Customer story

Performance-focused cycling company creates a smooth path for cross-border tax transactions

Results

Increased compliance
Cost savings
Improved processes

Summary

Results

  • Increased compliance
  • Cost savings
  • Improved processes

Tax challenges

  • Tax complexity
  • Compliance risk
  • Manual costs
  • Process inefficiency


Products used

Avalara Item Classification
Assigns country-specific tariff codes to products for more efficient and accurate customs documentation.


Benefits

  • Confidence in duty and tariff codes
  • Increased margins due to correct custom calculations
  • Assured goods will flow as expected
  • Less rework, saving time and energy

Company overview


Customer
Anonymous

Industry
Retail and ecommerce

As athletes, the company founders set out to create a leading line of cycling footwear, made for aggressive mountain biking. They began designing and manufacturing their first line of cycling shoes driven by specific technical and performance demands of the sport.

Tax challenges


As items arrived in the United States from manufacturing facilities in China, misclassifications of the company’s inbound shipments not only caused disruption in their receipt of goods, but also significant overcharging of duties and tariffs that had to be recovered.

Classifying items for duty calculations is highly complex. There are no universal standards from country to country, and the rules within any given country can be mazelike. In the case of footwear, the content and construction of the various parts of a shoe are key elements and can significantly impact the tariff and duty rates.

In 2019, with close to 20,000 units inbound, the company discovered their product was held up by wrong classifications. The duty rate went from 5% to upwards of 20%, resulting in a significant impact to margins. It was clear having a resource that understood the product and how it was manufactured would be key to proper classification.

Why Avalara?


The company’s freight forwarding service recommended they use Avalara for item classification. The Avalara Item Classification team invested time to understand the various products and manufacturing processes. The solution covered not only the codes for import into the U.S., but also for export to Canada, which was quickly becoming a new priority.

After the initial work was done, Avalara reviewed the full rationale of the codes they had assigned with the client. With confidence, the codes were loaded directly into the ERP system.

Results


After experiencing the delay of their goods in customs and the overcharge of tariffs due to misclassification, knowing that customs duties wouldn’t be the source of anymore surprises was true peace of mind. 

With a new product launch on the horizon — one with all-new construction and materials — the company could rest assured there wouldn’t be any problems at launch. Item classifications had been done and verified. 

Geographic expansion was easier as well. Having confidence in item classification has assisted the company with expansion into 30 countries with more sales channels on the way.

Customer
Anonymous

Industry
Retail and ecommerce

Tax type
Sales and use, cross-border duties and tariffs

Tax challenges

  • Tax complexity
  • Compliance risk
  • Manual costs
  • Process inefficiency

Products used

Avalara Item Classification
Assigns country-specific tariff codes to products for more efficient and accurate customs documentation.


Benefits

  • Confidence in duty and tariff codes
  • Increased margins due to correct custom calculations
  • Assured goods will flow as expected
  • Less rework, saving time and energy

“During the calls with the Avalara Item Classification team, they really dug in to understand our products and manufacturing processes. I could tell there was a real sense of urgency, and a serious commitment to understanding our needs.”

—Cycling footwear company employee

“During the calls with the Avalara Item Classification team, they really dug in to understand our products and manufacturing processes. I could tell there was a real sense of urgency, and a serious commitment to understanding our needs.”

—Cycling footwear company employee

Join the 30,000+ customers that automate tax compliance with Avalara
See how easily our solutions work with your business applications.
Curious how we can help with your specific tax challenges? Just ask.