Logistics of Business Operations between the US and Colombia

Purpose

After experiencing success in local markets, S-Girl, a retail company specializing in high-end retail, has decided to expand its operations to Bogotá, Colombia.

Company Information

At this time, S-Girl is based in Miami Beach, Florida. The company’s distribution centre is also located in Miami Beach, Florida. The company completes order intake, processing, and shipment in-house through on-line sales. However, carriers, transportation, and logistics are outsourced. The company uses proprietary in-house applications for inventory control. These applications are designed to track stock and provide notifications when items are low or out of stock. Custom declarations are not handled with inventory control. Rather, customs declarations are done at the shipping API level. At this point, the company integrates with UPS and USPS (both of which are used for shipping by the company), which lets us input some standard information for customs at the port of entry. However, customs declarations regulations differ from port to port. Furthermore, through using UPS and USPS, the company has reduced cost and expanded geographic reach in order to ship products to consumers. Most of the company’s products are obtained from the US, Australia, and Canada. These places are chosen due to quality assurance and aesthetic fit with the company’s product. The company prides itself on balancing efficiency, cost, and consumer satisfaction. The average order has 1 or 2 items that range from $100 to $250.

Colombia Customs

Corruption is a major problem in Colombia customs. In fact, “embezzlement is a considerably bigger problem within Colombia’s tax agency (DIAN) than was expected before… Since 2004, the government lost $1 billion by reason of fraud embezzlement”. Despite this, Colombia has 3 different tariff rates. These rates differ according to the type of product. Typically, tariff rates are “0 percent to 5 percent on capital goods, industrial goods, and raw materials not produced in Colombia; 10 percent on manufactured goods; and 15 percent to 20 percent on consumer and ‘sensitive’ goods”. The following shows the import process from the US to Colombia:

  • Obtain necessary permits.
  • Purchase, complete, and file the Import Registration Form.
  • Obtain approval from the necessary governmental agency.
  • Work with a financial institution to pay for the imported goods.
  • Export the goods to a Colombian port.
  • Obtain the Customs Manifest.
  • Complete the Import Declaration and/or Andean Custom Value Declaration.
  • Pay all required fees.
  • Provide documentation and receipts to Customs.
  • Receive goods.

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