Easy way to sell your items to USA.

[HarryBr]

Hello,

I have joined to ask all of your opinion on the following family idea:

My Cousin (US resident and very good experience of e commerce and online retial) is setting up the following, and we've both drafted this to show you all, in the hope you can offer advice.

As a UK retailer myself I think the deal is balanced and fair for accessing the US marketplace, especially having read horror stories of other methods and the tax amounts, postage and storage rates.

Here is the proposal / offering:

A great way to sell boat loads of your stock in the USA without residence, without tax implications and without worry of an Amazon, ebay account.
All to United States customers that will get your items within a few days.

You send your item/s on ‘wholesale sale or return’ to Gemma in the USA.

She pays for storage, postage, listing fees, from the profit she makes on adding a markup to the items. Just like a shop.

Stock is shipped daily and sent via the most economical means.
Bad feedback is her problem, none arrival of items is her problem.
Faulty items will be a shared issue (i.e. item thrown away, customer refunded, no wholesale charge).
Postal issues and strikes are her problem for her account only.
This means it’s her business and so she is also tax liable.
She will pay tax on items sold, not you.

Sounds like a win win, what’s the catch:
Gemma only pays you, when she sells the stock. Again similar to shops you might sell to, that require sale or return.
However, if she’s paying many overheads before a return she would like you to pay customs duty in advance, that’s around 20% to DHL or a bigger pallet courier (based on your wholesale price, not your RRP).

To reduce risk on sitting stock, she only requires 2 months of stock.
If after 4 months your stock has not shifted, she can discuss with you returning it, at a pallet fee to yourselves. I am sure most stock will sell by then, as the following rules apply:
YOU MUST; have a proven track record of sales in the UK.
It's highly likely the item is something you manufacture rather than import, or at least own exclusivity rights to it.
YOUR MARKUP must be a high percentage for low value items or a fair percentage for high value items.
Your sales numbers of ‘said item’ must be provided for a 2 month period. As this will be the amount of stock held in the USA.
If you end up selling more items then this can be discussed, at that stage

Thank you.

Thoughts on this and I am happy for genuine critique. We are both reading it.

If it’s set up then we will report back here with the business name and contact details.

Thanks again,
Gemma and Harry.

 

[TotalWebSolutions]

Try re-posting here.

 

[HarryBr]

Okay, I will sorry, didn't think and didnt see that. Still learning.

 

[japancool]

This sounds to me like what you're really looking for is a supplier who will give you a credit line.

You're asking for an awful lot here without really giving anything concrete in return. The supplier is taking on most of the risk. I don't see why anyone would go for this.

I don't think you're in a position to impose conditions, certainly not at this stage. The one who needs to have a proven track record is you, not the supplier, and on an SOR, I would expect you to be the one who pays for the return.

 

[billmccallum1957]

So you want folk to give you stock, and pay the shipping cost to the USA, then wait to get paid if and when it sells!!!!

So, if I have a product with a wholesale cost of £100 and sells on average 1 a day in the UK, then I would need to send 60 items (£6000) + 20% customs duty (£1200), that's a £7200 outlay, for what?

Is Gemma going to get a premium price for selling to US customers or fight all the other retailers for space in the market?

What guarantee does Gemma give for this amazing trust we give?

What advantage does the deal offer over anything that a fulfilment service could offer?

 

[HarryBr]

You're asking for an awful lot here without really giving anything concrete in return. The supplier is taking on most of the risk. I don't see why anyone would go for this.

I think because there is already a lot of risk, if not more, with either setting up shop in USA (state tax, residency, staffing and overheads) another poster on this forum is currently discussing this on another thread: "if Marks and Spencers, Tesco" and Robin Williams to boot, can't crack America then there's little chance a medium size business would (not without large investment), a small business has little chance. However, Gemma's business would give even a small business a great opportunity.
or using fulfilment:

What advantage does the deal offer over anything that a fulfilment service could offer?

i.e. lets take Amazon fulfilment; sell over here through Amazon and send your stock via pallet load to Amazon fulfillment centres, you still have to work with DHL or some pallet service, customs, IRS, state tax codes and pay tax on stock you send to them and they keep 'for free' the items for you until they sell. If they dont sell they charge you a storage fee. Fees and more fees.
Unlike Gemma, they charge you for postage, and just look at all the posts on their forums about the paperwork with sending the pallet and the dreaded 'storage fee'; CANT POST LINK
'£1.50 per book for storage' after certain time unsold. Something Gemma's business would not charge. There are no fees, no postage, just pay the customs duty.

But calling it 'Gemma's business' does not sound wholesome. I agree with you both on the

What guarantee does Gemma give for this amazing trust we give?

I am sure with her experience it will be called 'Cooper and Johnson, The Retail Distribution Centre, USA'. It will have to get liability insurance for products, fire, theft, and breach of contract. Remember America is red tape and insurance capital of the world. They have to have cover for everything. You'll see her ID, meet her in person in the UK when she networks and visits the family at the same time. Build a trusting relationship and add to that a contract that if she steals your stuff (as that's the worst case scenario) then you can take her to court and take her house off her and get her arrested.
Based on that, lets assume that's what's available and that;s the company as I know that sounds better than 'My Cousin Gemma's bedroom storage."
She's in it to offer a business opportunity where there might be a gap in the market and if it's a success she makes money from the profit of the items sold (just like a shop would here in the UK). The only BIG difference to selling wholesale to a shop in the UK, is Gemma wants the customs duty paying up front. But in return, you get access to a large US marketplace that otherwise would be closed.

As messages on forums could look like debate, it's not, I am just trying to address questions and concerns as best I can so that the idea can keep moving forward.
I am extremely happy for you to both challenge things, it helps greatly and I am happy for others to critique. Thank you.

 

[The Byre]

Amazon Fulfilment works brilliantly, is credit worthy and trusted by consumers and will almost certainly still be in place in five years time.

Cousin Gemma?

Who knows?

 

[HarryBr]

Amazon Fulfilment works brilliantly.

Nothing against it, it has it's own merits, especially when your using it within the country of residence.
It's just this would compare more favourably, offering a similar process but with less overall outlay and paperwork. It's a better alternative, in my opinion.

Do you use Amazon fulfilment in USA, if so, what is your experience of the overall costs of using it? Did you work out the tax implications?

 

[The Byre]

Are you suggesting that we use Cousin Gemma to defraud the IRS?

 

[HarryBr]

Are you suggesting that we use Cousin Gemma to defraud the IRS?

No. As it would not be. It would be selling Sale or Return to a business in the USA. Liable for tax on goods sold. They would get the tax from Gemma.
They would get the customs duty as well.

What we are saying is that Gemma would deal with this, not you (as would have been the case with a fulfilment service). As mentioned it's an alternative business approach not a tax avoidance system.

 

[japancool]

No, I'm sorry.

What you're proposing is no different to someone setting up as an ebay/Amazon seller in the US and then asking a manufacturer for stock on SoR. Then you're demanding all sorts of conditions like 2 months stock. Without meaning to be rude, if you propose this in the real world, you'll be laughed out of the room.

Here's how SoR works. You only get SoR when you have a proven track record of being able to shift large quantities of stock. If you're Tesco, or you're Walmart, you can demand SoR.Nobody will advance you thousands, or tens of thousands of pounds worth of stock unless you can demonstrate your ability to sell. That's the same as giving you thousands of pounds worth of credit.

Would you give someone thousands of pounds to me if they told you they'd double it or else they'd give it all back to you? But you have to pay to fly them to Vegas, and if they didn't double your money, you'd have to fly them back? No you wouldn't. Would you give Warren Buffet thousands of pounds if he promised to double it for you?

So what you do is you purchase, at your own risk, stock. Then you start selling. When and if you can prove that you can shift it at a reasonable price and in quantity over an extended period of time, you can ask for SoR, not before.

Sorry, but that's how it works in the real world.

 

[HarryBr]

No, I'm sorry.

What you're proposing is no different to someone setting up as an ebay/Amazon seller in the US and then asking a manufacturer for stock on SoR.

I agree that's exactly what it is.
But the key thing here is; 'that someone' can't be anyone who is a UK resident.

So access to that marketplace is limited to US residents and medium to large businesses with money or maybe through a fulfilment centre that becomes too difficult and results in high tax and high risk start up costs.
Even a US person seeing this, might not like the risk of holding stock or SoR from UK, when they can do it in the USA. This service is a niche in that it offers it to UK sellers.

As to the trust with all that thousands of pounds worth of stock; the same can be said of a fulfilment centre, you still have to pay customs and send the same amount of stock.

I need to add that we do have a track record of sales and delivery, this is why we wanted to do this. However, you and us would be insured, so this is not a worry.
There is also the old line of 'without risk comes little reward'.

My thoughts were not thousands of pounds worth of stock, but that as the first stage. She wants to hold millions. With that I want UK sellers to trust us with thousands to start with but for it to grow, it's that growth that will prove trust. It's that growth that makes it worthwhile for both parties.

However, you might not like or wish to take advantage but there will be one or two and as we grow they will grow as well.

If someones nervous they can send her a months worth of stock, but I dont see why they need to be.

Again, thank you. Your questions and opinions will help us form a more polished proposal.

 

[japancool]

Any company that can afford to give you tens of thousands to millions of pounds worth of stock is perfectly capable of setting up an Amazon account.

You may not like what I've told you, but that's how it works in the real world. Nobody is going to give you the kind of credit you're looking for based on what you've posted here. Of course, I have no idea what your sales record is.

So good luck with that.

 

[Webzsuite.com]

Did 7 eleven gave you the right to use their property (logo that is protected by law also in UK)?

 

[HarryBr]

Did 7 eleven gave you the right to use their property (logo that is protected by law also in UK)?

Ha ha. I like the logo, like other people like to walk around with their supermarket bags, when not in the shop. However, in my case, I am suggestive of my working hours and how I'm like the shop, when it comes to working. So it's a joke or taking the mickey out of myself.
So effectively, I am covered under parody law.

However, as it might cause the discussion to go sideways, I can pick an alternative (a cheeky monkey ).