Last updated on July 29th, 2022 -
Are you interested in selling your products into a foreign country? You should be. Ecommerce retailers worldwide are driving sales growth by selling their products globally. Why limit your customer base to a single country when the world is open for business? Experts project international ecommerce will grow at double-digit percentage rates in 2022. It’s a growth opportunity you cannot afford to ignore. The prospect of selling your products cross-border can be daunting. Figuring out how to smoothly get a package through another country’s customs office is probably not how you want to spend your workday. Don’t worry—we’re here to help!
To get you started, we will introduce you to product classification by explaining the following:
If you want to understand international ecommerce, a good place to start is product classification. When your product arrives at the border of another country, the customs office will want to know exactly what the product is so they can track what is coming into the country and efficiently assess the applicable tariffs, customs, duties, and taxes. They can do this by using HS code product classification, which is based on the Harmonized System. In 1988, the WCO (World Customs Organization) developed The Harmonized Commodity Description and Coding System, also known as the Harmonized System (HS). HS codes function as a standard worldwide language for describing goods, allowing a world of different languages to communicate accurately and efficiently as one regarding product classification. HS codes usually contain ten digits but can be seven to twelve digits long. The first six digits are global and based on the Harmonized System. The last one through six digits are determined by the country into which the product is being imported, based on their system. Country-specific HS codes are used for statistical purposes and assigning accurate duty rates to imports into a given country.
To show you what a typical [country-specific] HS code looks like, here’s a breakdown of the HS code for a platinum ring being imported into the US:
As mentioned above, countries have their own systems to add their specific digits to the end of the universal six-digit HS code. To understand the way HS codes vary depending on the country of importation, consider the following example of a basketball being imported into the US, Germany, and The Bahamas, based on their version of the HS system:
|Country||Code||Version of HS System|
|United States||9506.62.8020||Harmonized Tariff System (HTS)|
|Germany||9506.62.0000||Integrated Tariff of the European Union (TARIC)|
|The Bahamas||9506.62.00||Common External Tariff of the Caribbean (CET)|
As you can see, the first six digits are the same—these six digits are used worldwide—and the last four digits are different based on the requirements of the country of importation. This is important to be aware of for international ecommerce in order to avoid over or under-calculating duty or having your shipment rejected or held by customs due to incorrect HS codes.
You should be aware that while most of the time, the same HS code can be used for import and export, some countries [occasionally] require separate HS codes for each for tracking and data-gathering purposes. Here are a couple of examples of classification systems specific to exports:
Export HS codes are not used very often, but it’s helpful to know about them because your shipment may require them at some point. For example, although HTS codes (see the table in the previous section) can often be used for US exports, goods in chapter 98 (e.g. goods having been returned to the US for repair) of the Harmonized Tariff Schedule require Schedule B codes to be exported, not HTS codes.
There’s no doubt that aspects of international trade, like product classification, are difficult; but knowledge is power when it comes to navigating cross-border ecommerce. Luckily, you don’t need to stress about product classification because there are tools that can handle it for you.
Zonos has an industry-changing automated tool called Classify that assigns HS codes to products. Using as little as an item description, Zonos Classify generates HS codes upon demand. Classify is available via API or as a web-based tool allowing you to harmonize your entire product catalog, either before obtaining a landed cost quote or for real-time classifications within Zonos Dashboard.
A never-ending interest in solving international logistics and global trade challenges through IT solutions has allowed me to work with companies to decode cross-border. With a background in IT product management, education, and advanced customs certifications, 'going global' is an obtainable goal for Zonos' retailers.