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Exporting US Liquidation Pallets into Chile

After years of doing business locally, you have started taking steps to grow and expand to new regions. First, you started covering the state where your business is located, next you opened up offices in other states and basically covered the whole country. But operating in the United States only is not your ultimate goal, you intend to deliver your merchandise abroad to places like Chile.

Such an expansion is not only seen as a positive step for the company but also seen as a boost to the domestic economic growth. Exporting to new markets means upscaling the operation and creating new jobs for domestic workforce. If you are running a new or growing liquidation business and plan on exporting US liquidation pallets to Chile, there is a strong possibility you might require new hands on deck to handle a potential upswing in orders and the need to handle more merchandise and get it ready for shipping.

But, there are some words of advice before you plunge into a new market abroad. Doing it on a whim can seriously backfire, because entering a new market abroad without previous research can lead to issues with customs, with your representatives or distributors in the country. But other than that, before entering a new market you should always evaluate your business and determine whether it is operating at an optimum level. Would you be capable of coping with the step into a new market? Would you look to open a new office in the destination country or would you hire a local representative? In terms of merchandise, you have to look into the demand of that specific market, the buying culture and then, on the legal side, you have to look into market regulations and export/import regulatory requirements.

What might come as a positive in terms of liquidated stock and liquidation companies looking to export US liquidation pallets to Chile is the fact that products produced in the United States do have a reputation abroad of giving the most for the amount of money invested, making them attractive in any market. And the expansion is further supported by the fact that anyone from anywhere can access the liquidator’s website and place an order for a pallet of electronics that you have to figure out how to export from the United States and import into Chile. This short guide will look into that matter and provide tips on how to deliver the merchandise to a Chilean customer.

Exporting Merchandise to Chile

Chile is seen as a very positive market for US companies due in part to its open market policies, zero tariffs, and solid business practices and in part to the United States-Chile Free Trade Agreement (FTA) that came into force in January 2004 and has reduced duties on 90 percent of US exports to Chile to zero. Since January 2015, even the remaining tariffs were phased out.

But, despite the positive markers, there are still certain regulatory requirements when it comes to exporting merchandise to Chile. Even before your merchandise reaches a Chilean port, you have to ready the export documents, which commonly include a commercial invoice, which is a bill for the merchandise provided by the seller to the buyer. These are usually used by the customs services to assess customs duties. Among other export, documents are the export packing list, which contains more specific details about the seller, the buyer, the invoice number, date of shipment, mode of transport as well as the carrier. In addition to that, it also contains information about the quantity of the products, their description, the type of packaging they are in as well as the number of packages within the pallet and a total net and gross weight which has to be expressed in kilograms. You can also find a pro forma invoice among the common export documents as it is usually sent by the seller to the buyer to notify them of the value and some other specifications of the merchandise and can be used as a price quotation.

You will also require certain transportation documents, which depend on the mode of transport. Air freight deliveries require an air waybill and these are specific to the shipping company. In case you are transporting your merchandise by ship, you will have to provide a bill of lading, which essentially is a contract between the owner of the merchandise and the carrier. There are non-negotiable and negotiable bills of lading. The first one has specific rules that can’t be altered while the second one can be bought, sold or traded with while the merchandise is still on its way to the destination.

The most common of all the transportation documents is the Electronic Export Information (EEI), formerly known as the Shipper’s Export Declaration, which is needed for all the shipments above $2,500 in value as well as for those that require a specific export license, such as nuclear materials or chemicals. The Electronic Export Information is filed electronically with the Customs and Census through their online system AES Direct.

The common documentation used by the Chile importers is similar to the US export documentation. For the most part, importers and exporters use commercial invoices, certificates of origin, bills of lading, freight insurance, and packing lists.

The Chilean Customs uses the value of the goods, freight, and insurance (CIF) to evaluate the duties. In case you are looking to import used goods into Chile, these are valued by the customs according to the value of a similar new product with a discount of 10 to 70 percent.

In general, Chile is an open market and all legal entities, as well as people, are allowed to conduct import transactions. However, if the goods import value exceeds $3,500, the importer is required to submit the ‘Informe de Importacion’, a license that is granted automatically by the Central Bank of Chile. If you are planning to import processed food into Chile, these are approved on a case-by-case basis and require a Health Service Officer permit at the port of entry. You may find more information on online declarations on the website of the Chilean equivalent of the IRS the Servicio de Impuestos Internos (SII).

Tariffs and Restrictions When Importing into Chile

With the United States-Chile Free Trade Agreement coming into force in January 2015, the trade between the two countries became duty-free. However, Chile applies a 6 percent tariff on any product that is imported from a non-FTA country.

If you are looking to purchase used products from liquidation companies, you will find that the free trade deal eliminated the 50 percent duty surcharge applied to used goods originating in the United States. Even the luxury tax on cars manufactured in the United States has been completely eliminated in January 2007, only three years after the FTA came into force. There are, however, other luxury goods that are charged with a 15 percent tax and these products include beer, wine, champagne, platinum, jewelry pyrotechnical articles such as fireworks, among other products. Other alcoholic beverages such as grape pisco, whiskey, aguardiente are charged with a 31.5 percent tax, while wines, sparkling wine cider and beer face a 20.5 percent tax. Tobacco products are faced with an additional tax, ranging from 51 percent for cigars to 57.9 percent for processed tobacco and 61 percent for cigarettes.

Domestic goods are subject to a 19 percent value-added tax (VAT). This is also applied to all imported goods.

In terms of trade restrictions with Chile, the International Trade Administration (ITA), and the U.S. Department of Commerce notes that there are very few obstacles to foreign companies operating in Chile. It is said that foreign companies enjoy protection similar to that of local companies.

There are, however, certain exceptions to this rule. Chilean Ministry of Agriculture will have to inspect all the pet food and other animal products; however, the two governments are constantly negotiating and making steps forward and nearing the status of dairy, beef, and poultry that do not require such inspection. It has to be stressed that, as noted above, processed food is approved on a case-by-case basis and no blanket approval exists for US companies that export identical products, even though these have been tested and found to be in compliance with local regulations. An importer of such products requires a permission of the health service officer at the port of entry.

What is Liquidation Merchandise?

While its popularity is rising among Amazon Sellers, many are still wary when it comes to liquidation merchandise as it was largely associated with scrap, broken products, and customer returns. While the majority of liquidated merchandise does fall into this category, a number of companies have stepped up their game to provide not only quality service but also quality merchandise. It is no surprise that US liquidation pallets are sought after merchandise internationally.

But what exactly is liquidation merchandise? There are many ways merchandise is liquidated and you can develop a certain tier system that would divide the merchandise according to the way it is liquidated and afterward by the condition of the liquidated merchandise.

Some merchandise is liquidated because a company is closing and the remaining equipment and inventory are sold to recover any investment made on it. Even if a store is moving location, instead of packing up and moving all the remaining merchandise to the new location, these products are packed up and sold to consumers through liquidation companies. You might find pallets of closeout merchandise as well as products of overstock merchandise, which are probably the most attractive types of liquidation merchandise as these products have never been sold and come at the highest price point and have the highest resale value as these are basically brand new and you will often have them delivered with price tags from the store.

There are also products that come at lower price points such as customer returned products, which can be reviewed and graded as well as pallets of unsorted merchandise which can include scrap, and broken items that are not functioning. All these can be found among liquidated merchandise.

What is the Best Liquidated Merchandise?

As an interested buyer, you might be wondering what the best liquidated merchandise is. The answer depends on your need and requirements as well as the market you are looking to serve. If you plan on serving a market seeking high-end electronics, the products you will be looking for are pallets of brand new electronics or even refurbished electronics which are products that have been returned and restored to their original ‘as new’ condition by the manufacturer before being liquidated. This means that you will know what the best merchandise for you is if you conduct market research and see where the supply gaps are and where the niche, underserved markets you could tap into are.

How Does a Liquidation Resale Business Tackle Quality Issues?

As we noted above, a large portion of liquidated merchandise consists of customer returns and unsorted customer returns which can be lower in quality. But if you intend to export high-quality merchandise are liquidation companies a good choice? The answer is a conditional ‘yes’. There are certain aspects the buyer has to look at before ordering liquidated merchandise. First, you have to find all the information about the liquidation company you intend to buy from. The higher the reputation of the company the higher the chances are of purchasing quality products. In addition to the reputation, top liquidation companies are siding with to manufacturers and retailers. This is why you will find Walmart liquidations storefront on Direct Liquidation. Finding such pairings of reputable liquidators and retailers significantly increases your chances of scoring quality products.

Besides the quality, the cooperation between the retailers and liquidators eliminates another factor in the supply chain, the wholesale suppliers that essentially acquire liquidated merchandise by a truckload and resell the products with a wholesaler’s markup. However, in order to keep the prices as low as 50 percent below wholesale, retailers use liquidation websites as a platform to reach a wider range of customers online and sell the pallets of liquidation merchandise directly consumers.

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