It’s always been common practice for Americans to go north for bargains whenever the Canadian dollar falls meaningfully below the greenback. Throughout the current slump, they’re doing this straight from their houses by shopping online from small-time Canadian merchants.
The Canadian dollar – the loonie – has fallen about 18 per cent against its U.S. counterpart in the last 2 yrs after flirting with parity many times within the last decade. Simultaneously, spending by U.S. shoppers using PayPal on Canadian websites jumped 20 per cent in 2015 in the year before.
“The recent stop by the Canadian dollar presents an exciting export opportunity for Canadian businesses supplying American buyers,” Cameron Schmidt, PayPal Inc.’s Canadian general manager, said within an e-mail.
As the power and mining industries struggle under the collapse of the decade-long bull market for commodities, Canada is turning to exports and tourism for growth. The development of shopping online allows that to happen without requiring Americans to seek out their passports.
We see a lot of customers purchasing from Canada because of the strong dollar — the merchandise is just cheaper
Shopify Inc., Bigcommerce Inc. and Shoptiques Inc., which offer websites and services for small and medium businesses from multiple countries to market online, all said they’ve seen an increase recently in U.S. consumers purchasing from Canada-based merchants.
“Across our customer base, Canadian businesses saw strong growth among U.S. shoppers in 2015,” Brent Bellm, ceo of Austin, Texas-based Bigcommerce, said in an e-mail. Sales at Canadian Bigcommerce stores during the holiday shopping season rose 39 per cent in the same period a year earlier, while the number of actual stores only increased 2.9 percent, he said.
There’s a higher bar to entry for cross-border e-commerce into the U.S., one good reason the country has one of the lowest percentages of online shoppers who buy abroad, according to eMarketer. When a customer purchases an overseas product online, getting it delivered is recognized as importing and also the package is susceptible to examination from U.S. Customs and Border Protection.
That implies that the buyer might have to pay extra duties and fees depending on the kind of item and it is value. There may be also extra paperwork involved and bank processing charges.
Related
- Here’s one of the ways the low loonie will benefit you like a cross-border shopperSlumping loonie holds silver lining for Canadian retailers as cross-border shopping likely to ‘all but die’From Arizona to Florida, U.S. destinations feeling chill from low loonie, weakened Canadian economy
-
-
-
Worth It
Despite everything, some Americans have found the lower prices worth their while. Americans spent US$3.2 billion on Canadian websites in 2015, part of a total cross-border spending spree of US$27 billion that is likely to grow 10 per cent in 2016, based on a study from PayPal and Ipsos SA.
The top two reasons U.S. digital shoppers cited for purchasing cross-border were better prices and product availability, according to a study published in February from eMarketer. Of all the things Americans buy from Canada, the biggest category of goods is auto parts, based on PayPal, accompanied by fashion, then Web services and software.
Nicole Papasergiou, a 26-year-old from Brooklyn, is one of those shoppers. She stumbled onto Canadian deals via a pair of vintage-style earrings she bought on Shoptiques from a Vancouver-based boutique. She then started filtering her searches for Canadian stores and she’s since found a high, a pair of jeans and a winter hat she wants to purchase in the country.
“I’m in my 20s and living in Brooklyn – every day life is expensive,” Papasergiou said. “Price definitely is a huge factor in my purchasing decisions.”
Papasergiou estimates she saves around 10 per cent on her purchases from Canada.
Customer Service
“We have seen a lot of customers buying from Canada because of the strong dollar — the merchandise is simply cheaper,” Olga Vidisheva, founder and CEO of Shoptiques, said within an interview.
Her customers are finding deals even when accounting for extra trans-border costs. And also to make things easier still, Shoptiques provides shipping labels to the sellers which include all the information needed to get across the border.
Ottawa-based Shopify is seeing similar development in U.S. digital shoppers looking at Canadian stores, according to Chief Operating Officer Harley Finkelstein. He declined to give any details.
Larger retailers are also feeling the advantages, even though they maintain separate websites for the different countries they be employed in. The number of U.S. consumers using Amazon.com Inc.’s Canadian website doubled to 1.3 million in December in contrast to exactly the same period last year, based on data from ComScore Inc.
PayPal’s Schmidt said cross-border commerce could keep getting bigger and merchants could be wise to learn how to sell internationally.
“If companies are prepared to invest the required time and effort to develop a global presence and foster customer trust – cross-border trade can offer a lucrative growth avenue for 2016,” he said.
Bloomberg News
