Why every international eCommerce business must have a bonded warehouse

If you have been importing goods for your eCommerce business, you would know the multiple challenges that come with it. From paying excessive duties over products to handling hassles of shipments, the list of troubles is long. So much so that many businesses refrain from importing goods despite consumer demand.

But many eCommerce businesses miss a trick here. If you have been importing goods for your online selling sites or looking to start importing, here is a simple trick that can prove quite beneficial for you. Changing your storage space for imported goods to a bonded warehouse can save you a lot of cost and hassles, among other benefits. Read on to know how a bonded warehouse that provides ecommerce fulfillment services in India helps.

What is a bonded warehouse?

A bonded warehouse is just like any other storage warehouse in terms of space and accommodation. The difference lies in the way of operation and control. The Customs department or Custom agents supervise these warehouses. You can store your imported goods in these warehouses without having to pay duties until they are sold.

Typically when you import goods for business, a Customs agent inspects and approves of them on the port. The importer has to pay the duties immediately. Then only you can send these goods to your warehouse that provides eCommerce fulfillment services in India. The direct connection of bonded warehouses to the Customs helps defer duties.

The government, as well as some private firms, own these certified Customs-controlled warehouses. Apart from helping defer duties, the bonded warehouse has multiple other benefits:

Benefits of a Bonded Warehouse

Long-Term Storage Facility

Custom bonded warehouses are excellent long-term storage locations. They are safe, secure and well maintained. In India, you can store any imported goods for one year in a bonded warehouse. If you have registered your business under the Export Oriented Units(EOU) scheme, you can store the goods for five years. You must export these capital goods or their final products on your online selling sites under the EOU scheme.

Upon approval of the Chief Commissioner of Customs, you can extend this period for six months or even more. Storing products in a bonded warehouse ensures you don’t have to shift them over some dispute with the owner.

Save Costs

You don’t need to pay any duty on your imported goods until they leave the warehouse. This relieves you of the burden of investment before the goods are sold. In case you couldn’t sell the products and need to re-export them back to the destination, no duty will be applicable to them.

You only have to pay VAT on sold goods. You will only have to pay export duty on the destination country, saving you from double payment.

Improve cash flow

When you defer import duties and VAT, you have more cash in hand through which you can buy more products for your online selling site. Who wants to prepay duties and taxes anyway?

Insurance bond on imported items after Duty is paid

When you store imported goods in a bonded warehouse, the authorities will give you a bond. This bond ensures you won’t face any monetary loss after paying import duties and VAT at the time of shipment. You can safely ship these items to the warehouse providing eCommerce fulfilment services in India.

Additional shipping facilities

Many bonded warehouses have affiliations with reputable logistic providers like Quickshift. They will adequately handle your distribution, delivery, packaging and more.

International Shipping gets convenient

A bonded warehouse is especially useful for eCommerce businesses shipping products worldwide. They can import products to anywhere in the world and keep them in a bonded warehouse without paying duties. You can store the goods there until there is an increase in demand in that country.

Instantly pay duties and deliver products on-demand in the destination country. Many successful eCommerce companies keep products in bonded warehouses in multiple countries.

Instant Shipping

Since bonded warehouses provide a secure storage location, you can import products much before the seasonal peaks. Importing products prior comes in handy for sales in festive seasons. Storing products in advance helps improve your delivery service. It also ensures your products are available when other products go out of stock.

Storing restricted goods

Importing restricted goods comes with multiple hassles of complicated legal legwork and paperwork. The Customs authority provides only a short window during which you have to get your restricted imports approved. You can’t keep these goods in a non bonded warehouse over that time.

Fortunately, the Customs bonded warehouse doesn’t have such restrictions. You can keep the restricted goods in this warehouse until the regular time period as for other commodities. This allows importers enough time to either get permission to get them in the country or export them somewhere else.

The multiple benefits of the bonded warehouse are too hard to ignore for an international eCommerce business. Perhaps the only downside is the lack of proper packaging service which can make the shipping process longer. But the advantages comfortably overshadow the drawback. With eCommerce businesses rising around the world, we are only going to see a rise in private bonded warehouses in the near future.