Suppliers, retailers, and manufacturers are seeking opportunities to expand their footprint beyond local or national boundaries. With the emergence of the internet, many businesses have grasped the opportunity to tap into markets abroad.
With this in mind, liquidation businesses are seeking to export US liquidation pallets into every country where there is demand for such merchandise. In terms of appeal, the US-build and manufactured products have always had a reputation as the best value for money, but liquidation stock has its own advantages and issues. The advantages are clear as this merchandise is sold at prices well below wholesale. If you do the research well prior to purchasing, you might avoid the main problem associated with this kind of merchandise: that a large portion of this merchandise is customer return pallets of products, used items, and scrap.
But, the same way these products have found their way to US e-commerce sellers, such as Amazon sellers, the online reach, which more and more retailers are taking advantage of, has allowed these products to be advertised in markets abroad, such as the Venezuelan market. Retailers, in particular, have grasped this opportunity to reach a wider audience by using liquidation companies as platforms to quickly sell their customer returns, overstock or closeouts merchandise.
This is not only an option for larger companies. Small businesses can try their luck as well as individuals. But prior to exporting, there are some regulatory issues you have to negotiate and then there is the business side of things: finding the market, researching for potential partners in the receiving country and shipping the merchandise over. This guide briefly looks into the obligations you might have as an exporter of US liquidation pallets into Venezuela.
In 2010, under the patronage of President Obama, the United States launched a National Export Initiative (NEI) with the embassy in Caracas committing to supports US companies willing to export to Venezuela. The initiative had the objective of removing trade barriers and assisting small businesses financially.
In terms of exports, there are certain regulatory requirements you have to comply with and documents you have to fill and provide in order to export merchandise from the United States. While the documentation required may vary depending on the destination of the merchandise, for a company to export products outside of the United States, it has to provide a commercial invoice, export packing list, a pro forma invoice, air waybill of a bill of lading, electronic export information filing (EEI), some export compliance documents, such as export licenses, destination control statement as well as certificates of origin.
A commercial invoice is simply a bill issued by the seller to the buyer that governments often use to determine the true value of the merchandise in order to assess customs duties. An export packing list is a detailed list containing information about the seller, the buyer, the shipping company, invoice number, mode of transport, dates, and also includes the description of the merchandise as well as quantity, type of package, total net and gross weight and dimensions.
The bill of lading and the air waybill are transportation documents, with the second one being specific to a shipper you plan on using. The bill of lading has two forms, a non-negotiable one, which is a straight bill of lading (contract between the owner of the goods and the carrier), and a negotiable bill of lading. This option allows for the merchandise to be purchased or sold while in transit.
What is now the most common export control document, the Electronic Export Information (EEI) is required for all shipments that are over $2500 in value or any other shipment that requires an export license. This document is filed directly with the AES Direct online. This is the free online service from Census and Customs.
The export license is a government document that required is in most cases. The document is an authorization of export of certain merchandise or specific goods in specific quantities to a certain destination. It might be required for all exports to some countries while it could be required for exporting to certain countries under specific circumstances. In addition to the export license, items that are on the Commerce Control List but do not require an export license need a Destination Control Statement. This may also be needed for exports controlled under the International Traffic in Arms Regulations (ITAR) and it is shown on the commercial invoice, bill of lading or the air waybill. Its purpose is to inform the carrier that the products can be exported to a specific destination only.
Some countries may also require you to provide a certificate of origin for certain types of products. Some certificates of origin, especially those claiming benefits under a Free Trade Agreement, or the North American Free Trade Agreement (NAFTA), should be completed by the exporter.
In any case, before venturing into exporting merchandise to Venezuela, contact your importer, freight forwarder or the US Trade Information Center for additional details and clarification.
On the Venezuelan side, the government (GBRV) issues import permits, import licenses, and product registrations. However, export controls may be few and far between and very often an import license is not required, unless you are importing firearms and explosives, food and agricultural imports, medicines, cosmetics, and alcohol.
On the other hand, Venezuelan Customs requires that all the documents are in Spanish and several of these document need multiple copies. The invoice has to be typewritten and can’t be a copy while the manifest or a bill of lading has to be copied four times. In addition to the commercial invoice and the bill of lading, customs require you to provide a packing list, certificate of origin and any other special certificate you might require, depending on the merchandise you are importing. The CIF and free on board (FOB) prices are to be quoted by exporters with insurance and freight to be listed separately. Invoices need to be doubled and include value per unit as well as the total value. When describing the merchandise, it has to include adequate tariff numbers. In case of a large import, you can opt for a single declaration but then list all the items separately with respective tariff numbers.
According to International Trade Administration data, some exports to Venezuela require approval in advance (medical devices/the Ministry of Health) and the process of approval can last up to six months. However, whatever the merchandise, US companies are advised to verify the experience of their importers or local agents because they are the only ones who can request product approval or registration.
Another issue highlighted by The U.S. Department of Commerce’s International Trade Administration is the currency exchange requirement that puts US exporters at a disadvantage to regional competitors due to the the Unitary Unit of Regional Compensation (or SUCRE), a virtual currency pegged to the US dollar enabling businesses in the Bolivarian Alliance for the Americas (ALBA) to “process offsetting commercial transactions, without a physical transmission of a payment, through Banco del ALBA, a Caracas-based bank founded by member countries.” Additional specific permits such as sanitary and phytosanitary certificates might be required in some instances and these are often used by the government to restrict imports of agricultural products almost at will.
Venezuela has withdrawn from the Andean Community in 2011 and in 2016 it was suspended from the Southern Common Market (MERCOSUR) and remains suspended.
Restrictions aside, Venezuelan import duties are based on the Cost, Insurance, and Freight (CIF) value of the shipment. Customs Duties and taxes on imports are at 12 percent on average, ranging from 5 percent to 20 percent although there are cases of 35 percent for private vehicles. With exporting/importing US liquidation pallets into Venezuela in mind, it is worth knowing that the tax on wholesale transactions is 16.5 percent.
The country does have a free zone of Margarita, where the tax on wholesale transactions is only applied to services. In addition, luxury products are taxed at 10 to 20 percent, depending on the product.
Often the value of the merchandise listed in the bill of lading can be accepted as an actual value by the Customs. However, the government regulations allow the Customs to reference base price for a number of products types, such as textiles, in order to determine customs value.
Knowing the export/import regulatory framework as well as tariffs and restrictions is essential in the process of growing your customer base abroad. However, knowing the merchandise you deal with is also of great importance. Liquidation merchandise has gained its popularity because, as previously mentioned, prices can go well below wholesale, allowing e-commerce entrepreneurs such as Amazon Sellers to secure a significant profit margin on the resale of such merchandise.
In general, there are a number of ways merchandise gets liquidated. As an example, a store might be closing or moving location, which could result in the merchandise to be packed up into pallets. Then, rather than transporting it to the new location, the retailer might opt to liquidate the merchandise through liquidation companies. This allows the retailers to reach a wide online audience in any corner of the world, including Venezuela, faster.
But stores closing are not the only ones liquidating merchandise. You might have come across refurbished, customer returned merchandise, closeout sales or overstock merchandise on a liquidation website. All these products can be offered by stores that are posting sizeable profits and are operating successfully. Customer-Returned products can’t be sold as new regardless of the condition they have been returned in. Refurbished products have been restored to their original ‘out of the factory’ state, but these can’t be sold as new either.
However, these present an opportunity for a sizeable profit on resale as these products are sold very cheaply but come with at least a 90-day warranty from the liquidator alone. Closeouts and overstock merchandise are liquidated by retailers that need to empty shelf space or storage space for incoming merchandise, and these products are basically new and unused. All in all, liquidation merchandise, if the purchase and selection are completed properly, present an opportunity for significant profit.
The answer to this question mostly depends on the market and the products a seller is comfortable working with. In any case, do thorough research of the liquidation merchandise based on your preferences and target customers. If you plan on selling electronic devices, then that is the best liquidation merchandise for you. If you plan on selling products on flea markets, than unsorted customer returns, or tested but not working products might be your thing.
Whenever you hear liquidation merchandise you may think of scrap and products that you might not be able to sell anywhere. However, while a large portion of liquidated products can be scrap, customer returns, and refurbished products, there is a way to secure that the merchandise you sell is of high quality.
The same way you have to pay attention when selecting the importer or a local agent in Venezuela, you have to look for a reputable liquidation company. This is because top liquidators will form ties with top retailers and manufacturers. This is why you can find a Walmart liquidations storefront on Direct Liquidation. This is a prime example of a top-tier retailer and a top-tier liquidator working together. Both names have a reputation to look after meaning that the products you purchase are of higher quality. In addition, reputable liquidators will provide you with a manifest for each pallet you purchase. This is a list containing details about the count, the quantity and the state of the products in the pallet. This means you can specifically purchase items that are in demand and you need to cover a certain market.
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