As the world begins to recover from the pandemic, many Australian retailers are eyeing lucrative market opportunities overseas. But cross-border trade can be very challenging. Along with continued uncertainty over global shipping and COVID-related delays, retailers face increasingly complex international standards and customs regulations.
Retail margins are under increasing pressure while costs continue to increase across multiple aspects of the value chain. To ensure viable margins and growth potential, retailers engaged in cross-border commerce need to be lean, mean and hyper efficient about cost control. Here are five ways to do that.
1. Do your legal homework
Even a market that looks “similar” to Australia can have wildly different customs rules, taxes and duties that may vary by product and industry. Retailers will also need to research and factor in costs for accreditations, certifications, licenses and registrations, to ensure they have the required processes and documents to sell in a specific market. Although Australia has signed numerous Free Trade Agreements (FTAs) with different countries, requirements vary and duty reduction isn’t automatic. Getting expert advice for a particular retail area is vital.
2. Check your eligibility for refunds
Australian retailers may also be able to reduce costs through refunds and custom duty minimisation, such as Australia’s Duty Drawback Scheme. This refunds customs duty paid on unused imported goods, as well as goods that will be “treated, processed or incorporated into other goods for export”. Another scheme is fuel tax credits, where businesses can claim credits for the fuel tax (excise or customs duty) included in the price of fuel used in their business activities. Austrade’s Export Market Development Grants (EMDG) program also provides grants to help small to medium enterprises market their goods internationally.
3. Update your systems for the new HS codes
The Harmonised System is the universal basis for identifying products shipped across borders and is used to determine their applicable duty and tax rates and is updated every five years. The World Customs Organisation (WCO) oversees the changes and published 351 sets of new amendments to six-digit HS codes on 1 January 2022. The Australian update means businesses that sell internationally or import must harmonise (or re-harmonise) their product catalogues.
4. Automate and use AI
The right fulfilment platform can cut down the time, cost and errors experienced with manual systems. If an importer fails to keep product classifications up to date, or has incorrect HS codes, it can result in delays, penalties, fines, or seizure of goods at customs. Automated solutions can do much of the heavy lifting: for example harmonising product catalogues by converting item descriptions or images into HS codes instantly, using technologies such as machine learning and natural language processing.
5. Aim for transparency
Business transactions flow better and faster when there is trust between all parties, and the key to creating trust is transparency. This has been lacking in the cross-border industry for consumers, merchants, and businesses, but technology can play an important role here.
The more visibility there is – the more transparent the value chain – the faster issues are identified and resolved. Taking a more collaborative approach and working more closely with logistics partners is also important for ensuring as smooth and seamless a process as possible. As a further measure, applying for Australian Trusted Trader (ATT) status may also help reduce red tape at the border and enable faster access to market.
With global trade continuing to grow in size and complexity, local importers and international retailers need to ensure they stay updated to comply with new standards and regulations, including product classifications and tax calculations. Overseas markets hold exciting potential for Australian retailers, and those who can navigate the complexity of cross-border commerce accurately will reap big rewards.
Travis Robinson is general manager of Zonos.