Tariffs were one of the factors that contributed to Ssense’s insolvency last year. Now, as the Montréal luxury e-commerce platform hopes to mount a comeback, it plans to open a new warehouse in the United States to avoid those charges to its largest customer base.
The news: The embattled fashion company told The New York Times last week that it plans to ease the hit of US tariff policy by opening a large fulfillment center in the Northeastern part of the United States early next year. BetaKit has reached out to Ssense for comment.
A third-party logistics company will run the new fulfillment centre, according to the report, which will import items from around the world to be sent to its US-based customers. Ssense will still keep its Montréal fulfillment centre to service customers outside of the United States, and its headquarters will remain in Canada. The main motivator for the move was the Trump administration’s removal of the de minimis exception last year, which previously waived duties on imports under $800 in value.
From the source: Right now, a customer from the United States would pay $97 in duties for a $990 cardigan shipped in from Ssense. However, if Ssense first imported the cardigan to a US warehouse at a hypothetical wholesale price of $300, the tariff would instead be around $30—shifting the cost calculation to a different step in its supply chain.
The context: Ssense is attempting to recover from a restructuring plan it drew up under insolvency proceedings last year, which staved off a quick sale by its lenders. The family of co-founders Rami Atallah, Bassel Atallah, and Firas Atallah managed to buy the brand back earlier this year and went on to cut more than 200 jobs to help stay afloat.
Final thought: The trade war between the United States and Canada intensified a couple of weeks ago after Canada bowed out of trade negotiations, and the US enacted sweeping 50 percent tariffs on many goods. The Canadian government responded by putting together an aid package intended to ride out the remainder of Trump’s term. Meanwhile, Trump has called for all Canadian companies doing business with the US to move their headquarters south. As the countries dig in for a fight, Ssense’s move shows the company preparing for the long haul.
