2.3 HS Codes: TipsHS Code Tips
Tips for Your Business Strategy: HS CodesDetermining the HS and Schedule B codes for your products can be complicated, depending on how many products you have and how diverse your product line is. The strategies below can help you simplify the product classification process.
Working with Your SuppliersIf you need to classify a large number of products, asking your suppliers to provide HS and/or Schedule B numbers could save you time. If you resell products that you purchased wholesale, your suppliers may have classified them already, especially if those suppliers have exported or imported them in the past. If you’re reselling products imported from an international supplier, then the shipping documentation probably lists the HS number and may contain the full Schedule B number. Keep in mind that modifying the product may change its classification.
Always remember, though, that you, the exporter, are responsible for correct reporting to the U.S. government, regardless of any classification your supplier may suggest. This is an important consideration when determining whether simply to accept your supplier’s suggested Schedule B numbers.
Some additional suggestions for using your supplier’s HS codes include:
- Use them as a guide to direct you to the approximate location of the code in the Schedule B book, and then use your own analysis to determine which code you will use.
- Conduct your own product classification, and then use the supplier’s code as a way to double-check your work.
If your company has thousands of items in its inventory, you may not need to classify all of them, especially if you’re just beginning the classification process. Remember, you only need to assign Schedule B codes to items that will actually be exported. If you plan to sell only some, rather than all, of your items to international clients, or if you think there is no market outside of the United States for certain products, then classify only the ones you plan to export.
Start by classifying your top-selling products. Use these criteria to determine which products to code first:
- Products with a history of international sales, if any
- Top-selling products overall
- Products you have determined to be the top prospects for international sales
- Items in sales materials (e.g., catalogs, your website, etc.) that can be accessed by international customers
GroupingAnother time-saving strategy for classifying large numbers of products is to group them by product type. As noted earlier, the Schedule B book is divided into chapters, with like products found in the same chapter. For example, Chapter 65 addresses headgear. Grouping all your hats, helmets, and headbands together and classifying them simultaneously according to the information in Chapter 65 would be much easier than constantly jumping from product to product in your portfolio. By focusing on one chapter at a time, you will become much more familiar with the classification codes in the chapter so you can quickly identify the correct codes for your products.
Worldwide Sales PermissionIf you sell products that you didn’t manufacture, be sure that your distribution agreements allow you to resell the products internationally. Some manufacturers don’t want their products sold internationally because they are concerned about issues like liability and warranty coverage. If an item you offer domestically can’t be sold internationally, don’t spend time classifying it.
PricingIn general, you’ll want to select products for cross-border eCommerce that deliver the margins you seek after subtracting the costs of getting the product to the buyer. At the same time, you need to be conscious of what competitors are charging for similar products. You can easily get this information the same way buyers do: by comparing products and prices online.
These days, on- and offline exporters must carefully monitor the prices of their products and the strong dollar. For example, some buyers may have to pay 25 percent more for your product this year than last. Depending on the product and the market, little profit may be possible from the sale, but you can take some practical, common-sense actions to help manage the strong dollar’s effect on your pricing and profit.
eCommerce Industry eCommerce Payment Customs Trade Documents