OT: Canadian Dollar Aiding Online Retailers

[Guest guest]

Hey y'all,

Seems to me this oughta double the orders we receive from our Canadian

cousins. ;-)

 

Y'all keep smiling. :-) Butch .. http://www.AV-AT.com

 

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September 28, 2007

Canadian Dollar Aiding Online Retailers

By IAN AUSTEN

 

OTTAWA, Sept. 27 — The ritual has resumed, as it always does when the

Canadian dollar rises against the United States dollar. Large numbers of

Canadians cross the border in search of lower prices and greater selection

at American stores. But when the Canadian dollar reached parity with

American currency last week, there was a new twist: online sales now let

Canadians bargain-hunt in the United States without leaving home.

 

If early indications hold true, some of the biggest gains from the Canadian

dollar's strength — it settled in New York late Thursday at 99.87 cents —

may be at online retailers based in the United States. Because Canada's

small population compared with the United States, some 33 million versus 302

million, makes online operations less cost-effective, relatively few

Canadian retailers, less than a third by some estimates, sell on the Web.

 

That limited local competition, combined with the strong Canadian dollar and

the moderate cost of expanding into Canada, make the country a tempting

target for American electronic retailers.

 

No one measures Canadian crossborder spending, virtual or otherwise, but

Paulina Sazon, a direct-marketing strategist at Canada Post, said the volume

of shipments through the Canadian postal service's special service for

American retailers increased 38 percent over the last year. A spokeswoman at

UPS Canada, Christina Falcone, said her company had also registered

" significant growth " as a result of the strengthened Canadian dollar.

 

Representatives of retailers tell the same story, including those from L. L.

Bean, Crate & Barrel and Brookstone: all posted noticeable increases in

sales to Canada in the last few months. Carolyn Beem, a spokeswoman for L.

L. Bean, said double-digit growth had prompted the company to increase

marketing efforts aimed at Canada and to begin advertising in this country.

 

" We like our Canadian neighbors, and they seem to like us, " Ms. Beem said.

 

Several retailers, including Amazon.com <http://amazon.com/>, declined to

discuss their Canadian trade, while others, like Lands' End, did not respond

to requests for comment. In some cases, American retailers could not say how

much of their increase in Canadian sales was attributable to the weak

American dollar and how much resulted from increased marketing efforts.

 

Ms. Sazon of Canada Post said that research conducted by her office in

conjunction with a retailing research firm, NPD Canada, showed strong

interest among Canadian shoppers for buying online from the United States —

but not from just any American retailer. According to the study, Canadians

are most interested in buying clothing online from Target. But Target does

not ship to Canadian customers and has no Canadian stores. Target did not

respond to a request for comment on the policy.

 

The Gap also denies Canadians special access to online shopping, but the

company does operate stores in Canada.

 

Other American retailers who court Canadian customers through the Web,

including Amazon, Wal-Mart Stores and Home Depot, have set up separate

online operations in Canada. Since shoppers on those Canada-based Web sites

are not making crossborder purchases, they do not benefit directly from the

weaker dollar. But they do benefit from falling prices on many American

products.

 

Although Canada and the United States share a free-trade agreement,

crossborder trade is hardly free. All merchandise entering Canada is

inspected by Canadian Border Services, which adds federal sales taxes,

provincial sales tax (except in Alberta) and, in the case of some products

made in third countries, duty.

 

In addition, the companies transporting the packages have border handling

fees of their own, which on a $300 item can exceed 40 Canadian dollars.

Canada Post adds a flat fee of 5 Canadian dollars.

 

To avoid those charges, L. L. Bean and several other companies use a Canada

Post service that brings their parcels across the border in bulk rather than

individually. The American retailer collects Canadian taxes at the time of

the purchase and the customer is not surprised by border fees at the

doorstep. The service also enables a shopper to return items to a Canadian

address.

 

U.P.S. operates warehouses in Canada that hold inventory from American

online retailers, including Crown Premiums, a collectible model-car maker in

Bonita Springs, Fla. Orders placed on Web sites in the United States are

filled with merchandise from the Canadian warehouses.

 

The J. C. Williams Group, Canada's leading retail consultancy, estimates

that American companies account for about a third of all Canadian online

shopping. Canada Post said that reached about 60 percent at the height of

the shopping season last year.

 

Jim Okamura, a senior partner in J. C. Williams, said that growing business

in Canada might allow retailers to offset an increasingly saturated market.

 

And Canada could perform another role for American retailers. For many

companies, Mr. Okamura said, " Canada is really being seen as the first step

in a broad international expansion plan. "

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