Facing crazy high Amazon fees? Here’s one idea to increase your profits.

Included is a story of how this tip #1 saved us a lot of $$$.

Tip 1: Revisit your tariff classification codes

The HS code determines your product’s duty rate and can significantly change your landed cost of goods.

How I often see the story unfold: brands start out focused on product development, branding, positioning, marketing, etc. So when it’s to import their first shipment, the HS code is often just a detail.

Brands often stick with the HS code given by their freight forwarder, using it for years and numerous imports without reconsideration.

But, but, but—you aren’t necessarily locked into this code. In fact, if you aren’t revisiting your products’ HS codes then you could be leaving thousands upon thousands of $$$ on the table.

Story time

In 2021 we were looking for ways to reduce our brand’s COGs. About 60% of our SKUs, due to their similarities, were classified under a single HS code that was seeing a tariff of 28% levied.

No small amount, right?

Through “shopping around” at different customs brokers we discovered there was another, also compliant HS code, with a tariff of only 13%.

Now let’s do the fun math.

Not including shipping, a container’s worth of goods was costing us around $40,000.

Assuming 60% of our goods were under this HS code, here’s the savings breakdown. 

How much we saved

➤ Total tariffs on 28%: ($40,000 * .60) * .28 = $6,720

➤ Total tariffs on 13%: ($40,000 * .60) * .13 = $3,120

That’s a cost savings of $3,600 on each shipment. Not bad, right?

Now multiply that by 6-8 shipments a year and it becomes tens of thousands of dollars added to the bottom line.

You can possibly do the same. Here’s how:

(1) Ask your supplier what HS code their other clients use for similar products

Are they using a different code? Jot it down to follow up on.

(2) Reverse search the competition

Using Import Yeti, do a reverse search on your competitor’s business name and note which HS codes were used for similar products.

(3) Ask your customs broker contact if you can reclassify under a different code

You may experience push back. Here’s where you can share your “HS codes for consideration list” and ask them if any qualify.

(4) Reach out to other brokers

This optional step may incur a fee, but it’s often worth the investment.

So there you have it! Try out this tip to potentially greatly reduce your COGs.

Disclaimer

I’m not a licensed customs broker nor do I play one on the internet. This advice aims to guide tariff reduction efforts within legal bounds. Always ensure accurate product classification to avoid penalties and keep detailed records for audits. Consult a licensed professional for specific guidance.

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