News / Preparing for post-de minimis in the EU: 'start with the numbers'

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Continuing yesterday’s story on the implications for returns processes post-de minimis, today’s post considers how retailers and their supply chain partners can ensure they are best prepared for the EU changes.

Data quality, exposure, and supply chain partners will determine the success or failure of EU retailers operating in the post-de minimis trading environment, according to Al Gerrie, CEO of returns and post-purchase network ZigZag.

From 1 July, the EU will terminate its de minimis exemption for low-value imports, meaning parcels valued at under €150 will be subject to a flat customs duty of €3, with a handling fee, expected to be €2, taking effect in September.

A “fragmented B2C parcel clearance model” has been central to the explosion in ecommerce into Europe and North America, all made possible by de minimis exemptions allowing these goods to move duty-free, but the playing field is being restructured.

Recognising the anxiety this may be creating for retailers, Mr Gerrie told The Loadstar they needed to “start with the numbers” and only consider changing their supply chains once they have “properly modelled their exposure”.

He explained: “That means looking at EU order volumes, average item value, return rates, number of items per parcel, tariff codes, country of origin, and the value of goods coming back. Without that, they are guessing.

“The next priority is data quality. Poor customs data will become much more expensive, so retailers need accurate product descriptions, HS codes, country of origin, item-level values, and clear links between the original sale and the returned item.”

Central to all of this, Mr Gerrie said, was for retailers to consider the partners supporting their operations – not least those involved in post-purchase solutions, and their carriers, customs brokers, warehouses, 3PLs, and returns platforms.

Mr Gerrie said that without joined-up partners, the retailer’s supply chain would be left with gaps that would not only leave them blind, but would cost them money.

“The best retailers will want a single view of the order and return journey. They will want to know what was sold, declared, and what duty was paid; what was returned, where it went, and what happened to it. That is the level of control needed to protect margin,” he said.

Forwarders had become cognisant of this, he added, and having seen the opportunity for margin gains coming out of the US as a consequence of its scrapping of de minimis, had been looking to offer “complete solutions” to meet the needs of retailers.

One forwarder told The Loadstar: “The end of de minimis has moved us from the fragmented B2C model towards something better described as a consolidated B2B2C import structures, leading to retail flows being centralised.

“Goods are imported in bulk under B2B processes and then distributed domestically to end customers. This reduces administrative effort, improves customs consistency, and helps avoid additional handling charges increasingly associated with direct-to-consumer shipments.”

As far as sales go, while forwarders believe the changes will boost their margins, they are less certain whether terminating de minimis exemptions will prove a good or bad thing for them in the long run.

One told The Loadstar they expected a sizeable volume drop-off, with neither consumers nor retailers willing to shoulder a €3 duty  only refundable if the product had been delivered in faulty condition.

Others, however, see it more simply: “Any disruption to supply chains creates opportunities for forwarders, as we are the experts best suited to ensuring goods get to market. I don’t think it will hit demand too much, maybe change the shape.”