Early research! I was looking at products that are legal in the US and not in the EU - all kinds of foods, cosmetics, etc. (probably the reverse as well).
From a practical pov, I guess the plan would be to purchase from the US and have the products delivered to a UK warehouse (by air or sea). Maybe a pallet or half pallet.
From a legal standpoint, I guess the EU customer places an order in the EU with either a US company or at least a non-EU company (maybe on a website outside the EU). The the product is dispatched from the UK warehouse … maybe the UK end is an agent …
Questions:
Do you need to be a US registered company to purchase wholesale from US manufacturers?
Has anyone done this; am I getting too convoluted?
If the products are not legal in the EU, how is shipping them to the EU and selling them there legal? This seems like a violation of EU law.
I am going to close this for now. If you want me to re-open the thread, send me a PM explaining the legal issues and how this does not violate EU (or any other) law. And please keep in mind with your explanation that I am an engineer, not a lawyer.
up_the_junction sent me a PM explaining that it is legal for someone in the EU to purchase (at least some) goods that cannot be sold in the EU directly, as long as they are purchased outside of the EU and are then shipped to the EU. There is apparently some difference as to what may be sold in the EU directly and what may be sold externally and shipped into the EU.
I’ll be honest, I’m an engineer, not a lawyer, and I don’t fully understand the legalities involved. However, I have re-opened this thread. Let’s all keep in mind that posts which encourage illegal activities are prohibited here. The OP is not intentionally trying to violate any laws. If there are any legal issues involved that need to be clarified or dealt with, then by all means feel free to discuss those within this thread.
Thanks engineer_comp_geek. Yep, the legalities could use demystifying.
It’s definitely legit for me, in the UK, to buy products not legally sold in the EU, from the US. The anomaly between the US and EU derives from different regulatory standards or applications.
I think there used to be a big difference on for example, products reliant on animal testing - not sure now.
So, I guess the main question is to do with jurisdictional niceties … what would I have to set up from the EU end to positively answer a question like ‘It was bought from the US’ …
Other than the fact that you’re located there, what’s the advantage of getting the UK involved? It just seems to be adding the complications of a third legal jurisdiction with no advantage. Wouldn’t it be simpler to ship goods directly from the US to the EU without the intermediary stop? Or is this idea based on the fact that the UK is, for now, still a member of the EU?
I’m just using the UK as a distribution centre (somewhat grandiose terminology …) - getting the stuff across the pond in bulk before individually dispatching to customers. Not necessarily fixed to the UK, I guess - though in the UK communications with the distribution centre would be one less thing to think about.
Plus, my guess is, most customers, at least to begin with, will be in the UK. UK will be in the EU for some while yet.
How you purchase depends on the manufacturer. They set the rules for how they sell. Some only sell through distributors. Some only sell to a few wholesalers. Some sell to anybody. Distributors and wholesalers, in turn, have their own rules about who they sell to and at what pricing.
My company is an industrial distributor. Most of my vendors require that we stock X dollars of inventory to qualify as a distributor and many have large minimum orders.
Pricing that I sell for is generally quantity sensitive. You want to buy one fan control at “wholesale” pricing? No way. If you want 10 cases of 158 pieces each, then we can talk wholesale pricing.
Thanks Bob. This particular manufacturer does sell to anyone they just have a very large minimum order. They then talk about going via a wholesaler* but it’s been really difficult finding one.
One question you might have an answer for, is there any requirement a buyer from a wholesaler/distributor be a US reg company?
are ‘wholesaler’ and ‘distributor’ interchangeable?
Depends on the rules. For example, importing Kinder chocolate eggs is a felony and can get you arrested - even if they are personal items in your luggage. Apparently it’s almost as bad as drugs. They’re on the checkout counter as impulse buys here. Apparently Canadians are smart enough not to let their kiddies have the choking hazard parts.
But there’s a reverse example - the US does not automatically allow personal purchases of commercially illegal items.
And I’ll hazard a guess there’s a personal use clause in the EU? Importing a 20-year supply of your personal favourite illegal treat is probably not considered Ok, as it more looks like you’ll resell it? (Analogous to “trafficking quantities” of drugs?)
Like engineer_comp_geek, I’m not a lawyer. But are you sure you’re staying on the right side of the technicalities here? I can see the possible loophole that allows customers in the EU (which for now includes the UK) to buy products “in” the United States, even if it’s an online sale. The product is physically in the United States at the time of the purchase, the money is sent to an American seller, and then the product is shipped to Europe.
But the situation you’re describing seems different. If I’m understanding correctly, you’re planning on buying the products from the American seller and having them shipped to the EU while you own them. Then you’ll be reselling them to customers in the EU. I don’t see how that doesn’t qualify as sales that are occurring in Europe.
On a different note, is it a good idea to be setting this business up in the UK? I don’t follow the news that closely but the UK’s exit from the EU seems like a done deal. If your business is based around sales within the EU, why not set it up in a country like Ireland that’s going to remain in the EU? If your business is a success, you’re going to have to relocate in a year or two. So why not avoid that problem by doing it now?
The other issue being, I assume, that some foods simply aren’t labelled correctly to be sold in the EU, and the manufacturer can’t be bothered (yet) to do that labelling? Then presumably reselling in the EU would be illegal because you are violating labelling laws.
Similarly, there would be goods like TV products whose only purpose would be to violate copyright and similar trade restrictions. There has been an on-and-off market in Canada for devices that will receive US satellite signals, in violation of the CRTC rules about what can be sold (based on licensing of broadcasts and services like HBO).
The key here is whether the EU exception applies for personal use only, or allows you to resell? If all it took was a purchase in the USA, and then - poof! - it could be resold in the EU as is, then I’m sure a large number of EU corporations would be sending a representative to the USA to purchase goods.
Plus, I would imagine that if too much illegal material started arriving from Amazon via FedEx then the EU would change the rules pronto.
As I understand it, this -and other products - are not allowed to be sold in the EU because one of the ingredients exceeds EU limits but not US limits.
So perhaps my terminology earlier was unhelpful - these products aren’t ‘banned’ in the illegal sense (like guns, weed, etc), they are not licensed.
That means, while they cannot be bought/sold inside the EU, they can be bought from a US based company (and website).
That’s where I am at the moment …
ETA: I shoud add products like this are on Ebay, etc, but there are also a lot of Chinese fakes so an evidenced US supply chain is desirable.
If it comes to it, believe me I will relocate to Spain, France or Italy at the drop of a fedora - it’s internet based and remote warehouse/dispatching … I’m dreaming already!
On the practical side your terminology of distribution center was probably accurate particularly if you want to make money on this plan. I can buy sugar direct from the manufacturer but the minimum quantity they sell is 18 pallets each of which weight 2400 lbs. When you’re looking at international shipping you’re going to be buying everything by the container. Which is about the same size and the semi load above. So figure 18 pallets that are 8’ tall of each item you want to carry. It won’t take many items until you need a warehouse and multiple forklifts to manage it.
That’s also worth keeping in mind when you say it’s an online business that can move at the drop of a hat.
Depends on the company and the product, I suppose. None of the items we sell are export sensitive, so we would require that you wire transfer the money in advance and ship collect on your international shipping account, or to a US based freight forwarder. We’re willing to do it, but it has to be as simple as possible for us.
No. Wholesalers only sell to trade. You have to be tax exempt and generally they have large minimum orders. It’s not unusual for manufacturers to be cagey about who their wholesalers are and lots of wholesalers aren’t exactly customer friendly to small order one time deals.
Distributors may or may not be wholesale only, it depends on the market. Here in California, beer distributors only sell to retailers. In the industrial market, we distribute (sell) to all levels of customer, users (retail), re-sellers (wholesale) and OEMs.
Everyone sings the “if this works out it will be big business” song. Establish credit and give me a year long blanket order for shipments every other month and you’re going to get my best pricing. Otherwise, I’ve heard it all before. Money talks.
But again, by the time you are selling in any appreciable quantity, you are likely violating EU commercial laws on content. Plus, there must be some EU customs check on items coming in - and larger quantities would likely be stopped… Unless the profit margin makes it lucrative enough to ship in smaller package sizes, but even then, someone in customs will notice the volume - “Look, this is the 250th parcel of this stuff for the same address…”
I have read this thread in its entirety and still do not see how this proposed business could work without violating either Eu regs, US regs, or profit margin.
So EU has banned stuff for various reasons, while the US has not. Got it.
You want to import a large or largish quantity of these “Gray Market” goods from the US*. Got it.
You now have a warehouse full of gray market goods IN the EU. Got it.
How do you sell these items, and to whom? Why would your reselling the items be permitted while nobody else can sell them? This is where I lose track.
You can’t seriously think you are the only person who thought of importing this stuff - Alibaba probably will ship to EU, and I know most eBay sellers will. Try Amazon?
If this scheme would work, I’d guess there are people in Eastern Europe, in countries not in the EU, who could resell US products and undercut your prices.
I’m guessing you are thinking of cosmetics and/or industrial supplies.
If acetone or MEK or any number of other chemicals are banned under EU rules, you probably will not easily import the stuff in any quantity.
For planning purposes, the smallest container (ship type) is 20 feet long. If you want any significant discount, you may run into “min order: 1 container”.
a whole bunch of “US Products” come from China, Mexico, S. Korea, etc.
There is nothing illegal in buying goods overseas and importing them - as long as the goods themselves are not illegal in your country. The distinction here is in licensing. The profit margin maybe be pretty good but I’ll get to that if I can make sense of the organisational set up.
I don’t think of it as being wildly different to a regular US based supply chain - sure there’s additional shipping costs and legal technicalities, but the market is the market - isn’t it? Who knows how competitive the market for this product is in say, Italy …
It still comes down to: just because it’s legal for you to import goods you purchase abroad, does NOT necessarily mean it is legal to resell them inside the EU, particularly in retail quantities as a business rather than occasional personal sales.
This seems to imply that reselling inside the EU itself IS forbidden?
The idea is there is no reselling inside the EU. Distribution isn’t selling. The transaction takes place in the US as between an EU customer and a US reg company … I think.
