How eCommerce Brands Can Automate HS Code Classification and Stay Compliant
- Freya Jane
- Director of Customer's Success
Have you ever experienced a shipment being delayed due to an incorrect HS code? It is more common than you might imagine, and it costs eCommerce businesses a loss of funds and customers due to fines and delays.
However, what if the process could be automated to completely prevent these delays? eCommerce firms can now easily classify HS codes and maintain the smooth flow of their shipments with AI-driven technologies. Let’s explore how automation works:
What are HS codes?
Harmonised System codes, or HS codes, are international product classification numbers used in global trade.
Think of them as a universal language for customs authorities around the world. No matter where your package is going, the U.S., UK, EU, Canada, Australia, or anywhere else, these numbers tell customs exactly what’s inside.
These codes aren’t random; they follow a global system developed by the World Customs Organisation (WCO). The system uses a 6-digit base code that applies internationally, and many countries (like the US) extend it with extra digits. For example, the US uses the HTS code (Harmonised Tariff Schedule code), which builds on the HS system for local needs.
Here’s what an HS code does:
- Identifies the type of product you’re shipping.
- Determines the import/export duties or taxes you’ll owe.
- Helps ensure you meet trade compliance rules.
- Affects whether your goods face restrictions, bans, or extra documentation.
In case of incorrect HS codes, your shipment can get stuck in customs, hit with unexpected fines, or, in the worst situation, be denied entry.
Common challenges eCommerce brands face
Manually searching HS codes can be very time-consuming and challenging for all the industries involved in international trade, particularly eCommerce. Common issues are:
Big and complex product catalogs
If you sell hundreds or thousands of products, especially across categories, keeping up with each one’s HS code is a nightmare.
Different rules for different countries
The U.S., EU, UK, Canada, and Australia all have their own set of regulations for the HS system. Something classified one way in the US might need a different approach in Europe.
Limited internal expertise
Most eCommerce teams don’t have a dedicated customs classification expert in-house. And doing this task without the assistance of experts could lead to errors.
Manual work is error-prone
Manual work has the highest chance of errors. Even the most careful individuals make mistakes, especially when dealing with long spreadsheets and product details.
How does automation simplify HS code classification?
The exciting part is that you can use artificial intelligence (AI) to significantly improve the way your eCommerce brand handles HS code classification. Many automated HS code classification tools, such as iTariff by iCustoms, make it simple for the e-Commerce industry to cope with this challenge.
Here’s how AI makes automated HS code classification possible:
Natural language processing (NLP)
Automated HS code finder can read and understand complex product descriptions with the help of NLP technology, even when the language is messy or inconsistent. It’s like having a customs expert who understands every aspect of goods descriptions.
For example, if you are listing “hoodie,” “pullover,” and “sweatshirt,” it understands they are the same kind of products. This helps e-commerce industries handle product data from many sources without worrying about using the exact right words, which speeds up and improves classification.
Machine learning (ML)
With machine learning, the system doesn’t merely follow predefined rules; it actively learns and improves over time. The more data it processes, such as past shipments, classification, and even customs adjustments, the smarter it grows. It detects trends and complex edge cases that are missed by simple rule-based systems.
For example, the ML system modifies its recommendations to prevent repeat errors if specific products consistently result in customs enquiries or corrections. This helps you avoid needless delays or fines, lowers compliance risks, and eventually improves the accuracy of your HS code assignments.
Real-time updates
With AI-driven tool, you don’t need to chase every change in regulation. These tools automatically update themselves since they are designed to link directly to global databases.
Therefore, the system adapts on its own without you having to do anything if a country modifies its regulations or changes the way that particular products are categorised.
This gives you peace of mind that you’re compliant wherever you ship, saves your team time, and lowers the chance of missing crucial changes.
Bulk processing power
With an AI tool, you can classify thousands of products simultaneously in a single pass, thanks to bulk processing capacity. The system completes everything in a matter of minutes as opposed to hours or even days of manual product inspection.
In addition to saving your team a lot of time, this also lessens the likelihood of human mistakes that occur when people become overwhelmed by massive amounts of data. The tool ensures you stay quick, precise, and effective whether you’re introducing a new product line or updating current listings for various regions.
Wrapping up
To stay compliant in the competitive market, eCommerce businesses should consider automating HS code classification to minimise fines and prevent delays.
Let AI do the heavy lifting with tools like iCustoms’ automated HS code finder, which will guarantee that your products are classified promptly, precisely, and in compliance with the most recent regulations.
Ready to relieve your team from manual effort and speed up your cross-border operations? Let automation do the work so you can focus on growing your business.
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About iCustoms
iCustoms is an all-in-one solution helping businesses automate customs processes more efficiently. With AI-powered and machine-learning capabilities, iCustoms is designed to streamline your all customs procedures in a few minutes, cut additional costs and save time.
Simplify Customs with our Powerful Customs Management Software
Automate declarations, track shipments, & ensure compliance.