Finding the perfect distribution partner for your reseller business can take a considerable amount of time—sometimes even a few trials. But as some businesses learn, the best partner often isn’t the cheapest one. There are various reasons for this, from customer service to product quality, yet this doesn’t stop resellers from wandering from deal-to-deal.
Unfortunately, many said deals—especially those offered internationally—are rarely as lucrative as they seem. A common example comes from picking discount international distributors. Although attractive at first glance, there are many logistical and economical reasons to stay clear of them.
Taxes, Duties, Payment Instruments and Other Financial Matters
Distributors that process orders online most likely use a popular payment gateway like Stripe or PayPal. As the buyer, this enables you to enter your financial information securely, use a preferred method of payment and complete the transaction quickly. Despite such convenience, there are caveats.
- Foreign distributors often price in USD or some other local currency. While the conversation mathematics may seem straightforward, the act of exchanging money costs money too. For instance, PayPal charges a retail exchange rate in addition to a currency conversion fee—somewhere around $0.30 + ~3+% depending on the payment method. Likewise, Stripe converts 2% above the daily mid-market rate.
- Most imported goods—electronics included—get taxed GST and PST at the border. Even if the original transaction had been advertised as tax free in that country, it does not exempt your order from national and provincial taxes. Similarly, your products may need to satisfy duties, a special tariff enforced by the Department of Finance Canada. Like conversion fees, taxes and tariffs can render an outstanding deal abroad rather uncompetitive domestically.
International distributors may operate large shipping channels in Canada, but the movement of product to said channels often takes time. There are myriad variables affecting shipment times abroad, something your business may not want to gamble with when ordering product for customers.
For distributors with limited shipping networks, you may need to pay for a second leg to the shipment. Arranging such transportation from designated drop-off points adds further overhead to your operations and increases margin for errors. Conversely, a national distributor will have such logistics settled, enabling them to go further and offer value-added services like blind-drop shipping.
Customer Service and Reachability
International businesses operate according to their own local time zones. Although ecommerce accepts orders any time of day, there are sometimes manual processes that must take place before shipping an order.
As well, simply reaching out to a distributor to discuss an account can be tedious when balancing time zones, often resulting in missed phone calls or sporadic emails. Admittedly, even national distributors face this challenge across countries like Canada with multiple time zones. That said, Canadian time zones only differ by a few hours, leaving ample overlap during regular work hours.
These are just a few of the concerns in dealing with an international distributor. Be sure to always research the fundamentals of the distributor, too, including their relationship with suppliers and their policies on warranties, refunds and so on.