The shape of shipping, returns and growth in Apparel

Q: Apparel brands importing to Canada have high duty rates. How can they manage these costs efficiently?

A: Apparel brands do deal with some of the highest duty rates in the market, which can easily cut into profits if they aren’t mitigated. To avoid paying those duties upfront, on products that might otherwise sit in a US warehouse for several months, some brands choose to hold products in a customs-bonded warehouse or free trade zone. This means they only pay the duty when the product is sold to the customer. It’s a smart way to maintain cashflow.

Q: So how can Landmark Global help to manage the process to avoid the duty?

A: Helping businesses gain these advantages is a big part of what we do. We collect from free trade zones, bonded warehouses, from sea and air cargo, while making sure stock heading cross border is cleared and moved on quickly to the end customer.

Things need to run like clockwork. Being a bonded US and Canadian carrier enables us to move freight through both countries without getting held up at the border and without paying duties and taxes until the goods reach their final destination. It makes it much easier for brands – and ensures the customer gets their products quickly.

Q: Returns are always high in apparel. How can brands manage duty and drawback when products are constantly moving back and forth?

A: Returns are a big part of the apparel business. Customers often buy a few sizes or colours, try them, send back what doesn’t work and so on. When you’re dealing with such a high rate of returns, brands understandably look for a way to recoup the money from duties and taxes easily, which again helps cashflow!

In Canada we have something called the Credits Program, which lets businesses digitally claim back duties on returned items. We’re one of the few brokers who are licensed to do this, the whole process takes around 3 months. Unless brands work with a licenced partner, the alternative is to use the much slower, paper-based process that can take up to 18 months.

We also make the returns process simple. We work with Canada Post, who has around 8000 drop-off points, so customers have an easy, local place where they can send products back and have a more convenient returns experience.

Q: How can Apparel businesses offer more convenience to customers?

A: In a word: omnichannel. Many brands in Canada now use their physical stores as mini-distribution hubs, from where they can ship products directly to customers. It’s a good way to manage inventory at a store-level, and it gets products out faster. On the returns side, customers love convenience so letting them return items they bought online to a physical store for a quick refund is a plus. Thinking about how to use all the channels you have can help to simplify things for both customer and business.

Q: How can businesses manage quality control for returned items?

A: It’s so important that clothing products are in good shape, or else you immediately lose the value of that inventory. Returns need extra attention, as brands don’t have the same oversight. Businesses tend to have some processes in place to inspect returned items, and we often get asked to support with this.

As part of our returns checking service, we inspect returned items when they come back to the warehouse – looking for any stains, damage, signs of wear and so on. Only once we’re confident we can verify the condition will a refund get processed. It’s a way to speed up the customers’ return experience and protect our customers from potential losses if products are damaged.

Thank you Ryan!

North American apparel brands operate in a market that moves constantly. Customers are empowered to seek the experience that suits them; buying, trying and returning as they choose. It's up to businesses to manage the complexity this creates, with a robust, resilient logistics operation that can protect customer experiences, keep cash flowing and simplify management.

For more information about how Landmark Global can help take that complexity off your hands, reach out to one of the team.