Financial Daily from THE HINDU group of publications
Thursday, Dec 09, 2004
Marketing - Online Marketing
Amazon zeroes in on NextLinx solution for price determination
Raja Simhan T.E.
Chennai , Dec. 8
THE e-tailing giant Amazon.com Inc is using Indian expertise to develop a system that will help its customers identify products and their prices, and help the company comply with varied Customs regulations and smoothly ship the products to customers spread across the globe.
The $5-billion US-based company, one of the world's largest online stores, ships millions of products to more than 200 countries.
This means that depending on the destination, its products are subject to a wide range of Customs requirements and levies.
And helping Amazon.com do this is the US-based NextLinx Inc, which has a presence in Bangalore.
NextLinx used local expertise, including Indian Customs brokers and others experienced in global trade, to enable Harmonised Schedule (HS) Classification used by Customs authorities to assess duties, VAT (value-added tax), excise, other taxes and import/export controls.
They provided real-time global trade content to help determine landed costs and to classify products for shipment to more than 40 countries to which Amazon.com's products are exported.
This was part of a pilot project leading to the main project, to take off next year, said Mr Vikas Dhawan, Director of Global Content, NextLinx India.
An agreement between Amazon.com and NextLinx was signed early this year.
"We have completed the pilot project, and the main project will kick off during 2005," he said.
Amazon.com got the benefit of this expertise at a fraction of what it would have cost in the US, he said.
For instance, Amazon.com requires HS Classification for each of its one million plus products for 40 countries, which means 40 million classifications.
In the US, each classification costs between $3 and $10, and the same is done in India at 5-10 per cent of this cost, depending on the complexity involved, he said.
Under the agreement, Amazon.com uses the NextLinx solution to help its customers in more than 40 countries make well-informed buying decisions.
These customers will be able to get an accurate idea of the total product cost, including all country-specific Customs duties, taxes, and tariffs at the time of making the purchase on the Amazon Web site.
This is a high-end BPO opportunity in the field of HS Classification.
In other words, when a customer clicks "buy" on Amazon.com's Web site, NextLinx's huge database of trade information will analyse the product, check the relevant customs rules and regulations for shipping it to the country of destination.
The customer will know exactly how much he has to pay, said Mr Dhawan.
This project deals with a crucial aspect of online stores.
A key challenge they face in managing global trade is accurately calculating door-to-door delivery costs and ensuring that shipments comply with international shipping regulations.
HS Classification requires not only adherence to the General Rules of Interpretation (GRIs) - promulgated by the World Customs Organisation (WCO) - but domain expertise too.
For instance, the person classifying an electronic product or component should have knowledge of the product attributes (which may not be stated explicitly by the manufacturer) as well as of the proposed end use.
This requires someone who not only has extensive domain experience in that field, but has had practical exposure and experience in HS Classification for Customs clearance purposes, he said.
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