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Episode 19: The biggest international shipping myths (busted!)

Sippin' & Shippin'
Sippin' & Shippin'
Episode 19: The biggest international shipping myths (busted!)
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Tanya Phipps|July 22nd, 2022

We’re talking all things international shipping as it relates to e-commerce. For online brands, international shipping can be a huge undertaking that becomes costly for themselves and their customers. So, what can brands do to smooth the process and manage costs? Our guest, Alex Yancher, Co-Founder and CEO of Passport Shipping, covers everything from unexpected fees and surcharges to old and new regulations to international returns and reverse logistics.

Timestamps:

1:20  Guest Alex Yancher dives into his background and company.

3:33  What prompted the creation of Passport Shipping?

5:18  DDP vs DDU Shipping: What are they and what works best for ecommerce?

7:01  Which one of these methodologies (DDP v DDU) is recommended?

15:05 4 Myths around international shipping- busted.

24:18  The reverse logistics of international shipping: pain points, processes, and more.

32:34  Recent changes in international shipping – what should brands watch out for?

Transcript

Brian Weinstein: Welcome everybody to Sippin’ and Shippin’. I’m your host, Brian Weinstein. We’ll be kicking it here every other Friday, quenching your thirst for an insider’s take to enhance your customer experience. So grab your drink of choice. Kick back it’s sippin’ and shippin’ time. Alright, welcome everybody to another episode of Sippin’ and Shippin’. I’m your host, Brian Weinstein and with me as always, because somebody has to run a serious side, never part of the program, Caitlin Postel.

Brian Weinstein: Hey Caitlin.

Caitlin Postel: Hey Brian. Hey, I don’t know how I always draw the short straw, but I’m happy to be here.

Brian Weinstein: The short straw. What do you mean?

Caitlin Postel: Yeah, keep you in check. Brian. You’re always sidekick. Right?

Brian Weinstein: Keep me in check. You are not, you are not serious person, so I’m, I’m sure anybody who knows you personally is like, what is he talking about? That’s right. All right. We have very special guests today, from Passport Shipping, Alex Yancher. How are you, Alex?

Alex Yancher: I’m good. Thank you.

Brian Weinstein: Welcome to Sippin’ and Shippin’. This has been a passion project. We’re excited to have, another year of doing this, in 2022. So we’re really excited for that. So tell us a little bit about you and your background and where, where are you based?

Alex Yancher: Yeah, I’d be happy to. Thank you for having me, excited to be on Sippin’ and Shippin’. I love saying that. (laughs), I’m based in San Francisco, California. I’ll tell you a little bit more about myself, about how I got started with Passport, and then happy to tell your audience all about the wonderful world of cross border eCommerce and international shipping.

Caitlin Postel: Let’s go.

Brian Weinstein: Yes.

Alex Yancher: All right. (laughs) So, yes, my name is Alex. I’m the Co-Founder and CEO of Passport Shipping. We handle international parcel shipping for direct to consumer eCommerce companies and on merchants that ship, or that sell on marketplaces. Before starting Passport, I actually used to run a personal shopping service that help people abroad buy products from the US.

Caitlin Postel: Hmm.

Alex Yancher: Yeah. (laughs)

Brian Weinstein: Yep.

Alex Yancher: And I ran operations for that company. We were headquartered in, Delaware. Okay. And I don’t mean like C Corp Delaware thing. I mean, like we had a warehouse in Delaware.

Brian Weinstein: Right, right. Nice.

Alex Yancher: (laughs) The reason we had it in Delaware for those who don’t know. It’s one of the only states that is sales tax free. Okay, so people would buy things from us and then we would use our own credit cards and PayPal account to go on a merchant. It could be, you know, Etsy or a direct to consumer store.

Brian Weinstein: Mm-hmm

Alex Yancher: We would buy it and we wouldn’t have to pay sales tax, because everything would be shipping to our warehouse in Delaware. Yeah so, got to save people some money that way, and then we would figure out, and it was my job. I was the head of operations, the COO of that company, and I had to figure out how to ship products really of any shape or size. Sometimes we got surfboards. We weren’t really in control of what people wanted to buy. It was a personal shopping service after all.

Brian Weinstein: Yep.

Alex Yancher: It was my job to figure out how to ship those things all over the world. What could possibly go wrong? (laughs)

Brian Weinstein: Right. Exactly.

Caitlin Postel: An easy task, an easy task.

Brian Weinstein: So, I have to ask you the question, I know this is gonna walk right into the shameless plug, which we always try to avoid, but what gap did you see in the market that you were like, hmm, I need to start something here.

Alex Yancher: Yeah, no, really. That was the reason I started Passport is that there was this situation that I found myself in, of having to solve for the various duties and taxes that different countries around the world charge all the regulatory compliance that comes into international shipping. Customer support becomes a different question and equation than it is for domestic, because even if we did everything right, it would still take five to 10 business days and consumers around the world they’ve been trained to expect two to three days, so they get antsy, they start asking questions and you need a different engagement model for customer support than you have domestic shipments. Guys don’t even get me started on returns. That’s a whole other beast of a problem. Maybe we’ll dive into that on this podcast, but that’s a whole other thing to solve. What I realized in running ops for the personal shopping service is that, all of these things, the duties and the taxes, the regulatory compliance, the customer support, the returns, it’s all intertwined around the actual physical logistics and you can’t take one away from the other, and they all should be working under the hood by the same company, handling it all in one seamless way and making it easy for the customer. I really just didn’t see that in the industry. So decided to leave and start my own international shipping company. What could possibly go wrong? (laughs)

Brian Weinstein: I could possibly go wrong. Yes.

Caitlin Postel: Nice. I thought you were gonna say the only problem was too many people were ordering surfboards, but sounds like that wasn’t, that wasn’t the issue you had to tackle. So for our audience, for those who may not know, who don’t have the experience that you do, Alex, can you just give us a quick high level understanding of the difference, between DDP and DDU let’s start there.

Alex Yancher: It’s a great place to start. It’s a question that we hear all the time at Passport and it is an important decision to make upfront for any merchant. So, let me break it down. Let’s take a step back. So every country has its own set of rules, regulations, in duties and taxes for importing, and these duties and taxes and other charges, they can either be paid by the sender, (so the brand that’s based in the US ) or the recipient of the shipment, you know, Joe Smith, who’s in Toronto or Sheryl Crow who’s in London. (laughs)

Caitlin Postel: Sheryl Crow, shout out okay.

Brian Weinstein: Frequent listener by the way.

Alex Yancher: Either one of those parties can be required to pay those necessary duties and taxes. Now, when the sender pays all of the duties and taxes up front, that’s called DDP, which stands for ‘Deliveries Duties Paid’. So it’s delivered duties paid. Right. Makes sense.

Caitlin Postel: Yep. Thank you for spelling out that acronym, by the way.

Alex Yancher: Yeah, of course. There’s a lot of acronyms in this industry, so please…

Caitlin Postel: I know it.

Brian Weinstein: There is.

Caitlin Postel: I know it.

Alex Yancher: When the recipient pays the duties and taxes upon delivery, that’s called DDU, which is ‘Delivered Duties Unpaid’, so.

Brian Weinstein: Okay.

Alex Yancher: Yeah.

Brian Weinstein: Right. A lot of thought went into that one. Right. (laughs)

Alex Yancher: Yeah. (laughs) exactly.

Brian Weinstein: Duties paid, duties unpaid.

Alex Yancher: Yeah.

Brian Weinstein: So, as you’re seeing brands evolve is one methodology more popular than the other?

Alex Yancher: Great question. So let’s talk about what our recommendation is and how we got to our recommendation. Let’s start with DDU.

Brian Weinstein: Yep.

Alex Yancher: I think historically that has been the most popular method and the one that the majority of merchants and shippers would be a part of. But as you learn in a second here, it’s actually changing. It’s actually becoming DDP. So let’s talk through both of these. Yeah so, let’s start with DDU. So sending shipments DDU it may appear cheaper at checkout, because remember deliver duties unpaid. Yeah, so you don’t need to charge the duties and the taxes and the shopping cart, so the shopping cart looks lower, just the absolute number looks lower, cuz you’re not charging the duties and taxes.

Caitlin Postel: Yet.

Alex Yancher: Uh, yeah.

Brian Weinstein: Yeah, exactly. The power of yet.

Alex Yancher: Yeah. The power of yet. However, the customer is gonna be in for a rude surprise. Well, the package actually gets to the destination country and they get this really annoying note on their door that says you have to come into the post office and not only pay the duties and taxes, which is already sometimes, like I said, a rude surprise. But you also have to pay a clearance fee that the post office is gonna charge you for holding your package, and it’s admin work for them. Right. To send you that note, have you come in, wait in line and they charge in Canada, I think it’s nine Canadian dollars. So…

Brian Weinstein: Additional. Just to handle

Alex Yancher: In Canadian dollars. Yeah. Which actually, I would say eclipses the duty and tax charge. So adds up to a lot.

Brian Weinstein: Wow. So, that’s really a rude awakening for the recipient to have to not only pay for it. But they’re also then getting hit with, with basically surcharges from their local post office.

Alex Yancher: Yeah, it sucks.

Brian Weinstein: Yeah, okay.

Alex Yancher: It’s really common for customers to actually be unaware that duties were even owed in the first place. Right. When they were placing the order. A lot of brands, they try to communicate that and they don’t wanna be hiding things like that from their customers. But, and they’ll put it into an FAQ, but who checks FAQs.

Brian Weinstein: Right.

Alex Yancher: Before you wanna buy something, you see (laughs) okay.

Brian Weinstein: Fine. You really do.

Caitlin Postel: I really do. I do. Maybe because I know folks do this and one time I heard, is it true, Alex, that in some cases, in some countries, the Postman, like the person, if they get your Postperson, I should say, if they get to your door, they might even put their hand out and you’re supposed to pay them on the spot. Is that true?

Alex Yancher: That is true. That is true.

Caitlin Postel: That Is wild.

Alex Yancher: Yeah.

Caitlin Postel: Yeah. I think I heard that like four years ago and that’s when I started checking epic. I don’t imagine that happening.

Brian Weinstein: (laughs)

Caitlin Postel: Unreal.

Alex Yancher: They, the square reader and they have your package and they’re gonna hold it hostage until you give them the credit card and then they’ll, swipe it and take it. So, it’s really not the best experience and that’s not the kind of experience that direct to consumer brands are trying to have with their customers. They’re trying to create trust. They’re trying to create a pleasant experience. They wanna create a higher lifetime value than that one single purchase that they’re doing upfront. And that’s the whole spirit of I would say the direct to consumer industry.

Brian Weinstein: Yeah.

Alex Yancher: Just to build a relationship with the client.

Brian Weinstein: It’s interesting because it it’s very similar. It sounds like it has this similar evolution to and we had talked about this before, but returns, right? Used to be when e-commerce was really starting to grow in its infancy stages. The idea was make it as difficult as you could to return a product, this way you discourage the customer. But then what happened was, “hey, I’ve gotta build trust with my customer.” My customer needs to think this is as easy as can be, so I wanna make it as simple for them to return a product. So it sounds like this is kind of going that same or has kind of gone that same evolution path.

Alex Yancher: Exactly. Brian it’s like the saying “penny wise, pound foolish.”

Brian Weinstein: Yeah.

Alex Yancher: Right. Yep. So, let’s talk about DDP. So, DDP shipments, they’re a little bit more expensive upfront because the duties and the taxes are charged in the cart. But the experience is really a great one because there are no surprises of the door. It’s all cleared already when it gets to the country. So it just travels straight to the customer’s door and there’s no delays, there’s no extra fees or payments. One other thing that I forgot to mention about the DDU thing, is when you get this kind of surprise, a lot of customers actually just abandon the shipment.

Brian Weinstein: Right.

Alex Yancher: So you get a double whammy. Not only do you upset your customer, you lose the sale, but now you have to pay for the return shipment back to the US. So really it just ends up being a bad experience for everybody involved. That’s why we really at Passport recommend that merchants move to a DDP method of shipping internationally.

Brian Weinstein: That’s, if it even makes it back, right? Because I know there’s a lot of countries where things get refused by the consignee don’t actually make its way back to the US. Is that correct?

Alex Yancher: Totally. Yeah. That reverse logistics. And we’ll talk about that when we talk about returns, but that reverse logistics, it’s tricky.

Brian Weinstein: Right. Now do you recommend that the brand is transparent at the checkout? Because to your point, they’re gonna see a cart with a higher fee, but do they line item that number and say, “hey, here’s what your duties and taxes are.” So this is why you’re paying a little bit more, or do they just kind of bury it into the shipping cost?

Alex Yancher: Yeah, it’s a good question, Brian. You know there’s two schools of thought. There are some cases where one makes sense versus the other. But, some decide to just bake it into the shipping. Okay. And some even bake it into the price of the good, so that they can have a really strong marketing message around free shipping, free duties and taxes. That’s possible when the number isn’t too big. You know, maybe the item is cheap, so it’s below the deminimis. So, duties aren’t owed, or maybe if it’s so cheap taxes aren’t even owed. So, it’s possible to just, you know, bake everything into the price of the good. In some instances it actually makes sense to just break it out as a separate line item.

Brian Weinstein: Right.

Alex Yancher: So we’ve seen brands have success with both methods. It just depends on what the marketing plan is gonna be around that cart.

Brian Weinstein: Interesting. Okay, yeah. I guess that makes sense, and I’m thinking in terms of, the whole deminimis factor in the UK. I believe, for example, the shipping fees and all of that are included. So you, you need to be careful, right? If you’re trying to bury some of that in the shipping fees, it could actually push you above the deminimis fees. That’s true as well. Right?

Alex Yancher: Mm-hmm yeah, exactly.

Brian Weinstein: Talk a little bit about myths around shipping internationally. Like, what are some of the pitfalls or things that brands should look out for, not get caught into? Or what’s some of the pluses that they don’t know about and they should really expand upon?

Alex Yancher: Yeah, I got some good ones for you, Brian. There’s a lot of myths in the world of international shipping. So, the first one that I think is important for everybody to know is that there’s a myth…

Caitlin Postel: The Post, the Postman will have a square device. He will collect your money. That is true.

Alex Yancher: (laughs)

Caitlin Postel: That’s the first one we already cleared it. We got it. Okay, go ahead. Sorry. Alex, go.

Alex Yancher: (laughs) that’s a reality. That’s no longer myth…

Caitlin Postel: Yeah.

Alex Yancher: So, let’s do a little bit of myth busting here. So, number one myth is that if it can be sold in the US, it can be sold anywhere.

Caitlin Postel: No, way!

Alex Yancher: (laughs) what’d you say, Caitlin?

Caitlin Postel: No way. (laughs) You can’t?

Alex Yancher: We think in the US, we have the FDA and we have all these regulatory agencies and that we’re really strict, but actually we have probably one of the most relaxed regulatory markets.

Brian Weinstein: Really?

Alex Yancher: For example, the FDA only bans 11 chemicals in the use of cosmetics while Canada prohibits or restricts 500.

Brian Weinstein: Wow

Alex Yancher: In the EU over 2000.

Caitlin Postel: Wow.

Alex Yancher: Yep. I have a good example. So, one example here in the US, we have the Crest white strips. We were looking into this at one point. Yep. So they cannot be sold in the way in which they’re made in the US. They cannot be sold in Europe because the concentration of the hydrogen peroxide exceeds the allowable levels in the EU.

Brian Weinstein: Hmm.

Caitlin Postel: Interesting.

Alex Yancher: Mm-hmm.

Brian Weinstein: I always hear that our FDA is so strict that it takes so long to get drugs through the process of getting passed. It’s interesting to hear that the reverse is true on some of these products.

Alex Yancher: Grass is always greener. (laughs)

Brian Weinstein: Yes, exactly. Exactly.

Alex Yancher: Yeah. alright, myth, number two. I can just say everything costs a dollar, right? (laughs) A lot of people think that it’s just easy to declare the value of a shipment at a dollar or 1 cent and not have to pay any duties and taxes. But really this is false. Everything except for documents, which you know, there’s still a lot of documents being shipped internationally. Everything has a value for custom purposes. Even if it’s a sample or a replacement, there are specific rules around what you can claim on the customs value, in marking it as zero or a cent or a dollar it’s likely gonna get flagged. They’re not dummies. They don’t wanna lose money for their government at the customs offices around the world. We’ve actually seen brands receive huge bills from customers, from customs, not from customers, from customs, for undervaluing products.

Caitlin Postel: Wow. How often are they checking that, declared value?

Alex Yancher: How often it’s hard for me to answer that, to be honest. We try ensure everybody’s in compliance at Passport and work very closely with our customers and 3PLS to make sure that there’s high level of data integrity. So we almost never run into this kind of issue. Sure. But when we hear like scuttlebutt from the industry or people come to us, say, “we just had a huge shipment stuck or whatever.” I don’t think it takes that long for customs to figure it out. Maybe you’ll get away with it for a few months, But, they’re keen on collecting revenue, right? Like what, what was his name? Al Capone. He went to jail for tax evasion, it’s one of those types of things where that’s the biggest crime in any government is tax evasion. (laughs)

Brian Weinstein: Yes. To give them their money.

Caitlin Postel: Often enough to strongly discourage it. Yep.

Alex Yancher: Understood. Exactly. Not worth messing around with, to be honest. All right. I got a couple more myths.

Brian Weinstein: Go ahead. I’m listening. I remember that from years and years ago, I was around businesses that did a lot of production, and they used to have to, especially in apparel, they used to have to send samples and they would have to be defaced in some way. Cut, slit, whatever this way of customs got them, they knew it was a sample and it wasn’t gonna be something that was gonna be brought here and sold. So I knew that trick. Clearly, I was hanging out with the mischievous type, but yes.

Alex Yancher: (laughs) No way.(laughs). It’s a really interesting thing that you’re mentioning, Brian. I’m not gonna name any names here, but there was a company that I was aware of would avoid these super high custom fees into Latin American countries for iPhones, is that they would crack the screen. So they’d buy a new iPhone, open it up, crack the screen, and then ship it and avoid, it would be cheaper for them to have it fixed in Brazil than it was to pay the taxes. (laughs) in Brazil. Yeah.

Brian Weinstein: That’s genius though, right? Did they? I assume they eventually got shut down.

Alex Yancher: I have no idea where they’re at right now, but I would assume so. Yeah.

Brian Weinstein: Right, right. Yeah.

Alex Yancher: Okay. The next one is a little bit more practical, I would say. It’s for everybody’s number one country outside of the US. Everybody’s number one country is Canada, our neighbor to the north, over 30 million people. It’s about the size of California. It’s a really big market for everybody. So I wanna specifically hone in on Canada here, about a myth that I hear a lot. The myth is that if I’m shipping to Canada, I should register in Canada; and I should have my packages have French labeling because that’s what they require in Canada, but that’s actually false. The traditional advice was for merchants to register as what’s called an NRI, a non-resident importer, but this advice was really only for B2B shipments.

Brian Weinstein: Okay.

Alex Yancher: With tax deminimis, as part of the US, Mexico, Canada, free trade agreement, rising to 40 Canadian dollars for taxes in 150 for duties, it’s actually much more beneficial to ship directly to consumers with the Canadian consumer as the importer of record and never register it. Just staying in American company, shipping it to a Canadian customer and having that Canadian customer act essentially as the importer of record. This is all done under the hood. The Canadian never needs to actually fill out any forms or really do anything. This is just sort of like a de facto structure. But it actually hurts you as a brand. If you do a lot of DTC to register as a non-resident importer, there’s really no reason for you to do it. And you’re also not obligated as a non-Canadian business with no retail presence. You are not obligated to change your labeling whatsoever. So, that’s an important myth to dispel for potential interested parties shipping to Canada.

Brian Weinstein: Yeah, that is interesting. Because we have a lot of people that wanna set up a 3PL, they’re mostly US based. They wanna set up a 3PL in Canada or ship in, and they’re concerned about shipping in, so that’s an interesting myth. So yeah. Thank you for that.

Alex Yancher: Okay, cool. I have one last one and it’s not quite a myth, but it’s one that I feel like is important to raise anyways. If I’m shipping something to a consumer for their personal use, the rules don’t apply, and this is a half-truth. It’s a half myth. So, there is some truth to this. B2C shipments have less scrutiny than B2B shipments. Correct. When I say B2B, it’s like, Amazon Canada, for example, or a retailer in Europe, wants to carry your product and you need a ship product over to that retailer.

Brian Weinstein: Mm-hmm

Alex Yancher: That shipment has more scrutiny than Cheryl Crow in London, you know, buying some makeup. It has less scrutiny. A lot of countries haven’t quite caught up with this new world of direct to consumer cross border shipping, and they haven’t even written laws to address it. But some countries have, and the ones that have, they mostly let direct to consumer shipments slide, even if this B2B shipment would’ve required some special documentation or relabeling or something like that. So for example, Canada actually does have a personal use importation clause that exempts things like vitamins and supplements.

Brian Weinstein: Mm-hmm

Alex Yancher: From getting what is normally required. Canada. It’s called a natural health products license. In Canada does not require that if you’re just importing it for personal use. There’s some caveats, like as long as you’re not planning on reselling it for personal use, right? You’re shipping it directly to a customer, like a home address, you’re not shipping it to like a warehouse, and none of the ingredients in that product are on a prohibited list, but beyond all those things, there’s really very little requirements, if it’s for personal use.

Brian Weinstein: Interesting. So they’ve got themselves covered in case someone’s ordering and then trying to resell. So they’re trying to get in under. Okay, interesting. So, let’s jump topics and let talk about everybody’s favorite subject, which is returns, international returns. Returns within the US are complicated enough with the processes and things that have to go. In the US we love to buy multiple items, multiple sizes of the same item and do all that other stuff. So there’s always a lot of returns coming and going and within the domestic US. Tell us a little bit about how you’re handling international returns.

Alex Yancher: Yeah, it’s a great question. I’ll even broaden the scope of this question to incorporate companies that have a business model of everything being returned. So think 23andMe. You send something, they send something to you. You always have to send something back.

Brian Weinstein: Right.

Alex Yancher: Or rental companies, or there’s this new, concept of try now, by later, right?

Brian Weinstein: Yep.

Alex Yancher: Where you can receive it, try it on and not pay for it yet. So, all of these permutations of eCommerce, and then just, you know, run of the mill returns and didn’t fit or the wrong color, I got the wrong thing, you know, you wanna send it back. It is complicated with international for two primary reasons, and I’ll break down the question into these two pieces. The first piece is the reverse logistics. How in the world are you gonna get this back from the Philippines? Like, whoa, you know, that’s crazy, right? It’s hard for somebody in the US to ship to the Philippines, not to mention somebody from the Philippines to figure out how to ship to the US, you know?

Brian Weinstein: Right.

Alex Yancher: So that’s problem number one is the physical return logistics. The second problem is how are you gonna recoup the duties and taxes? Remember we talked about the tax man wants his money, right?

Brian Weinstein: Mm-hmm

Alex Yancher: So, um, (laughs)

Caitlin Postel: (laughs) He sure does.

Alex Yancher: Once they collect it, it’s pretty hard to get them to give it back, but there are ways, and at the end of the day, they wanna be fair and they don’t wanna take, what’s not rightfully theirs. They do recognize this concept of somebody paid for it. You have to pay taxes on it, but once it gets returned back to the US, and the money is refunded, surely the duties and taxes should be refunded as well, but they want proof. That’s the thing. It’s not that they’re gonna just take your word for it. You can’t just write them a letter, you gotta submit documentation and things like that. So it gets pretty complicated. So let me dive into both those things just a little bit, and then you two can ask questions to make sure I covered it in an adequate way for listeners here.

Brian Weinstein: Alex, I will say that Caitlin and I are both from Jersey. So, we have people that’ll collect if anybody’s having any trouble collecting.

Alex Yancher: All right. You’ll have to share some names.

Brian Weinstein: (laughs) I can’t give you names. I can’t give you names.

Alex Yancher: Okay. So, on the reverse logistics, there’s, there’s two ways of doing it. One way is to help that person, that customer in Canada or Philippines (was the example that I used) to help them print, a domestic, call it, label from their local post, at the end of the day. Like a grandma can send their grandkids, cookies in another country, and they just go to the local post office, call it Canada post, or, Australia post, or Philippine post, and yeah, buy a label for a destination that’s in the US. They could do the same exact thing with the returns, and we work with a variety of platforms, such as Loop, that can let you print a passport return label, on our rate card, pre-negotiated rates make it, make it really easy. So, we could streamline that if we’re talking about like onesies, twosies. If it’s a situation like the 23andMe, or it’s a brand that has a high return rate, again that’s sometimes it’s part of, it’s just part of their business model to let people try on different things and send it back. There’s a lot of volume to a country, like say Canada, there’s a more optimal way of doing it. It’s allowing people that wanna return the product in that country to send it to a central warehouse, in that country, to consolidate all of those returns and then send one big consolidated shipment back to the US.

Brian Weinstein: Mm-hmm.

Caitlin Postel: Okay.

Alex Yancher: We do that as well for all the major markets like Canada, UK, Australia, Europe. We provide a first mile label. So somebody in Canada, in Toronto will just send it locally to warehouse in Toronto, and then all those returns will be consolidated. Then we’ll arrange the shipment back to the US. Makes sense?

Brian Weinstein: It does, and so I’m gonna ask this question and I’m sure you know when I hear of our customers making shipments that are getting refused or returns, and they’re going to certain countries, this is a whole slew of them out there. They’re known for being problematic for getting product back. Honestly, my assumption, it was probably a little bit of a loose knit situation in the supply chain there. Is probably some degree of corruption. Packages just go, fall off the truck, so to speak. Is it more the case that it’s just the fundamentals of making sure that the eyes are dotted and the tees are crossed, to get the packages back and not as much of a corruption, things falling off the truck scenario?

Alex Yancher: You know, I would say that shipping to the major markets, especially the English speaking markets like Canada, UK, Australia, and most of Western Europe, it’s pretty rare.

Brian Weinstein: Okay.

Alex Yancher: For things to quote unquote, “fall off the truck” or for things to not have the right documentation, every carrier us included of course, will set you up with something that you need. It does get a little bit hairy for let’s say, Brazil or Chile. Some of these countries, either is a last mile network that is a little bit more corrupted, and theft is much more common and much more likely that something is gonna fall off the truck. But in addition to that, a lot of those countries also require the recipient to provide something like their equivalent, of a driver’s license to get the package cleared, and there could be some miscommunication between, what happens when the product gets into that country. So we try to bridge that gap and ask that person in Brazil for their, it’s called their national ID card, so we get their number and we fill in that missing information to make sure that it goes straight there. But of course, whenever there’s extra steps and it requires different stakeholders, there could be things lost in translation and things will make it back to the US, because it just were able to be delivered.

Brian Weinstein: Yep. That makes sense. I’m obviously sensitive to it. I want to make sure that we’re not disparaging anybody in particular, but I know it exists to a degree. I just wasn’t sure how much of the complexity of getting product back, was coming from documentation, versus that kind of corruption. So, that’s a great explanation and I think there’s ways to do it. But then again, the trade-off is, are you gonna make it more complicated for the consumer?

Alex Yancher: Totally.

Brian Weinstein: Good. Anything else that we should know? Is there any other changes coming for the EU or UK, I know everybody’s finally settling in after some major changes this, this past year. Anything else coming down the pike now for either location?

Alex Yancher: Yeah. Let’s do a quick refresh on what happened in UK and EU. This just happened in 2021. So, both markets, they removed the value added tax. The VAT from the deminimis in 2021 UK changed it in the beginning of the year. EU changed it in the middle of the year. June 30th, 2021 is when that came about, and that basically means that all shipments are assessed for the VAT in that country, irrespective of the price. It used to be that anything under 16 British pounds is VAT free, and anything under 22 euros in Europe is VAT free, but that’s no longer the case, even if it costs a dollar, it’s still, you have to pay VAT on that dollar.

Brian Weinstein: Mm-hmm.

Alex Yancher: So that’s one big change that happened. The second big change that happened as part of their restructuring is they moved the responsibility for paying that VAT to the merchant. So now, the merchant versus the shipping company and the brokers, now, in the UK has to have a VAT number with the UK, HMRC her Majesty’s Royal, you know what, I don’t actually remember what that stands for, but it’s basically their IRS in the UK. You have to have a VAT number and in the EU it’s the same story. You have to have a IOSS registration, that’s their version of again, like our IRS and you have to pay on a quarterly basis, this VAT that you collect from customers. This is a product that we immediately saw this pain and brought to market a solution called, the seller of record service that basically allows brands to use our VAT number. So, just to make it really easy for brands, because who wants to register with like UK IRS, you know, it’s such a pain. So we made that really easy, but that’s one big change that happened in the world very recently. The other big change, it hasn’t happened yet. It’s coming down the pike for Canada and it mostly impacts B2B shipments. But, I would say that this is gonna probably be a foreshadowing of what’s gonna happen in the DTC world. But, I would say a lot of merchants, that you all work, and that we work with, they’re starting to sell, they’re starting to become multichannel. They’re really interested in both a DTC channel, but also selling through either a marketplace or some retailer. So B2B is gonna become a bigger and bigger part of their business. So, it’s important for people to be aware that there’s a big change coming to Canada. The change is called the CARM set of changes. CARM, stands for Canada Border Services Agency Assessment and Revenue Management.

Caitlin Postel: Nope. Is that it? (laughs).

Alex Yancher: So, this new program for Canadian imports, it’s gonna require importers to pay import duties directly to the Canadian government. So notice it’s very similar to UK and EU. So instead of having the broker and the shipping company pay at the border, they’re putting the onus on the merchant to have a registration with the Canadian government and pay them directly. This program it’s been launched in stages and it was mostly for really big expensive shipments. But, it’s starting to become for lower priced, smaller shipments and again, we expect this to actually start to roll down and to hit, direct to consumer in the next few years anyways.

Brian Weinstein: Wow. Wow. And, and is that really just to kind of take the onus off of the brokers, because the brokers were getting stuck with large bills, and then sticking the government? Sort of an in-between to make the relationship more direct?

Alex Yancher: Yeah. That’s a part of it, Brian. I think a lot of it is just data integrity, and being able to go to the source the declaration. Like, why are you declaring this amount? Why are you declaring it as this HS code or this country of origin? Like all of these kind of things, I think the governments have felt they’re playing a little bit of broken telephone, going through the broker, and they wanna make sure that they start having these direct relationships with the merchant. So that they can have more of a cleaner picture of what’s coming into their country.

Brian Weinstein: Yep. Now that makes a lot of sense. That makes a lot of sense.

Alex Yancher: Yeah.

Brian Weinstein: Well, listen, I have to tell you, and Caitlin and I have talked about this a lot. One of my favorite parts about doing this podcast is the amount of information that we learn. Because we have great subject matter experts like yourself, come on and explain to us an area that we don’t know much about.

Caitlin Postel: That was amazing. He described the UK and EU situation in 90 seconds. I think we did two episodes. (laughs) My head was still spinning. (laughs) Fantastic! I was like, Wow! Okay. Yeah.

Brian Weinstein: That’s awesome. So, we really appreciate Alex Yancher, for coming on today, from Passport Shipping. If you’re not already set up in that market, please check him out, and you can find him on LinkedIn. You can find his company’s Passport Shipping. Really appreciate you coming on today.

Alex Yancher: Yeah. Caitlin, Brian, thank you so much for having me. Great questions. Happy to be here.

Brian Weinstein: Thank you. All right, everybody. Thank you for tuning in. Caitlin, you want to take us out?

Caitlin Postel: Sure. Thank you again, Alex. Thank you, Brian. Make sure you check us out sippinandshipping.com on Spotify, Anchor or whatever, platform that you like to listen to your podcast on guys, and we’ll see you soon.

Brian Weinstein: All right. Peace out everybody. Thank you.

Caitlin Postel: Thank you.

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