In no way is this post directed at any one individual or a group of them. This is simply to do my best to educate, not only the consumer but the retailer so that we are all on the same page, because after all, we don’t want to charge you taxes, but it is not us doing so, it is your government.
We have moved into a pure digital age where the internet rules the world, especially in the retail industry. Every company is shifting their culture to focus on the online side of things, even the big department stores that once prided themselves and relied on in-store sales and customer service. Gone is that day and every company is now implementing webshops so that they don’t miss the chance to gain a sale 10,000 miles away. I touched on this subject a few months back (as you can read HERE) but feel that I need to explain a bit more on it as I am getting more and more customers confused by their custom’s invoices received after purchasing my products, and know that I am not the only retailer that is facing this same phenomenon as it seems to be a growing issue in the shoe industry (from what I have heard and seen on the forums).
With the ever growing internet, it now means that you could be sitting in the most secluded corner of Alaska and be purchasing some Spigola shoes from The Armoury in Hong Kong with one click of a button. Who would of thought of that 20-30 years ago?! The problem however is that quite often the consumer is unaware of the implications of importing a foreign product into their local economy. Some consumers that have very strict governments that want to protect their country, i.e. Singapore, Switzerland and Norway, and will be quite clued up to exactly how their country’s import taxation works. Others, like many of those in the US and Canada are not as aware as there are (were) not only a lot of loopholes but up until recently they weren’t very strict on the act of adding duties to international purchases. This seems to be quickly and drastically changing however and it would appear that the US (in particular) is cracking down as more consumers from inside the country purchase foreign made/sold products.
That being, allow me to explain how things work….again. Okay, so first and foremost a retail company never charges you “customs taxes or duties.” These are imposed by the local government authority for importation taxation (i.e. customs). But I do know that it can be confusing when the invoice is coming from the courier. So allow me to explain why that happens. You see, the major couriers like DHL, UPS, FedEx etc are actually in cahoots with the custom’s office and the reason that they are able to ship so incredibly fast on international purchases is because they will actually fast track your package by paying the duties for you, only to invoice you later for them or when they are delivering them to you. I can see how it may come from the company shipping you the products, but I can assure you that it is not.
Now there are all kinds of loopholes like undervaluing things or listing them as samples or gifts (when they are in fact not) but what you guys have to understand is that it is not legal to do this (it is fraud) and to ask a company to do that is asking them to risk themselves in order for you to dodge taxes. Some are happy to do this, but many companies that care about their company, won’t and shouldn’t. I hate taxes as much as the next man does, but I know that they cannot be avoided so I just expect them to come and then pay them when they do (as everyone else should).
The real concern and issue at the moment within the shoe industry is the usage of the governmental postal service to ship the shoes. This could be Royal Mail, USPS or whatever equivalent. I don’t know why but a lot of times, if shipped with these companies, custom’s duties do not seem to get imposed (don’t ask me why as I don’t know). So naturally customers want this route in the hopes to not get hit with taxes and thus make their foreign products a whole lot cheaper. Now let me explain why I don’t use them and why probably many others don’t either.
You see, the Royal Mail service is mainly for small packages. Once it goes over 2kg or is tracked at all, it becomes a part of the Parcel Force service (a courier that works with the governmental postal service). And the second that you have a tracking or over 2kg package (as most shoe ones are), the prices go astronomically high. With couriers you can set up accounts and get lower rates depending on how many items you ship. Also the governmental services will never be as fast as the big couriers and if a package is lost, forget about ever getting it back or having good customer service on the other end.
So, I will use UPS or DHL and be able to charge a very low rate to the consumer (with the chances of getting taxed) but could also use Royal Mail and bump up the costs to the consumer 2.5 times and have the chances of not getting taxed (but that is not a guarantee). The thing is that a foreign consumer, no matter where they are, should not expect to ever get a deal by buying a product from another country. And if you did, and do for the most part, simply consider yourself lucky as it is not the norm to avoid taxes. And I think that the US/CA governments are wising up to this and are more heavily and frequently now imposing the taxation so that they can better protect the local economies.
This is an issue that affects not only consumers and retailers so please pass this post on in the hopes to educate so that we can all be on the same page.
Justin, Great post and many thanks.
One comment to add – sometimes, depending where you are, customs can be a bit random, both in terms of shipment time and import charges to pay.
I had some shirts (2 boxes) sent from UK to South America. The boxes were dispatched the same day and were identical and went via the same shipper.
One arrived on the door with no charge, one arrived 2 weeks later and attracted a customs charge.
You approach is quite simply the best one – just ¨do the right thing¨, be ethical, and you can´t go wrong.
Keep up the good work
Good article Justin but you are a fighting a losing battle. Most customers want a bargain and the retailers that want to get the most, partake in some chicanery to assist the customer.
Personally, i very very rarely buy anything ouside the EU, no matter how tempting (oh, and i am very tempted by some stuff from the US in particular) as it sours the purchase for me. I remember getting stung 40% of the retail value in total of items i bought in the states a few years ago and i was pissed. I learnt my lesson.
If something is worth it ( and very very few, if ever are worth it), i bite the bullet and buy it, hoping to get lucky. But prepared for the fact that i won’t.
Good post! As I understand things many manufacturers are now starting to set new policies and guidelines to stop or limit these “loopholes”.
The couriers are indeed in cahoots with the tax collectiing branch of governments. They also routinely overcharge for duties and taxes, then stick you with an additional “brokerage fee” for the privelege. If an international vendor won’t ship by trackable post, then I don’t make a purchase from them. Simple as that.
I expect that the reason that many postal packages sail through without duties assessed is sheer volume. In my experience, odds are far better than even that no duties will be assessed at all on postal packages, and that is without resorting to any dodgy “loopholes”. Duties on shoes in Canada is 18%. Taxes are an additional 13%. That’s 31% of the declared value due on delivery (which often magically inflates to 40% when the courier does the tax assessment on behalf of the government – no wonder they love each other).
Another reason I avoid couriers is that I cannot have packages delivered to my office for security reasons (don’t ask) and I’m not home during the day to receive packages at my front door. For that reason, I have a post office box at my local postal station that I use for delivery of all international purchases. The office is staffed during extended business hours and they are more than willing to receive packages delivered by couriers to holders of a post office box. But most couriers refuse to deliver there. Meaning I would have to drive to the airport to collect my pckage (40 min each way). No thank you.
That is correct that on occasion a package sent from UK by means of Royal Mail to an address at a Swiss Post Office was not subject to Swiss Customs, and Roger P’s guess the cause is “volume” might be right. Please keep in mind 1. Royal Mail collaborates with the Swiss Post Office. 2. Swiss Customs and the Swiss Post Office collaborate. This means 1. No delivery problems 2. No overcharges. The only guilt Swiss Customs has is intransparent fee schedule.
Yeah, if I miss a postal delivery, the local post office franchise is a short walk from home. Unless one can receive personal deliveries at work, or can work from home, a courier delivery requires taking time off work to receive it or to pick it up at an inconvenieniently located courier depot with inconvenient hours. Until couriers routinely redirect missed residential deliveries to their local franchises (FedEx Kinkos, UPS Store, etc.), courier shipments are going to be unfeasible for some people, and despite being slower postal service will remain more convenient for most.
Why don’t you say WHY private couriers refuse to deliver to any address at a post office? Have you ever tried to ask a private courier WHY? Private couriers simply ignore the question because they are manipulative. The answer is: any delivery to an address at a post office requires the private courier to pay POSTAGE!
Very good article.
I think it is important to note, that some couriers are more “honest” to the customer than others. For example, FedEX is always significantly overestimating the value of a product (although there is a bill attached to it) and in addition they charge you an admin fee of at least 20 CHF in Switzerland, which goes up the more valuable a product is. So FedEX gets paid for shipping by the retailer and then they make an additional profit by coming up with imaginary fees, which is why I stopped ordering from retailers using Fed EX.
DHL had an admin fee some years back, but they introduced a new priority shipping method which costs a tiny bit more for the retailer (or the customer), but does not charge any admin fees to the customer and does not overestimate the worth of a product. German stores usually ship by this method to Switzerland.
Last time I ordered at Meermin they charged 20 EUR for shipping to Switzerland and FedEx came up with an additional 25 CHF in admin fees, + import duties + inflated product value, while DHL shipped some Loakes 1880 in one day from Germany to Switzerland for roughly 15 EUR + import duties.
Of course, the best way is to order via Amazon. They charge you all import duties / taxes / fees on check-out and reimburse you in case they are lower than expected. Very transparent for the customer, but most likely not feasible to do for smaller retailers, as I never saw this anywhere else.
What Michael writes is odd because it sounds like he is cahoots with Amazon. If you assert some couriers are more honest than others, why don’t you name them? Unlike other private couriers, FedEx uses Swiss Post to deliver to addresses at the Swiss Post Office, and then FedEx sends the bill. You pointed out FedEx charges extra, as if other private couriers don’t. You didn’t say what FedEx does if the customer protests. FedEx outsources all correspondence to half-literate Asians who send pre-written answers. ALL private couriers assume control of Swiss import tax and administrative fee. Try to ask any private courier before the package is shipped what amount must the customer pay. Royal Mail collaborates with Swiss Post, and Swiss Customs sends Swiss Post the bill. No funny business like with private couriers.
Your article is written from your viewpoint, not from the viewpoint of the customer. Obviously you want the cheapest courier, and obviously private couriers will offer you their services less expensively than Royal Mail. Because you write from your viewpoint, you fail to differentiate WHERE the customer is located. You are really concerned with US and Canada, not Switzerland. What you write shows you are not familiar with reality of Switzerland.
Good article – it articulates the pros/cons of various delivery methods, and I suggest that it is written with both the vendor and honest customer in mind. I live in Canada and have been buying British shirts and ties, as well as shoes online for the past 10 years. Likewise I have ordered clothing from the US. Canada Customs charges 18% duty on every package that I receive via a courier, plus 15% VAT (sales tax), plus a $5.00 “handling fee.” If the package comes via Royal Mail, there is only a 10% chance that I won’t be charged the aforementioned duty and taxes.
As Justin points out, as an international customer, you cannot get a “deal” on quality clothing purchased online from reputable vendors in foreign countries. I choose these products on the basis of quality and selection that I cannot obtain domestically. I expect to pay duties and taxes, and on the rare occasion that a parcel comes through that has avoided customs scrutiny, I spend the savings on a good bottle of wine in celebration of catching a break.