In this article we will look into what happens when a seller sells goods internationally through e-commerce platforms
The e-commerce industry in India is booming like nowhere else. There are several factors that have led to its phenomenal success and it need an Import-Export Code. It is convenient to buyers because they save time and money on getting their purchases delivered home. It is convenient to the sellers because they do not have to invest in infrastructure such as having a showroom or a store and can instead sell goods directly from their godowns and warehouses. And it works well for the labour force as well since there has been a surge in the demand for delivery agents and hence has filled the massive void of unemployment to a considerable extent.
Furthermore, after the devastating effects of the pandemic, several people who were sceptical about online shopping were left with no other resort but to get on the bandwagon and adapt to the online model of shopping. Everything from groceries to medicines to high end luxury goods, all are available for sale in the digital marketplace.
And while consumers adapt to this change in the way we consume products in their own way, the change is not as drastic as it is for the sellers. The sellers now have the opportunity to not only cater to their local demographic but to a global audience. And this means they have to now adapt to several new regulations in order to leverage the full potential of having an online presence. In this article, we are specifically going to discuss the implications of e-commerce on this aspect of selling goods online. What are the regulatory requirements for a seller to be able to sell his or her wares to a global audience. Do the retail sale of goods online to international buyers fall under the category of exports. Do the wholesale purchase of goods online for retail sale count as imports? To understand this we need to first understand what is an import export code in detail. Let us find out.
What Is An Import-Export Code?
An Import Export Code (IEC) is a ten-digit identification number that is issued by the Directorate General of Foreign Trade (DGFT). It is mandatory for all businesses that wish to engage in the import or export of goods for the purpose of its business.
Of course, not all imports and exports require an IEC. Transactions of small value, or small quantities, Do not need an import-export code. Such transactions can be carried out via international shipping companies. This approach is suitable for small businesses that are still figuring out the market for their products.
Also if importing or exporting goods is not a core operation of the business and incidental or occasional it can be done without the IEC number. Gifts of personal nature can also be sent without the requirement of IEC.
Basically, shipping through a courier company, registered post, India Post or Speed Post do not require you to quote any IEC details.
However, when the quantity of shipments becomes larger, it may be uneconomical to send products via courier. Moreover, in certain cases, penalties have been imposed on sellers for routinely shipping their products into India under the guise of “gift”. This miscategorisation of a sale transaction is likely to lead to legal consequences and action by the customs office.
What Are The Documents Required For Selling Via Amazon?
Let us now take a look at what are the requirements for a seller to be able to sell goods on an e-commerce store like Amazon.
- Basic Business & Product Information
- Tax Identification Number
- Bank Account details – Current, Savings or Overdraft
- Pan Card
- Address Proof
- ID Proof
Additionally, for distributors or resellers –
- Authorisation Letter on company letterhead
- Invoice
And for Manufacturers –
- Declaration Letter on company letterhead
For Food Related Products
- FSSAI licence with Annexure (Including Product Category Details) with validity details
Thus, Amazon by itself does not ask for your IEC number at the time of signing up. However, shipping through the portal would nevertheless require you to quote the number. This would be required at the stage of shipping, courier, receipt and entry of the goods into the other countries.
Options For Shipping Via Amazon
If you choose to register yourself as a seller on Amazon, you have two options open to you
- Fulfilling international orders on your own
- Using Fulfilment by Amazon services
Let us take a look at how the two options work.
Fulfilling international orders on your own
As a seller, you may choose to ship orders from India to another country all by yourself. This can be done by contracting with a delivery service portal that engages in international shipping.
In such a case, you become liable for customs delays, additional duties and taxes on the products.
To be safe, you could choose to have a contractual agreement with the shipping company for adhering to strict timelines of delivery
You may also engage the services of an insurance company to help safeguard your business from the risk of transit losses. Your insurance may cover theft, accidental damage, loss of package etc
Using Fulfilment by Amazon for International Orders
Through this method of fulfilling international orders, your products would be imported into the country where you intend to sell the products. These would then be stored in an Amazon fulfilment centre in that marketplace.
As a seller, you would need to export the goods to the destination country. You may also need to pay import taxes, customs duties and fees levied by the importing country.
This is especially helpful for selling in the United States, European Union, Canada and Japan
You may also use Amazon’s Multi-country inventory program. Under this, you can send your most selling products directly to countries where customers are buying these products. This reduces the time for fulfilment of orders.
In order to selling via Fulfilment By Amazon mode, you will need an import-export code for selling. Moreover, the courier company would ask for an import-export code in this instance. Hence, it is advisable to get the code before proceeding to start
Difference between Import Export Code And Authorised Dealer Code
The Foreign Trade Policy in India necessitates that an exporter or importer obtain an Import Export Code. While applying, you would need to furnish an Authorised Dealer Code. An exporter needs to obtain an authorised dealer code from their bank. This is a 14 digit code that is common for all customers of the same bank. It has to be from the bank where the exporter holds a current account. The dealer code is for all ports for the purpose of customs clearance.
Conclusion
Thus, depending on the volume of your business, the turnover and the method of delivery you choose for your business determine whether you require an import export code or not. The guidelines and notifications issued by the Directorate General of Foreign Trade clearly outline the eligibility criteria and applicability of the various regulations that come under its authority. So it is best to seek the advice of a trained and experienced professional with a technical understanding of the guidelines and the inner workings of the department. So if you are looking for further guidance regarding importing and exporting goods or need assistance in applying for any regulatory licence, get in touch with us and our team of experts will be happy to assist you with your requirements.
Read More:
