Buying Exported US Liquidation Pallets in Brazil
Purchasing liquidated stock to resell on ecommerce platforms such as Amazon is becoming more popular among buyers that are looking to put some extra cash in their pockets outside of their office hours. Some have even gone a step further and made this online resale their main stream of income. The United States have numerous companies and established, top-tier liquidators that make the purchase process a lot easier and this type of merchandise accessible to many.
With the rise in popularity of such merchandise, and the general appeal of products made in the United States that are considered to provide the best value for money, it is not unusual to see foreign companies interested in importing US liquidation pallets. These might be pallets of wholesale laptops, or customer return pallets and these are very easy to find through online wholesale suppliers or liquidation business.
So what if you live in Brazil and would like to import US liquidation pallets, or buy US liquidation pallets in Brazil? For that we have assembled a little guide to help you on your way.
If you intend to purchase US liquidation pallets and have them imported into Brazil, there are some rules and regulations you have to follow, and fees as well as shipping costs to consider. Imports into Brazil are subject to a number of taxes and fees, according to the U.S. Department of Commerce’s International Trade Administration (ITA). Anyone importing merchandise into Brazil must take three types of tax into consideration, the Import Duty (II), the Industrialized Product tax (IPI) and the Merchandise and Service Circulation (ICMS) tax. It is worth noting that Brazil is part of Mercosul, a partnership created by Brazil, Argentina, Paraguay and Uruguay in 1995, with Venezuela joining in 2012.
If you are looking to become an importer or exporter, you must register with the Foreign Trade Secretariat’s (SECEX’s) export and import registry and receive a password given by Customs in order to operate the SISCOMEX. This is the Foreign Trade Integrated system that facilitates reduction in paperwork filing and creates electronic copies of import documents that are sent to a central computer. Overall, registering with SISCOMEX comes at a substantial cost, due to minimum capital requirements. Import duties, in the majority of cases range from 10 to 35 percent and it is possible to view all the tariff rates on the Brazilian Ministry of Industry, Foreign Trade and Services website. Duties are levied on a cost, insurance, freight (CIF) basis. You can also find more information about the Industrialized Product Tax (IPI) as well as Merchandise and Service Circulation Tax (ICMS), together with links to Brazilian authorities’ sources, here.
Customs on imports a duty-free for CIF value below $50. However, as part of Mercosul, Brazil applies the Mercosur Common External Tariff (CEF) on a number of products. Capital goods are taxed at a rate of 0 to 14 percent, textiles, clothing and consumer goods are taxed at 16 to 20 percent. Metallurgical products have a 10 to 15 percent duty tax and agricultural products are taxed at 12 to 16 percent.
In total, import costs will include the import tax (II), the Merchandise and Service Circulation tax (ICMS) and the IPI. ICMS is the state government value-added tax applicable to imports and domestic products. To this should be added the $70 fixed charge for an import license, a merchant marine renovation fee of 25 percent on the amount of the freight and for plane deliveries between $50 and $3000 in value a 60 percent tax on a free on-board (FOB) value of the merchandise. All this combined can increase the price of a product landing in Brazil by 70 percent. It has to be mentioned that the ICMS or the value-added tax is not considered a cost for the importer as it represents a credit, which the importer debits once the product is sold.
There are also two types of customs clearance processes in Brazil, one of which is for sales value between $50 and $3000 of goods that are not for resale, while goods of over $3000 in value fall into the second process bracket, the Formal Clearance. This means that the import license may be required and the importer on record must be approved by customs and included in the RADAR system. The original commercial invoice and the list of products are required, have to be signed in blue ink and must be cleared by the consignee-designated broker. U.S. exporters also face no export controls specific to Brazil unless it is military equipment, information systems, and equipment of a sensitive nature.
There are also certain trade barriers as Brazil is looking to protect local manufacturing with local content requirements and increased tariffs. This is why it is advisable to look for a strategic partner in Brazil.
All of the above can point larger importers to the relevant sources when it comes to following the regulatory process. However, what if you are a small buyer, interested in buying merchandise by the pallet from time to time, and not interested in running a large import operation? In that case, you should first understand what liquidation merchandise actually is, how to look for the right source, and what its advantages are over ordering single products or buying from a local wholesaler.
What is Liquidation Merchandise?
Merchandise can be liquidated for many reasons, but in any case it comes at a price point that enables online resale business owners to earn some extra cash if they buy smart. For example, if a store is approaching the turn of the seasons, summer to fall, with its shelves packed of merchandise specific for the summer period, seasonal merchandise, you might see the store pulling the products off the shelves and organizing closeout sales, dispatching merchandise by the truckload in order to free up shelf space for incoming products.
Closeouts merchandise is not the only type being liquidated. You will find that companies are liquidating customer turned products, in various conditions, which can further differentiate the type of liquidated merchandise you can get your hands on. Some merchandise is refurbished, some might have been tested but is not working, some is sold as scrap and some is labeled as unsorted customer returns and is sold ‘as is’, meaning that no review of the merchandise has been done by the liquidator and no quality items have been cherry picked out of the pallet. This means that you could be purchasing a variety of products as well as scrap. So with that in mind, you might ask, why buy liquidated merchandise?
What is the Best Liquidated Merchandise?
While the majority of merchandise sold through liquidation companies can be unsorted customer returns, or tested products that are not working, there is still a huge appeal in liquidated merchandise. If you are just starting in the business, you might turn away immediately, but there are a few things to consider.
If you are in the market to buy a pallet of electronics, you might be looking to purchase either smartphones or laptops, or a combination of both maybe. Buying from a local wholesale supplier seems like a good option until you compare these prices to those on ecommerce platforms such as Amazon. Prices of single units are barely above the price you get buying from your wholesaler, leaving you no room for profit. This is where liquidated merchandise comes in with its major advantage: the price.
Closeouts merchandise is usually sold at 25 to 50 percent below wholesale price, and if you manage to find a reliable and reputable source, you should be able to snatch some quality items. But closeouts come at a higher price point for liquidated merchandise, and you have the option of going for refurbished electronics. Determining what the best type of liquidation merchandise depends on your preference, requirements and the market you are looking to supply. But one thing is for sure: you could secure yourself a healthy profit margin. However, this still does not give too much quality assurance, does it? Well for that, keep reading.
How Does Liquidation Business Tackle Quality Issues?
We mentioned reputable liquidators a few times in the article so far, and for a good reason. If you are looking to buy from the first source you run into and buy the cheapest products, you are setting yourself up for failure. Securing quality actually depends on you as much as on the liquidator. First, you have to do a bit of research and compare possible sources, reading customer reviews online or going to trade events to learn about liquidation companies and the business.
All this is necessary because you should always look to work with the best companies you can find. Reputable companies will look to work with reputable manufacturers and retailers. Working with top brands means that no matter if products are closeout liquidation, overstock or customer return, you are looking at branded products. In addition, if it comes to buying refurbished products, liquidators will often slap a 90-day warranty on refurbished items, which should be a quality assurance on its own. In addition top retailers will also look to work with top liquidators.
For example, Walmart liquidations are done through Direct Liquidation platform. Walmart, a huge name in the retail world, is using a liquidation platform to reach a wider online audience and sell their products directly to you, the buyer, avoiding the wholesale suppliers and keeping the costs low. This is how quality is ensured. In addition, no top liquidator will withhold any information from their buyers. This is why you will be provided with a manifest which will let you know exactly the condition, type and quantity of the merchandise inside a pallet. This way you know what you are buying and can choose to buy only the items you really need.
So, if you still haven’t purchased any US liquidation pallets in Brazil, but you are considering either to buy them or them import them yourself, do contact your local authorities and familiarize yourself with all the rules, regulations and requirements. Scout the local market as well and find the most reputable liquidators, perhaps some that have ties to reputable US liquidators and purchase merchandise there.
Henley currently works as a sales representative for Direct Liquidation, assisting businesses with product sourcing of liquidated merchandise from the largest retailers in the world. Whether you are looking for a pallet or a truckload Henley is here to help you grow your business.
View Henley’s Bio on YouTube.