What is De Minimis Value and Why is it Important for Cross-Border Ecommerce Shipments?
Steven Jonker • 1 February 2022
In order to better prepare your ecommerce store for the process of international shipping, you will need to acquaint yourself with a variety of terms and definitions. ‘De Minimis’ being one of them.
InXpress have compiled the below ‘quick read’ blog to help you get a better understanding of what this threshold value is and how it can impact your ecommerce store.
What is a De Minimis Value?
When considering international eCommerce, De Minimis refers to a country-specific value that decides whether duties and taxes will be applied to a shipment.
Why Are These Threshold Values Used?
Assessing and collecting duties and taxes is a time and resource consuming process for the importing country. Suffice to say, it makes zero economic sense to apply these duties and taxes to certain low-value shipments.
And so, customs within an importing country make use of a de minimis threshold in order to deem certain smaller, less-valuable items exempt from these duties and taxes.
De minimis values are also used to encourage or discourage certain trade or purchasing habits.
How Can De Minimis Impact My Ecommerce Business?
De minimis holds a great value and significantly impacts international ecommerce trade. That being said, taking full advantage of these thresholds can have a great impact on the operations of your ecommerce store.
Generally, business to consumer orders are of a much lower value than those of B2B trades. This means that - for your ecommerce store, a larger percentage of your shipments will clear duties and be considered ‘tax-free’ in specific countries.
- Shipments below the de minimis value will clear faster at customs.
This means that the delivery times for these shipments will be quicker, increasing your customer satisfaction and the likelihood of customers returning to your store
.
- Alleviating added customs and taxes provides you with an opportunity to sell into certain markets much more competitively.
The de minimis value varies greatly by country. You can view each country's specific de minimis threshold here.
How to Use De Minimis Value to Encourage Sales on Your Site:
Clearly communicating the calculated de minimis value to your customers can have the same effect as offering a sale or promotion.
When a customer realizes they can spend up to a certain value before any duties will be applied, they will more likely add items to their shopping cart and maximize the benefit of staying under this value.
Staying informed and on top of these value thresholds will allow you to market your ecommerce store far more effectively and even sell into certain markets more competitively. On the other hand, choosing to not stay on top of de minimis values can keep your online store from growing.
For further assistance with any shipping needs, feel free to
contact us at
InXpress Sandton. We’re here to simplify your shipping process and ensure your ecommerce store reaches its full potential.
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