Business Without Borders

I love Canada. As a student at the University at Buffalo, which is a scant 20 minutes from Niagara Falls, I spent a lot of time there. Wonder of the world aside, the legal drinking age there is 19 years old and the exchange rate made for inexpensive nights out on Clifton Hill. Aside from those two nuances, the socioeconomic differences between American western New York and Canadian southern Ontario were few. We all loved hockey. We all loved good food. And we all loved spending money. I work in Erie, PA now. Daily, especially in the weeks following Thanksgiving, busloads of Canadians make the three-hour trek from the Toronto area to our town’s Millcreek Mall, where they take advantage of our fair prices and zero sales tax on apparel. U.S.-bound Canadian shoppers are eager and enthusiastic.

I recently spoke at length with Patrick Bartlett, president of Borderfree, a division of Canada Post, which is Canada’s postal service. Borderfree seeks to make it easier for American retailers to tap into the lucrative Canadian consumer base. Conducting cross-border consumer transactions has historically been painful for both American merchants and Canadian consumers. American merchants had trouble analyzing the Canadian market and targeting promotions. More importantly, the burdens of exchange rate calculation, duty, and customs taxes and fees led to avoidance. American merchants have been passive in marketing to Canadians and Canadians have been reluctant to go through the hassle of doing online and catalog business with American merchants. As a result, there has been an underdeveloped opportunity for cataloging in Canada. For perspective, there are more than 13,000 catalog titles produced and actively circulated in the United States. In Canada, there are 35.

Canada Post’s Borderfree initiative has tackled these issues and is working to facilitate a smooth transaction experience for both American merchants and Canadian consumers. It started by partnering with marketing and research companies like Abacus, Axiom, Icom, and Generation 5 to improve customer databases and targeted marketing efforts. Then it developed a transaction processing technology that, in effect, makes the Canadian consumer look American to the American merchant and makes the American merchant look Canadian to the Canadian consumer. It’s not common for American catalogers to print and distribute Canadian versions of their catalogs, so online and on the telephone prices, taxes, and duties are presented to Canadian consumers in Canadian currency. When orders are placed, American merchants receive payment in U.S. dollars and ship to a U.S. distribution center in Illinois or Michigan, where Borderfree negotiates Customs and places orders bound for Canadians in the postal stream via Canada Post. In this respect, the merchant handles the transaction as if it were no different than one being made by an American consumer. Borderfree even intercepts order confirmation e-mails and converts them to Canadian currency for the Canadian consumer, who is then billed a final, landed cost, eliminating the burden of dealing with duty, taxes, and shipping and handling. Returns are handled via Canada Post facilities as well.

Borderfree is already enjoying the business of 40 U.S. catalogers, and Bartlett says its success is leading some of these to explore the possibility of printing catalogs specifically for their Canadian target demographic. How lucrative does the Canadian consumer base look for you? Drop me a note at mattp@corrypub.com and tell me what you think.