Dive Brief:
- DavidsTea established U.S. fulfillment operations in Chicago in response to challenges stemming from the end of the de minimis exemption, according to an April press release.
- After the exemption was removed last August, the Canada-based company said it faced higher costs and greater complexity in shipping orders from Canada to the United States, such as unpredictable delivery times and delays.
- In late March, the tea company began fulfilling U.S. e-commerce orders with a third-party logistics partner in Chicago, the company said.
Dive Insight:
Beyond mitigating trade challenges, DavidsTea decision to establish fulfillment operations in the U.S. will support long-term growth in the country, Sarah Segal, CEO and chief brand officer at DavidsTea, said during an April earnings call.
“This fulfillment platform in Chicago, which complements our warehouse and logistics operations in Montreal, brings inventory closer to U.S. customers, supports improved service levels and strengthens the company's ability to grow profitably south of the border,” Segal said.
The fulfillment center in Chicago will also bring a curated assortment of SKUs that can be shipped at a lower cost, Segal said.
Last year’s trade conflict between the U.S. and Canada weighed on the company’s cross-border volumes and led a reduction in sales performance, the CEO added. which impacted revenue for DavidsTea, the CEO added. In 2025, e-commerce sales decreased 7.6%, mainly driven by a 18.4% decline in U.S. sales.
With enhanced customer experience, Segal said she expects U.S. sales will gradually recover in the second half of fiscal 2026.
The de minimis exemption allowed imports under $800 to enter the U.S. duty-free prior to its removal. DavidsTea and other retailers like Shein and Temu relied on this benefit to enable cost-effective, cross-border parcel shipping.
