Case Study: Beginner Fashion Importer Tips

Here at One World Courier we help a lot of small business owners achieve their dream of becoming an online fashion retailer. We do this by providing our online Freight Management Platform, to connect retailers with freight and shipping companies on our digital marketplace. We built a platform similar to Booking.com, WebJet, Hotels Combined etc, where customers enjoy the convenience of getting instant freight quotes, and confidently booking a freight consignment. From here, everything is set in motion, from shipping and address label creation, to carrier notifications and our very own customer service and support teams jumping into action to manage the shipment on behalf of our customers.

I own a small online fashion store, but I’m not confident importing – can you help me get started?

I own a small fashion business where I have a mix of local designers, and also my own range of clothing which I made in Australia, but now I’m beginning to see the benefits of manufacturing as well as going direct to overseas supplies. I want to start making my own garments, as well as import ready-made clothing samples and finished garments. I have a lot of ideas about new designs and fabrics, but I want to test the market here in Australia first. I need to do this so I know that I’m not risking money from the outset.

Here’s the situation

• I don’t know much about how to import.
• I have manufacturers in Bali and Vietnam.
• I’m unsure about customs procedures, duties and taxes, licences for import/export.
• When and how do I pay invoices to overseas manufacturers and suppliers?
• Do I have to pay GST on the goods when they arrive in Australia?
• What happens if the goods are damaged?
• How does the whole process work from getting my factory to pack the goods into a box and then how do I organise the shipping to Australia.
• What’s the most economical way to send the goods to Australia, is it air or sea freight?
• How are the goods delivered to me here in Australia?
• Are there any additional costs I should know about?
• What can go wrong that could cost me more money than I have budgeted for?

A step-by-step guide to get you started

1. Export & Import Licences, Documentation

• Australia doesn’t generally require an import license for businesses to import goods into the country. However, the exporting country might have certain export restrictions or require specific licenses, so it’s always good to check first. For fashion and apparel, it’s pretty straight forward.
• Ensure your overseas manufacturers and suppliers are fully aware of their local export regulations. Additionally, this is where having a local agent overseas can be really helpful. By having a local representative on the ground who speaks the language and is skilled and experienced dealing with export-specific manufacturers and suppliers, takes a great deal of stress off your shoulders.
• A Commercial invoice and a packing list is required for all shipments. This details every item contained in your shipment, and will be checked by Australian Customs Service every time. Digital documentation is a fast method of letting customs know of the impending shipment, thereby allowing pre clearance procedures to commence, which can speed up delivery of your goods.

2. Australian and International Customs Procedures

• Before your goods arrive in Australia, you’ll need to be well-prepared and be familiar with filing out Customs Entry. This document is essential and provides details about the goods, their value, and their origin.
• Goods cannot be cleared from customs until the customs entry is lodged and any duties, taxes, and charges have been paid. There are lodgement fees to be paid to Australian Border force as well. Find out about lodgement fees and their costs.
  The Australian Border Force (ABF) applies Import Processing Charges (IPCs) when you make a declaration for imported goods.

3.Duties and Taxes

• You will more than likely need to pay import duties depending on the type of product you’re importing. The Australian Border Force website has a wealth of additional information on the cost of importing goods into Australia.
• The Australian Border Force provides the necessary information about tariffs and duties on their website. Use the Working Tariff Document of Australia to find the exact rate for your product. It’s not that straightforward, so be prepared to do some reading, just to make sure you’re confident and aware of your obligations.

4.Goods and Services Tax (GST)

• GST applies to most imported goods. There are very few exemptions, however, there is a lot of information about GST compliance on the ABF website.Payment of GST on taxable importations
• GST is calculated at 10% of the Value of the Taxable Import (VoTI). The VoTI is the sum of the customs value of the goods, any customs duty payable, the cost of transport and insurance. We have written a guide to calculating the VoTi to help you understand how GST is calculated when importing goods into Australia.

5. Tax Deductions

• Costs associated with importing, such as shipping, insurance, and import duties, are typically tax-deductible for businesses as they are considered business expenses. It’s always recommended to talk with your accountant about what you can and can’t claim.

6. Shipping Process and Damaged Goods

• Shipping goods such as clothing and accessories is generally pretty safe, especially where incidents of broken goods is concerned. One of the main areas of concern is water damage, if the goods inside are not protected by plastic. Water damage for imported clothing can be caused by careless handling procedures at airports during loading and unloading, as well as if they have been left in some dark, damp corners of a clearance warehouse until being processed. This is also a good time to mention that it’s essential to communicate to the shipper that the boxes, cartons etc used to house the goods must be of a high quality and be strong and protective enough to keep out the elements. Additionally, packaging declarations can also be required and are essential to pacify Australian Quarantine & Inspection Service (AQIS)
• Always insure the goods being imported, especially when you’re first starting out. This will take a bit of the stress away, knowing if something goes wrong, your hard earned money is not wasted. Insurance for imported goods is relatively cheap, plus, you can of course claim the tax deduction on it.

 

 

7.Shipping Process and Freight Forwarding

• When you’re new to importing, it’s good to have someone on your side you can trust. Someone who is familiar with the process and will help you, no matter how inexperienced you are. This can be either One World Courier or you can work with a Freight Forwarder. Freight Forwarders manage the shipping logistics for you, especially when it comes to customs clearance, paperwork and the like. Or, if you’re like many of the One World Courier customers, you can manage the whole process and get help and advice from our Freight Operations and Customer Service Teams. Our in-house teams were created to help business owners to organise their own imports, saving time and money along the way.
  One of the benefits working with us is having the support of a team of skilled and experienced freight people who will actually teach you how to set up the correct documents for import, as well as helping choose the best international air courier freight quote that suits your needs and time frames. Our Freight Management Portal is used by 1000’s of sole traders, small business owners and large organisations and companies alike.

8. Air vs. Sea Freight

• Air Freight: It stands to reason its faster but generally more expensive than sea freight. It’s ideal for smaller shipments, urgent samples, or high-demand items where speed is critical. This is often the best shipping choice for topping up seasonal best-seller products, keeping your more profitable SKU’s on the shelves. Choose from a wide range of fast and reliable air courier services from the like of DHL, UPS and FedEx – all One World Courier freight partners for the past 6 years.
• Sea Freight: Much slower than an international air courier, but as you would imagine, it’s significantly cheaper, especially when you’re confident the manufacturer or supplier has ticked all of the boxes – so to speak. However, as the freight industry is for the most part a manual process, with a lot of touch points along the way, you might be unlucky and have to deal with additional costs such as bonded warehouse storage fees, especially if there are delays in customs clearance. If there are any Australian Border Force ‘customs’ delays, it will more than likely be inaccurate paperwork, further documentation requirements or non payment of duties and taxes.

 

9. Unexpected Costs

• Storage fees: Ff your goods can’t be cleared from customs promptly, then there can be high storage costs to pay before the goods can be released.
• Quarantine fees: If your goods need to be inspected or treated, this can cause delays, which push up the cost. If you’re bringing in goods containing wood, the of course, it’s common that the goods will be inspected by ABF.
• Fumigation fees: If your goods contain organic materials made form timber, then you can arrange for fumigation to be carried out by the manufacturer or supplier overseas. Any fumigation must comply with Australian standards and be accompanied by the correct documentation, which is submitted with all shipping documents.
• Penalties: Importers have three days during which to collect their goods from the holding facility before storage fees apply. Accordingly, for container goods, wharf storage fees can be between $100 and $250 per container per day. Airlines (who allow importers two clear days to collect their goods) can charge anywhere from 25 cents per kilo per day and upward..
• Currency Fluctuations: If you’re paying in a different currency, changes in exchange rates can affect costs.

Tips:

• Always budget for more than you expect. It’s common to encounter unexpected expenses when importing goods into Australia.
• Partner with a provider of freight services with a reputable and trusted customer support team who will help navigate customs regulations and paperwork.
• Maintain a good relationship with your overseas suppliers. Clear and regular communication can prevent misunderstandings and delays. Even better, employ and local agent who will represent you. Be prepared to pay them either a flat commission, fee or a percentage of the total cost of the goods. It’s well worth the investment.
• Regularly review and update your knowledge on import regulations and requirements, as they can change quite frequently. Go to the Australian Border Force website for all the additional information you may need.

 

 

Other things you might want to consider

1.Labeling Requirements

Australia has specific labelling requirements for textiles, clothing, and footwear etc. Australian Border Force are very particular, so make sure your manufacturer or supplier has the correct labels on every item. Always see the labels before finalising your shipment, even if it’s a sample, it must reflect the finished product.

• You’ll need to clearly label the country of origin (where it was made_.
• Ensure the fiber content is clear and understandable.
• Check any washing, special care instructions that need to be attached.
• Make sure the sizing information is accurate and clearly visible.
• Eco-friendly and Ethically Made materials and garments are well-respected by customers. If this reflects the values of your company, and the products meet the standards, then it’s recommended to add these labels.

 

 

2.Quality Assurance

• Regularly review the quality of the samples received from manufacturers to ensure they match the agreed-upon specifications and quality standards. Quality inconsistencies can damage your brand’s reputation. It’s quite common for fashion retailers to be inspired by the work of other designers, so they go out and purchase a garment and use it as a template for their own design.

  Whist the ethics are questionable, many apparel designers are inspired by the work of their peers, so it’s a natural instinct to discover how these popular designers approach garment design, and especially the quality aspect of it. When inspecting a garment for quality control (for your own manufacturing brief), you can look at the stitching, piping, hemming, interlinings, fusing, buttons, clasps, hooks, drawstrings, padding, plastic stiffeners etc.

  Another great cause of concern for retailers of fashion garments, particularly in the female fashion niche is the look and feel of the fabric, and of course the ‘fit’, which is dependent on the original pattern used to create the garment. This is why it is critical to carry out sampling before placing large orders. Having said that, it can also be the case where despite diligent instruction and a lot of back and forth discussion, some orders can be sub-standard and not to the original specs.

  This can be the nature of manufacturing overseas, and can be improved by

  1. Having your own representative who lives close to the manufacturing location. Someone who will liaise with the manufacturer or supplies and carry out frequent QA during the different stages of manufacture or supply.

  2. Budget for going overseas to see the manufacturer or supplier yourself. Let them know who you are, and communicate your expectations for the high level of workmanship.

3. Intellectual Property (IP) Protection

• If you have unique designs, consider seeking protection for them under Australia’s intellectual property laws. This might include registering trademarks, designs, or even patents if there’s a unique method or material involved. As we mentioned earlier, using someone else’s designs can also result in

4.Biosecurity Risks

• Some natural fabrics or dyes may have biosecurity risks associated with them. The Department of Agriculture, Water and the Environment sets these guidelines. Familiarise yourself with any potential issues, and make sure what you’re importing is free from prohibited substances.

5.Exchange Rates & Payment Methods

• • As you’ll be dealing with overseas manufacturers, be aware of the ever-fluctuating currency exchange rates, and factor them into your costs.
  • Negotiate clear payment terms with manufacturers. Letter of Credit (LC) or Telegraphic Transfer (TT), WISE are common methods in international trade. For complete peace of mind, always talk with an expert or your bank to decide the best option for your needs.

6. Cultural Sensitivity

• Dealing with manufacturers in different countries often means navigating different cultural norms and expectations. Understanding and respecting these can help in building strong business relationships. Once again, this is another reason to employ a local representative or agent in the country of export. Someone who already has strong ties with the local community and is also respected and valued.

7. Legalities

• Stay updated on any international trade agreements between Australia and the countries you’re importing from. These agreements can impact tariffs and other import-related costs.
• In case things go terribly wrong and a dispute arises, it’s good to be prepared. Small claims in shipping can be common, and will be heard in a local mediation centre. It’s generally an informal hearing, however, it pays to be thoroughly prepared for such events. This why it’s important to keep accurate records and agreements filed away in one neat location on your computer, or even better, in the Cloud.

 

 

8.Sustainability, Ethically Made

• Consumers are increasingly interested in sustainable and ethical fashion. Ensure your overseas manufacturers follow ethical practices, and consider eco-friendly fabrics and dyes. Ethically made garments and goods are being promoted more frequently online, as consumers become more sensitive and support businesses who share the same ethical view points. Looking back at our recommendation for labelling, it’s also a good idea to promote this on every label and even on garment tags and packaging.

9.Networking

• Connect with other small fashion business owners in Australia. They can provide insights, share their experiences, and sometimes even help with joint orders to save on shipping.

Starting an import business can be challenging, but with diligent planning, continuous learning, and the right network, it can also be very rewarding.