Thought Leaders in E-Commerce: Brian Dhatt, CTO of Borderfree (Part 5)

Sramana Mitra: So you calculate duties based on data that you have. You collect that duty when you deliver the goods and pay the duty after the fact.

Brian Dhatt: We show it to them right during checkout. If you’re checking out on J.Crew, you’ll see the duties that would be assessed and pay for them right then. Anything above and beyond that, we actually get billed by the government or by the carriers. We will pay no matter what that duty comes in as.

Sramana Mitra: If you have under-assessed the duty, then you’re going to be taking responsibility for that?

Brian Dhatt: Exactly.

Sramana Mitra: How often does that happen?

Brian Dhatt: Quite often actually. You’d be surprised. It’s our business to be really good at it. It’s really one of the core aspects of our business to be great in compliance and classification. At the same time, it’s a very error-laden process on the customs side. If you’re selling a shirt or coat, the type of materials matter. Each can affect the duty rate. You could have one custom assessor who would be charging different amounts for the same coat. We work through that. We have an auditing process to walk through.

At the end of the day, we can’t get it correct all the time because sometimes, the catalog information we might have would not be complete enough to fully rate the item. Part of our business is to say, both to the customer and to the retailer, “You’re never going to be responsible for anything outside of what we quote because we’re going to take full risk on that.” That’s one of the reasons why retailers enjoy working with us. We do take away that uncertainty or risk that they would see normally on things like currencies or duties.

Sramana Mitra: Very interesting. Do you have to deal with the corruption in these customs organizations? I know from my experience with India that it’s a very corrupt part of the system. People are asking for bribes all the time.

Brian Dhatt: Our model is completely above board. Meaning, we never try to under assess or we never try to call a product something that we don’t believe it to be in order to reduce duties and taxes. We go with a very transparent model to say, “We’re going to show you exactly how we calculated the taxes and duties on this item. We are fine to settle up with you if you think that we’ve done this incorrectly.” We stay very clean within this because we think that helps our ability to clear customs faster. If they see a Borderfree item coming across the border, they know that we have fully assessed the duties and the government is going to get what it should. Luckily at this point, we have not had any issues there. We’ve had a very good relationship with the customs bodies and a good track record of clearing customs.

This segment is part 5 in the series : Thought Leaders in E-Commerce: Brian Dhatt, CTO of Borderfree
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