Ordering from abroad: Tips snd tariffs
The allure of opening a package from afar continues to drive worldwide e-commerce growth. Because so many women are daunted by the extra charges, today's post is a nerdy tip sheet about importing personal goods from another country.
The rule is, Don't Pay More Than You Have To for two expense categories: shipping and handling, and customs duties and taxes.
Shipping
For big e-commerce vendors (and some eBay sellers), shipping is a profit centre. Even though they negotiated huge discounts with shippers, vendors know customers will not question paying full fee.
1. Ship strategically
Wait till the vendor offers a free ship day or period. If there is a limit (e.g., LL Bean's $50) bookmark staples (socks, maybe) so you can hit the requirement by buying what you need.
When possible, request that a vendor ship via their national postal service (e.g., Royal Mail, USPS) rather than by a courier company. For example, Canada Post charge a $5-$8 "delivery fee" but don't charge brokerage fees and that's why you want a vendor to ship via her national post service—because the package is handled by your postal service once it crosses the border.
2. Courier service fees: Know the charges before the bill hits!
Couriers charge an advancement fee (scaled to the price of your goods). In short, that's their charge to prepay your duty and taxes to the authorities.
Some vendors, such as Talbot's, offer an advancement fee work-around. Their "Shipping" page gives instructions, but there's a step missing; you must call FedEx with your account and the tracking number for your order, and request that they waive that fee. (I have spoken to both Talbot's and FedEx about the process, but haven't tried it yet.)
But wait, there's more!
Couriers also charge brokerage fees, which can drive the cost to way up. For examples and how to avoid paying extortionate fees, read a brilliant blog post by Erin from Calgary, badass scourge of greedy courier companies.
Bottom line: If a vendor does not list all fees to get your package to you (shipping and "handling"—the blanket term for advancement and brokerage fees), find out who their courier is, and call that courier's customer service to ask what these will be before you hit the Buy button. You want to know, and then you can tell the vendor why you are not buying, should you walk.
2. Pay by PayPal to get free returns
Sign up for PayPal's Return Shipping on Us program. US and Canadian shoppers can return up to 12 items in a calendar year and receive reimbursement for shipping costs up to $US 30 per shipment; sorry about your Wayfair sofa. The program includes PayPal's international vendors; however, the vendor must allow returns, and you must comply with their policy. Enrol here. FAQs here.
Terms for other countries may vary and PayPal says they can end the program any time they want.
Paying for your order
Pay with a no foreign transaction fee credit card
The typical credit card (and PayPal) charges you two fees every time you purchase goods in a foreign currency: a) the exchange fee to convert currency from foreign to local (foreign exchange or "fx fee"), and b) an additional 2-2.5% in what are called "service charges" or "foreign transaction fees". (Don't chose the option to be charged in your local currency by the vendor, because that currency exchange rate will be extra-high.)
Every card will charge the currency exchange, but a few do not charge the foreign transaction fee. It't not a big deal for one £18 tea cosy from Scotland, but if you order foreign goods regularly, it will add up.
US readers have a choice of card products; check annual fees and benefits. You could also use a cash-back or points card; you still are charged that transaction fee but get some of it back via the rewards.
Canadian readers: ScotiaBank's Passport Visa Infinite doesn't charge the foreign transaction fee (which they call "no fx markup"). Annual fee is $139/yr, though you do get other benefits. Rogers offer several cards, but they are tied to a Rogers account, and there's Home Trust, for all provinces except Quebec. If you order often from the US, another strategy is to open a $US chequing account with an associated $US Visa card: you pay currency conversion, but no foreign transaction fee.
Customs duties and taxes
1. Double-check the customs duties and taxes on the customs form stuck to your box. Any vendor, even the big ones, can make an error. Check the tariff rate levied for the item on online government sites*, or call them.
If you order from the EU and are not an EU resident, make sure you are not charged VAT. I had to go thorough several escalations for a refund from Liberty.
*Canadians: Since 2017, the free-trade agreement between Canada and the EU (CETA) has eliminated duty on most goods produced in the EU and exported directly to Canada. (Note that goods must be produced, not just sold, in Europe.) A list of goods exempt from tariffs is here. You will still be charged GST/HST. When there is an error but duty has already been collected, you can request an adjustment from Canada Customs.
2. France: Weirdness ensues
Let's say you've been eyeing an Eric Bompard cashmere scarf, and voilà! there's a special promotion in March that reduces the price by a tidy 30%. But when you get your parcel, the customs form lists the full price and you are nicked for duty on that. You bought a sweater from them in the preceding January sale at 40% off and the sale price was on the form. Qu'est-ce que c'est?
That is an inexplicable, irremediable French rule: items sold at a special price on promotion are not treated the same way as goods sold during the official, government-mandated twice-yearly sale periods (mid-summer and January) with official dates posted online. (Reader LauraH and I have tangled with EB on this.)
When you buy imports locally, you still pay
If you buy a pair of imported shoes in your home town, you are paying applicable duties and import taxes; they are just buried in the price. Large retailers hedge their foreign currency and can realize bulk shipping rates, but they still have import costs.
A few e-commerce sites offer transparent pricing so you can see exact transportation and duty costs in the price; Everlane are one.
Though there will always be costs associated with international e-commerce, the EU have taken steps boost efficiency and eliminate most tariffs between themselves and Canada with CETA; the US is still in negotiations for a similar deal.
Want to feel better?
If you're sure you're keeping your goodie, file the customs paperwork, so you don't see it unless you need it.
Put on that Peruvian alpaca shawl or place blooms in your graceful Murano glass vase and purr. Maybe have a nice restorative glass of wine, put on your favourite music. Remind yourself that paying those costs was cheaper than a plane ticket.
Imagine the planet, with shoes and pillows, dishes and books, a million and one things we live with, in orbit amidst the stars, flying in every direction, every day... and your choice made it to your cozy home. Whoa, pretty cool.
The rule is, Don't Pay More Than You Have To for two expense categories: shipping and handling, and customs duties and taxes.
Shipping
For big e-commerce vendors (and some eBay sellers), shipping is a profit centre. Even though they negotiated huge discounts with shippers, vendors know customers will not question paying full fee.
Wait till the vendor offers a free ship day or period. If there is a limit (e.g., LL Bean's $50) bookmark staples (socks, maybe) so you can hit the requirement by buying what you need.
When possible, request that a vendor ship via their national postal service (e.g., Royal Mail, USPS) rather than by a courier company. For example, Canada Post charge a $5-$8 "delivery fee" but don't charge brokerage fees and that's why you want a vendor to ship via her national post service—because the package is handled by your postal service once it crosses the border.
2. Courier service fees: Know the charges before the bill hits!
Couriers charge an advancement fee (scaled to the price of your goods). In short, that's their charge to prepay your duty and taxes to the authorities.
Some vendors, such as Talbot's, offer an advancement fee work-around. Their "Shipping" page gives instructions, but there's a step missing; you must call FedEx with your account and the tracking number for your order, and request that they waive that fee. (I have spoken to both Talbot's and FedEx about the process, but haven't tried it yet.)
But wait, there's more!
Couriers also charge brokerage fees, which can drive the cost to way up. For examples and how to avoid paying extortionate fees, read a brilliant blog post by Erin from Calgary, badass scourge of greedy courier companies.
Bottom line: If a vendor does not list all fees to get your package to you (shipping and "handling"—the blanket term for advancement and brokerage fees), find out who their courier is, and call that courier's customer service to ask what these will be before you hit the Buy button. You want to know, and then you can tell the vendor why you are not buying, should you walk.
2. Pay by PayPal to get free returns
Sign up for PayPal's Return Shipping on Us program. US and Canadian shoppers can return up to 12 items in a calendar year and receive reimbursement for shipping costs up to $US 30 per shipment; sorry about your Wayfair sofa. The program includes PayPal's international vendors; however, the vendor must allow returns, and you must comply with their policy. Enrol here. FAQs here.
Terms for other countries may vary and PayPal says they can end the program any time they want.
Paying for your order
Pay with a no foreign transaction fee credit card
The typical credit card (and PayPal) charges you two fees every time you purchase goods in a foreign currency: a) the exchange fee to convert currency from foreign to local (foreign exchange or "fx fee"), and b) an additional 2-2.5% in what are called "service charges" or "foreign transaction fees". (Don't chose the option to be charged in your local currency by the vendor, because that currency exchange rate will be extra-high.)
Every card will charge the currency exchange, but a few do not charge the foreign transaction fee. It't not a big deal for one £18 tea cosy from Scotland, but if you order foreign goods regularly, it will add up.
US readers have a choice of card products; check annual fees and benefits. You could also use a cash-back or points card; you still are charged that transaction fee but get some of it back via the rewards.
Canadian readers: ScotiaBank's Passport Visa Infinite doesn't charge the foreign transaction fee (which they call "no fx markup"). Annual fee is $139/yr, though you do get other benefits. Rogers offer several cards, but they are tied to a Rogers account, and there's Home Trust, for all provinces except Quebec. If you order often from the US, another strategy is to open a $US chequing account with an associated $US Visa card: you pay currency conversion, but no foreign transaction fee.
Customs duties and taxes
1. Double-check the customs duties and taxes on the customs form stuck to your box. Any vendor, even the big ones, can make an error. Check the tariff rate levied for the item on online government sites*, or call them.
If you order from the EU and are not an EU resident, make sure you are not charged VAT. I had to go thorough several escalations for a refund from Liberty.
*Canadians: Since 2017, the free-trade agreement between Canada and the EU (CETA) has eliminated duty on most goods produced in the EU and exported directly to Canada. (Note that goods must be produced, not just sold, in Europe.) A list of goods exempt from tariffs is here. You will still be charged GST/HST. When there is an error but duty has already been collected, you can request an adjustment from Canada Customs.
2. France: Weirdness ensues
Let's say you've been eyeing an Eric Bompard cashmere scarf, and voilà! there's a special promotion in March that reduces the price by a tidy 30%. But when you get your parcel, the customs form lists the full price and you are nicked for duty on that. You bought a sweater from them in the preceding January sale at 40% off and the sale price was on the form. Qu'est-ce que c'est?
That is an inexplicable, irremediable French rule: items sold at a special price on promotion are not treated the same way as goods sold during the official, government-mandated twice-yearly sale periods (mid-summer and January) with official dates posted online. (Reader LauraH and I have tangled with EB on this.)
When you buy imports locally, you still pay
If you buy a pair of imported shoes in your home town, you are paying applicable duties and import taxes; they are just buried in the price. Large retailers hedge their foreign currency and can realize bulk shipping rates, but they still have import costs.
A few e-commerce sites offer transparent pricing so you can see exact transportation and duty costs in the price; Everlane are one.
Though there will always be costs associated with international e-commerce, the EU have taken steps boost efficiency and eliminate most tariffs between themselves and Canada with CETA; the US is still in negotiations for a similar deal.
Want to feel better?
If you're sure you're keeping your goodie, file the customs paperwork, so you don't see it unless you need it.
Put on that Peruvian alpaca shawl or place blooms in your graceful Murano glass vase and purr. Maybe have a nice restorative glass of wine, put on your favourite music. Remind yourself that paying those costs was cheaper than a plane ticket.
Imagine the planet, with shoes and pillows, dishes and books, a million and one things we live with, in orbit amidst the stars, flying in every direction, every day... and your choice made it to your cozy home. Whoa, pretty cool.
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