others
- Items that come under the Countervailing or Anti-Dumping Duty
- Goods that US government agencies, such as FSIS, USDA, NHTSA, CPSA, or the FDA regulate
- Alcoholic beverages, cigarettes, and cigars
Remember that you have to showcase proof of the retail value of the items, and every shipment must have the consignee’s name and address.
• Restricted to One Shipment Daily – Following proper administrative and logistical measures, you can ship low-value items across the US border at minimal cost. Yet, you must abide by the daily restriction, allowing you to claim only one shipment daily. Though you can receive more than one shipment, you must ensure that no one associated with your business makes multiple claims on the same day.
• Imports from China – Due to the ongoing trade war between the US and China, Section 301 tariff/import duty is introduced on products that originated in China. This section increased levies on the following items:
- Household items
- Sporting goods
- Food and beverages
- Personal care products
However, Section 321 overrules Section 301, provided the products shipped meet the de minimis threshold.
Benefits of Section 321 That Maximize Your eCommerce Success
We all know that Section 321 enables you to reduce international fulfillment costs by helping you cut import expenses. Here are some of the benefits of Section 321:
• Reduce Costs – It helps you reduce overall business expenses by manufacturing the products in a foreign country and getting them imported to the US duty and tax-free. For example, even if you manufacture low-value items in China, your shipment might be relieved from Section 301 charges.
• Expedite Shipping Process – Lowering the paperwork to trade in products, Section 321 can speed up the shipping process if the imported items are not held up due to Customs clearance. Always keep your papers ready to provide proof of the valuation of items that will be assessed per Section 321 terms.
• Enhance Customer Experience – Leveraging Section 321 to import items, you can deliver products to your customers faster. It becomes especially helpful in the case of international shipping, as consumers often choose a brand based on the speed of delivery. Additionally, it gives you an edge and helps you stay ahead of the competition
Guide to Claiming Section 321 for Tax-Free Imports
Now that we have gone through all you need to know about Section 321 and how it can help you maximize revenue for your eCommerce business, let’s give an overview of claiming Section 321:
• Step #1: Order from US-based Customer – To be eligible to get duties and tax exemption under Section 321, the fair retail value of your customer’s order should be within $800. After receiving the order, it will be processed for shipping.
• Step #2: Order Sent Across the US Border – Once the shipment meets all the criteria and the organized paperwork required, it can enter duty-free and be delivered to the customer’s domestic carrier.
• Step #3: Customer Gets Their Purchase – In the final step, the domestic carrier is responsible for the order fulfillment. Once the customer receives their order, you will get a confirmation.
Conclusion:
Minimizing operational costs and maximizing revenue are the ultimate goals of all businesses, and eCommerce is no exception. Consequently, leveraging international trade laws such as Section 321 can prove highly beneficial for you. However, managing the whole process and ensuring your shipments qualify for Section 321 can be overwhelming while managing your business. The good thing is that you don’t need to navigate the complexities of international fulfillment alone.
Connect with XPDEL, and we will ensure seamless cross-border eCommerce order delivery so you can focus on your core competencies.
About XPDEL:
XPDEL is not just another 3PL provider but a growth enabler. We are a leading hi-tech Fulfillment and Logistics company supporting direct-to-consumer (D2C) and business-to-business (B2B) supply chains. Our widespread network of Fulfillment centers enables us to handle nationwide delivery in the US efficiently. Data analytics is at the heart of our 3PL services, powered by advanced technology and led by industry experts.
