How to sell into new markets.
Fashion sales channel expansion is a super exciting and powerful strategy that not only adds incremental sales to your bottom line but is also a great marketing tactic.
Expose your brand to new customers by leveraging a 3rd party platforms customer base whilst making sales! … Who wouldn’t want to sell into new markets and new sales channels!?
What does success look like?
To succeed using sales channel expansion strategy, you need to know about your target market, specifically how to sell into new markets.
Success will come from preparation and forward planning. So start the journey now and you will be ready to launch new sales channels within 2-3 months time.
*To note my advice is based on experience only from working in the fashion industry and we would always request that you seek legal advice for all other queries.
What are the key criteria you need to know about selling into the UK, Europe, US and Australia market?
How to sell into the UK.
- VAT (tax) – 20%. You can choose to register for a VAT number which will enable you to claim 20% back at the end of the tax year. If not, you will simply pay 20% off the cost of goods and shipping.
- Duty for clothing is around 12%.
- The UK has a trade free agreement with Japan and is in talks with Australia, New Zealand and the USA.
- All product must be REACH compliant.
The UK comes with some complexity in 2021 due to the most recent Brexit agreement. I, therefore, advise you to stay close to the changing goalposts for your country.
For more information about importing into the UK click here.
How to sell into Europe.
- VAT (tax) – 19%. For Childrenswear, it is 0%. You can choose to register for a VAT number which will enable you to claim 20% back at the end of the tax year. If not, you will simply pay 20% off the cost of goods and shipping.
- Duty for clothing is 12% but can vary for accessories and footwear.
- To import into Europe you need to have an EORI number. To gain an EORI number you need to register your business in Europe. For more information click here.
- All product must be REACH compliant.
- All care labels fabric compositions must be translated into German and English as standard.
How to sell into the USA.
- Tax 10%, payable based on your import value threshold.
- Duty is calculated based on the fabrication. See the image below. (last updated in 2019)
- To sell into LA, your product must compile with PROP 65.
- You need an importer of record (IOR) to ship into the US. This can be provided by your freight forwarder.
The USA comes with complexity in 2021 due to the new presidency. Trade rules will differ per country, therefore I strongly encourage you to invest in a customs broker.
"To succeed using sales channel expansion strategy, you need to know about your target market, specifically how to sell into new markets. Success will come from preparation and forward planning."
How to sell into Australia.
- GST (tax) – 10%. To claim back your GST you need to be registered as an Australian business and hold an ABN. Once you have this you can claim back your GST at the end of a tax year.
- Duty for clothing is around 5%.
- Anyone can import into Australia as you don’t require an import license, you must simply declare your goods using a customs agent.
For more information about importing into Australia click here.
General information you need to know when selling into new sales channels and markets.
- You will need to hire a customs agent so that they can submit declarations on your behalf.
- To import your product into a new market you need to know its HTS code, which is a 10 digit harmonised tariff schedule, needed to clear customs. You will need to include this on your paperwork along with your products COO, country of origin certificate. For more information on tariff click here.
- For example, faux fur is: 4304.00.00.00
- Review your contracts and Incoterms to ensure clarity of terms and conditions and responsibilities between you and your buyers.
- You will always have the choice to land the goods into your new market or agree to ship terms FOB, freight on board, sea shipment.
- Understand that the fashion definition of “samples”, i.e pristine product, will be subject to full duty. I recommend you cut the label on your goods and write in marker pen ‘SAMPLES’ on your paperwork to avoid being charged.
- You must be aware of what material/s are allowed to be imported into what country, for example, feather down is banned by most western countries. To find this out google: import prohibitions and restrictions.
- All products must be registered for GTIN/EANS. Contact GS1 now.
Please note; if you are choosing to work with a new sales channel via dropshipping both VAT/GST and duty will still apply to you. You will however have the choice to pass these costs to your customer at the checkout or absorb it in the cost price.
For shipping direct customer orders it is recommended to use a global shipping provider like FedEx, DHL etc.
To learn more about which shipping option would be right for your brand click here.
What does a good new market sales strategy look like?
I would always recommend that you pick 1 territory at a time. For example the EU.
This will allow you to consolidate costs including both setup costs and shipping costs, as well as, focus your time and effect on learning just 1 new market.
Imagine the overwhelm and complications you would give yourself if you opened new sales channels in USA, UK and EU all in one season?!
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