Businesses all over the world are looking to expand their footprint. The power of the internet has enabled many to do just that by tapping into international markets. But what if your business involves dealing with liquidated stock? In reality, every type of merchandise has its customers, and liquidation merchandise is gaining in popularity among e-commerce retailers, such as Amazon sellers, who are finding new ways to purchase quality merchandise at the lowest possible prices in order to secure the highest profit margin on resale.
An exporting opportunity has come about with liquidation businesses taking full advantage of the wider reach the internet has provided them. Setting up websites and facilitating the liquidation of merchandise by manufacturers or retailers directly to the end users, liquidation companies have been providing a valuable service to both ends of the supply chain.
The merchandise itself comes in all shapes, sizes, and conditions. You might find brand new, unopened products for sale, but there are also products that are tested and not working and need to be repaired or used as spare part donors for other products. In any case, there is something for everyone. This, in turn, increases the appeal of liquidated merchandise, as it can be dirt cheap and, if good prior research, some great deals can be made.
In addition to the appeal of the liquidated merchandise itself, US manufactured products, sold for example by Walmart especially appealing as they are seen as good value for money. No wonder one would consider exporting US liquidation pallets into Guatemala, or any other country.
But, in case you would like to explore the opportunity of exporting liquidated merchandise into Guatemala, you should read through this guide as it will provide you some basic information about export documentation required as well as customs procedures once the merchandise arrives in Guatemala. While directions will be given, we strongly urge you to contact relevant authorities if you require more detailed and specific information.
Prior to shipping any pallets of liquidated merchandise to Guatemala, you have to consider the shipping requirements. There are certain export documents you have to obtain and provide in order to export products from the United States. Most commonly, you will need a commercial invoice, which serves as a benchmark for the goods value and the calculation of customs duties, as one of the export documents. Another document you will need is the export packing list, which is similar to a manifest provided by the liquidation companies, with some additional details. It lists the seller, the buyer, the shipping company, the invoice number as well as the date of shipment and mode of transport. It also provides detail about the number of items in the pallet together with a description of the products and even the package type.
If the products come in packages, the export packing list will provide the number of packages in the pallet and the total net and gross weight in kilograms. This document is important as it can be a reference for the authorities in case they decide to check the cargo. You might also need, depending on the country of destination, a pro forma invoice, which can be provided by the seller to the buyer even before the merchandise is shipped and can serve as a price quotation or a sale offering.
Transport documents are also required. The most common is the airway bill and the bill of lading. The former is specific to the shipper and is required for all air freight. The latter is slightly different as it involves transport via a vessel, which is more likely to be used for greater quantities. It is actually a contract between the owner of the merchandise with the carrier company. There are two types of bills of lading: the straight bill of lading, which is non-negotiable, and the liner or negotiable bill of lading, which means the merchandise can be bought, sold or traded while in transit. In order to take possession of these goods at port, the owner has to provide the original bill of lading.
Electronic Export Information (EEI), formerly known as the Shipper’s Export Declaration, is probably the most common of all export control documents as it is required for all shipments above $2,500 in value. The exporter also needs to complete the electronic export information filing in case a specific export license is needed for the type of merchandise being dispatched. The filing is completed through the AES Direct online system developed by Census and Customs.
The export licenses mentioned are government-issued documents authorizing exports of specific goods, such as firearms, that are regulated by the State Department’s Directorate of Defense Trade Controls. You might also be required to provide a certificate of origin (CO). Do contact the relevant authorities to check whether Guatemala has any requirements related to the Certificate of Origin for any specific product. In some countries, these certificates are required for either all products, or only for specific products.
On the Guatemalan side, there are certain regulations you have to be aware of. To import food into Guatemala, the Division of Registration and Control of Medicines and Foods of the Ministry of Health is the relevant authority to go through, according to the International Trade Administration (ITA). Read through all the specific requirements for various types of products here.
The above noted specific types of merchandise requiring permits on import notwithstanding, Guatemala, part of the Free Trade Area of Americas (FTAA) and the Central American Common Market (CACM), the country’s import regime can be considered liberal. It uses the CACM external tariff schedule, which ranges from zero to 15 percent, for the majority of agricultural and industrial products. However, alcoholic drinks are tariffed at up to 40 percent and tobacco products can be tariffed at up to 20 percent.
The United States has a free trade agreement with Guatemala, under the Dominican Republic-Central American-United States– Free Trade Agreement (CAFTA-DR). This means that out of total 6,307 HS codes for US industrial and consumer products, 5,263 enter Guatemala duty-free, while the remaining codes are planned to be phased out by 2026. The deal has set specific requirements when it comes to the rules of origin. However, nearly all textile and apparel goods are traded duty-free.
This agreement makes it very appealing for US exporters to look into the Guatemalan market. It has to be added that, in general, Guatemala charges 5.8 percent on average of customs duties and import taxes. These are calculated on the cost, insurance, and freight (CIF) value, and the country’s customs office is managed by the Ministry of Finance.
While the Dominican Republic-Central American-United States– Free Trade Agreement provides for duty-free imports and certainly boosts the trade between the two countries as well as its appeal for US companies to either enter the market or look for a reputable partner to collaborate with, there are still some obstacles you might come across.
US agricultural food producers might face these issues more often due to certain customs regulations, sanitary certification, product samples, and product fortification requirements, that we previously liked to. These obstacles have been growing since 2009 as US produced goods are not given preferential treatment, resulting in higher tariff rate. It also has to be said that customs authorities have not yet streamlined their processes and equipped their staff to adequately handle variations in commodity spot prices between shipments. Should you come across such issues, contact the Office of Agricultural Affairs at U.S. Embassy Guatemala for assistance.
In any case, make sure you contact relevant authorities, locally or in your state and try to gather as much information as possible prior to engaging in exports of any goods to Guatemala.
As we’ve seen above, some products might face obstacles but others enter the country without facing many issues. In addition, a lot of products can be imported duty-free, which puts liquidation merchandise in a good position. For any of you intending to deal with US liquidation pallets, you have to know what this merchandise actually is. There are several reasons why merchandise gets liquidated and each reason brings a certain effect on the price point of the merchandise.
Starting from the lowest point, you have to know that a large portion of liquidated merchandise is products that have been returned by customers, have been tested and are not in working condition. That being said, there are ways to avoid such merchandise and we will discuss this further down in this guide. Customers return products for numerous reasons and manufacturers and retailers are looking to recover as much money as possible on products that would otherwise be scrapped or discarded, and this is best done by liquidating merchandise. For you as a buyer, this means you will be able to snap up products at prices way below wholesale.
But, non-working products are not the only products being liquidated. There are products at the higher end of that scale such as closeouts or overstock merchandise. While these are still sold at prices up to 50 percent below wholesale, these should be the ones to look for since they have the most appeal and bring with them potentially the highest resale value.
There is a slight difference between closeouts and overstock. Closeouts usually happen when a retailer is looking to empty the shelves of their store, often at the turn of a season, in order to free space for new merchandise. All products that have not been sold until that point are being packed up and liquidated. Overstock merchandise is different in that it often is a product of management mistakes that have misjudged the market conditions and ordered an excessive amount of certain products. Whole pallets might have remained unopened in the warehouse because the demand for these products was not as high as initially anticipated and these products never made it to the store shelves. The thing these two types of products have in common, and the reason why they have the highest resale value, is the fact that these products are new and have never been sold, often being liquidated with price tags from the store still attached. There are many more reasons why products get liquidated and their condition varies.
This question does not have a simple answer, although looking at this section you might think it is an easy one. The fact is that the seller decides what liquidated merchandise is the best for them. This is why we always advise researching the market you are interested in. Knowing your market in Guatemala, and knowing where the market gaps are will allow you to exploit these gaps by purchasing products you require in order to cover this demand. This means that you decide what merchandise is best for you and it only depends on your preference, whether you’d like to supply an electronics market with brand new laptops, or would like to sell products at a flea market and you are looking to buy products that can be sold cheaply as spare parts. Think about the specific market conditions in Guatemala, and the types of businesses you will be dealing with.
With the majority of liquidated merchandise being customer returns that are not working, how can one provide quality products by purchasing through liquidators? This is a common question. There are several aspects to consider. Some liquidators don’t own the merchandise, they simply serve as a platform for retailers and manufacturers to reach wider audiences online and sell their merchandise quicker, keep the price low and avoid selling to any mediators.
But to ensure quality, some liquidators will form ties with top retailers. We say some because there are companies out there looking to get rich quick and disappear. This is why you should look for reputable liquidators only as they will have exclusive deals with top retailers. One such reputable liquidation platform is Direct Liquidation, which serves as a platform for Walmart liquidations. This means that in a way they are a link in the chain that ensures quality products. By searching for reputable liquidators you are giving yourself the higher chance of scoring some great deals.
In addition to working with top retailers and manufacturers, top liquidators offer services that you will not find elsewhere. One of the most important aspects is the manifest we mentioned earlier, which is similar to the export packing list. The manifest is not as detailed but it still provides you information on the quantity of products with short descriptions and type as well as the quality of the merchandise within the pallet. At the end of it all, you are the one who makes the purchase decision and you should look to gather as much information about the merchandise as possible, and match it to your target market.
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