Canada Post strangling online business?

[MiddleMan]

I feel like Canada Post is strangling Canadian small businesses that do online retail. That is, without the support of Canada Post, Canadian online retailers can't compete with US or even off-shore online retailers. Why? Because it costs less to ship a small parcel from Southern California (using USPS) to Toronto than to ship the same parcel to your neighbour here in Canada using Canada Post, let alone traverse the country from say Toronto to Vancouver. From what I've seen, Canadian retailers can compete with US retailers in terms of merchandise price, but who's going to buy, say, an iPhone case for $10 from a Canadian online retailer when they have to pay $10+ dollars for shipping versus ~$5 from the far side of the US.

Why should we care, you say? Because online retail is a rapidly growing market in Canada. And with a lot of business going off-shore (production, programming, etc.) we need to keep whatever we can. How can we make Canada Post change???

PS. I came across this issue after living in the US for several years. Never thought much of the cheap shipping offered by USPS until I moved back here and attempted to buy something online only to be turned away by the high shipping costs. At first I figured there must be some other more economic way to ship with Canada Post but some google searching only brought up articles like...

Canada Post is hurting economy

Canada Post Rates Rant

[Bryan]

Tell me about it. I know a guy who runs a fairly large mail order business out of Winnipeg. He has recently moved all of his warehousing and shipping facilities to the U.S. because it just costs that much less to operate there. Even after shipping, duty, and taxes, getting orders shipped from the U.S to Canada will cost the customer less than what it used to to have it sent across town.

[Shwa]

Tell me about it.

That might be part of the problem right there. Instead of telling "me" about it, such business owners - I would think - would be telling their MP & MPP about it and making a big stink about it in the local media. Jobs lost, revenues lost, etc. A story that has traction nowadays.

Come to think about it, other than a few griping stories, why hasn't such stories gotten any traction in the media?

And if the business owners taking their beefs to their local politicians, why are they so ineffectual?

I know a guy who runs a fairly large mail order business out of Winnipeg. He has recently moved all of his warehousing and shipping facilities to the U.S. because it just costs that much less to operate there. Even after shipping, duty, and taxes, getting orders shipped from the U.S to Canada will cost the customer less than what it used to to have it sent across town.

I often do mail orders from both Canada and the US and sometimes I am surprised by how cheaply things are delivered by USPS. But the thing is... once it leaves the US, it is handled by CP without, apparently, any further charges.

I recently ordered a motocross shoulder brace for one of my kids from the US because Canadian shops didn't have the latest model. It cost me 9$ to have the brace shipped from MI and even at that, with DHL, the package went all over the place before it ended up in a USPS facility in Washington DC for some confounded reason. And is still only cost me 9$ to be shipped. The problem though, was that it took about 2 weeks longer to arrive.

That was the only downside - the shipping times.

Interestingly enough, I have ordered stuff from Amazon.ca to a Canadian address and from Amazon.com to a US address. The Canadian stuff always ships faster and arrives sooner even though the pricing is roughly the same.

[bush_cheney2004]

I refuse to ship to Canada these days....the wait times are ridiculous. I don't know what happens at the border, but stuff seems to go into a black whole for weeks. The added fees are nuts too. No thanks...

[Shwa]

I refuse to ship to Canada these days....the wait times are ridiculous. I don't know what happens at the border, but stuff seems to go into a black whole for weeks. The added fees are nuts too. No thanks...

I don't think this is a unique perspective either. Some firms who used to ship to Canada no longer do so. Some manufacturers prefer to have a Canadian distributer and work that way and if there are no takers, you don't get the product up here. It can be frustrating. Luckily, I can have it shipped to the US and have it re-directed or pick it up, but even that is a PITA sometimes.

[MiddleMan]

Checked some numbers online. Now, for a small parcel, how can USPS charge just $5.60 from LA to Toronto (just 20 cents more than LA to NY) while paying CP to ship the same parcel within Toronto would cost $7??? Even if USPS gets the parcel to the Toronto airport to hand it over to CP, does CP basically handle customs and delivery for just 20 cents. Ok, so maybe it's not 20 cents, but then what the heck is it, maybe $2.00 ?!?! How can CP explain this? How can they afford and profit from such a small fee to our neighbour (gladly taking our business), then turn around and charge us $7.00? Maybe if they would charge our neighbour a little more, they could cut costs for our own small businesses enough that people shopping online wouldn't be appalled by shipping costs and driven to buy across the border instead!!!

Interestingly enough, I have ordered stuff from Amazon.ca to a Canadian address and from Amazon.com to a US address. The Canadian stuff always ships faster and arrives sooner even though the pricing is roughly the same.

If you are shipping to the East side of NA this could be explained, since many things on Amazon.ca come out of the GTA area while on Amazon.com they often come from California. You have to be careful though, many things on Amazon.ca still come from California, if you don't explicitly check for this your package could take 2 weeks instead of 2 days. Also, shipping costs on Amazon (.ca or .com) don't represent real shipping costs. Amazon stores can put whatever they want there and, in the case of low or no shipping costs, absorb the costs into the product price.

Edited August 12, 2011 by MiddleMan

[Bryan]

I refuse to ship to Canada these days....the wait times are ridiculous. I don't know what happens at the border, but stuff seems to go into a black whole for weeks. The added fees are nuts too. No thanks...

That always happens when you use UPS to send to Canada. They are terrible about the extra fees especially, and will flat out lie to both the sender and recipient claiming that these are customs fees when they are nothing of the sort.

[bush_cheney2004]

That always happens when you use UPS to send to Canada. They are terrible about the extra fees especially, and will flat out lie to both the sender and recipient claiming that these are customs fees when they are nothing of the sort.

I don't mind the fees so much as they are paid by the customer in Canada, but the inexplicable waiting is just not acceptable. What are they doing with a package for weeks on end? I have shipped items faster to Rwanda! I just don't get it....

[Oleg Bach]

I don't mind the fees so much as they are paid by the customer in Canada, but the inexplicable waiting is just not acceptable. What are they doing with a package for weeks on end? I have shipped items faster to Rwanda! I just don't get it....

The post man rings twice..If you don`t get the package one day - you will get it the next- In Canada we are more patient...as for buisness on line....not such thing..real buisness takes place only in the real world...on line is usually a territory for the get something for nothing crowd...I rememeber the birth of the net and every Tom Dick and Mary were looking for a way to utilize this new form of commnicaltion .........`Mary we can stay and home and never have to leave the house - and we can make millions on the internet.............joke.

[MiddleMan]

as for buisness on line....not such thing..real buisness takes place only in the real world...on line is usually a territory for the get something for nothing crowd...

For those who fall under "old dogs can't learn new tricks" then yeah, if you're used to doing business in the (so-called) real world that's where you'll stay. But a quick look at statistic Canada will show internet retail growing at a very high rate for several years now. You think all the major Canadian stores (Canadian Tire, Future Shop, etc...) are putting up online stores cause they think it's fun?

Anyhow, I'm still wondering how USPS can ship to Canada for so cheap. Think I'll just email Canada Post.

[MiddleMan]

FYI. The story continues... Even the globe and mail has written about this.

- Globe & Mail: Cheapest shipping route across Canada? Try the U.S.

- Complaints from eBay shop owners: eBay Workshop with Canada Post

- Financial Post: This joke's on us: Did you hear the one about the profit-maximizing postal monopoly whose high prices crippled a nation's e-commerce infrastructure?

- Bogus CP response to above article: Letter to the editor of the Financial Post

- FYI: Canadian Postal Rates

Edited August 15, 2011 by MiddleMan

[Bonam]

I don't see why people would focus on Canada Post in particular. Almost every single type of product and service is significantly cheaper in the US than it is in Canada. Shipping is no exception.

[Wild Bill]

I don't mind the fees so much as they are paid by the customer in Canada, but the inexplicable waiting is just not acceptable. What are they doing with a package for weeks on end? I have shipped items faster to Rwanda! I just don't get it....

Back about a century ago the French used to say that a country wasn't truly civilized unless its mails worked well.

They were talking about emerging nations such as those in Africa but I've always chuckled about how it relates to Canada!

[MiddleMan]

I don't see why people would focus on Canada Post in particular. Almost every single type of product and service is significantly cheaper in the US than it is in Canada. Shipping is no exception.

Yes, but in the past taking advantage of these significantly cheaper prices (say 20% or 30% cheaper) also took significant effort. Enough so that it was (and still is) only common on big ticket items (like a car) where 20 or 30 percent translated to a lot of money. And, although common with these big ticket items, not common enough to impact the economy. ie. Car dealers are not closing shop due to cheaper cars in the US.

Now, however, it's all too convenient to buy, for example, that iPhone case from the US instead of Canada because shipping from the US is (no, not 20 or 30 % cheaper) half the price!!! This is so much an issue that it IS impacting Canadian e-commerce. Online retailers are commonly, [A] closing shop because high shipping costs don't let them compete with US retailers, or driving to the US to ship products TO Canada. There are even companies starting in Canada just to target this issue, claiming that they'll ship what you give them using USPS (basically just drive your package across the border for you).

E-commerce is a growing business in Canada. Unless we want to see it all move elsewhere (like manufacturing and many other things already have), I'm sure Canada Post can do at least a little better than double the price of their neighbouring competitor. People are willing to pay a little more for faster (domestic) shipping, but double the price is not a little, nor 20%, no 30% more.

Edited August 14, 2011 by MiddleMan

[Bonam]

Yes, but in the past taking advantage of these significantly cheaper prices (say 20% or 30% cheaper) also took significant effort. Enough so that it was (and still is) only common on big ticket items (like a car) where 20 or 30 percent translated to a lot of money. And, although common with these big ticket items, not common enough to impact the economy. ie. Car dealers are not closing shop due to cheaper cars in the US.

Now, however, it's all too convenient to buy, for example, that iPhone case from the US instead of Canada because shipping from the US is (no, not 20 or 30 % cheaper) half the price!!! This is so much an issue that it IS impacting Canadian e-commerce. Online retailers are commonly, [A] closing shop because high shipping costs don't let them compete with US retailers, or driving to the US to ship products TO Canada. There are even companies starting in Canada just to target this issue, claiming that they'll ship what you give them using USPS (basically just drive your package across the border for you).

E-commerce is a growing business in Canada. Unless we want to see it all move elsewhere (like manufacturing and many other things already have), I'm sure Canada Post can do at least a little better than double the price of their neighbouring competitor. People are willing to pay a little more for faster (domestic) shipping, but double the price is not a little, nor 20%, no 30% more.

Those retailers should try selling their goods on par with US prices rather than 20-30% above US prices before complaining about being charged 20-30% more for a service compared to a US service. If the shipping cost was the only difference, I'd often use a Canadian retailer rather than an American one. The reality is, even more expensive shipping from the US is often worth it when compared to paying the heavy premium for shopping in Canada.

Anyway, there may well be legitimate reasons for the higher price of shipping in Canada. For one, fuel to fill the shipping trucks is 20-50% more expensive in Canada than it is in the US. Secondly, the US has a much higher population density, meaning more packages can be delivered per mile of driving, reducing the per package costs of fuel, labor, and capital investment. Furthermore, in most carriers business models, higher density areas partially subsidize the costs of lower density areas.

Edited August 14, 2011 by Bonam

[MiddleMan]

Just found out that all these stories of Canadian E-commerce businesses moving shipments to the US (even to ship back to Canada) are missing one important fact. Any shipment back to Canada worth over $20 is subject to a $8.50 handling fee. Sucks to be on the receiving end if you're not aware of this, but to me this gives Canadian ecommerce stores a fighting chance. People slapped with that fee will think twice about buying from the states again. Now I wonder, are all these Canadian companies shipping merchandise back into Canada simply declaring everything they ship as under $20. I hope it's not that they just don't care about the customer getting hit with additional handling fees, as long as their shipment costs are less! Also, apparently, not all shipments worth over $20 are checked. I wonder how often that happens?

Well, I guess that means the big disadvantage for Canadian ecommerce is narrowed down into the category of small parcel and under $20 in value. In this case, it's still a no-brain'er to shop in the US if you want to save money. The question that remains is: who pays Canada Post to deliver all these small USPS packages (that cost $5 to ship) once they cross customs? Even the fee for those that are worth over $20 is still just a border handling fee, none of which goes towards the cost of shipping. The $5 can't possibly cover both US and Canadian delivery costs because even if that entire amount went to Canada Post, it wouldn't be enough to cover the price of any CP service. Is our tax money helping Canada Post ship international packages???

[bush_cheney2004]

Just found out that all these stories of Canadian E-commerce businesses moving shipments to the US (even to ship back to Canada) are missing one important fact. Any shipment back to Canada worth over $20 is subject to a $8.50 handling fee. Sucks to be on the receiving end if you're not aware of this, but to me this gives Canadian ecommerce stores a fighting chance.

That might be fine for e-commerce sites, but my firm just sets up fulfillment operations inside the Canadian border to beat those kind of charges. Hell, some Canadians don't even want to know that their product has come from the United States!

I just wonder, regardless of cost, why it takes so damn long to get a parcel from Milwaukee WI to Hamilton ON.

[Bryan]

I don't mind the fees so much as they are paid by the customer in Canada, but the inexplicable waiting is just not acceptable. What are they doing with a package for weeks on end? I have shipped items faster to Rwanda! I just don't get it....

I order a lot of things from the U.S. and I've never encountered this. 2-5 days at most is all I've ever seen, and if I pay for next day it always is next day.

[Bryan]

Now I wonder, are all these Canadian companies shipping merchandise back into Canada simply declaring everything they ship as under $20.

Yes.

I never get charged that fee, and the declared value of my packages is usually $15, no matter what I really paid.

[bush_cheney2004]

I order a lot of things from the U.S. and I've never encountered this. 2-5 days at most is all I've ever seen, and if I pay for next day it always is next day.

My shipping scenarios were different....expensive optical components shipped from a US counter to private residence. First step is to declare a low value because my Canadian customer doesn't want to pay the crazy fees. If the contents are for items not available in Canada, then there may be additional duty. And this is before the item has left the counter.

Some items just are not available in Canada, so this drives private reselling.

[dre]

I don't see why people would focus on Canada Post in particular. Almost every single type of product and service is significantly cheaper in the US than it is in Canada. Shipping is no exception.

Yeah it makes even more sense that shipping would cost more, because we have more taxes on fuel, whereas in the US they keep these taxes much lower than they are in the rest of the west, and make up the diference in revenue by borrowing the money. We could gut fuel taxes as well I suppose and offset that revenue by selling bonds, but in the end you just pay MORE by doing that.

[MiddleMan]

I'm not pointing a finger at CP for being more expensive. As already mentioned, the more expensive part applies to pretty much everything in Canada. Has been that way, probably always will be that way, and our economy continues as usual.

What I'm doing is pointing out a problem that I believe CP (or the gov't) needs to take a more serious look at. A problem that is (according to many already) damaging an emerging market in Canada - ecommerce. That problem is that US online retailers are making a joke out of Canadian online retailers without even having to try to! While Canadian ecommerce owners are jumping through hoops trying to figure out how to lower shipping costs, shoppers continue to walk away from them feeling like they're being gouged by shipping costs. People accept that things are more expensive in Canada, but in this case it's to such an extreme that too many Canadians are not accepting, simply going elsewhere.

So the question still remains, how can the US ship to Canada for so cheap? Somebody has to pay to deliver that USPS parcel past the Canadian border! Well, I found a nice article to help explain this:

I Mailed a Letter to Paris …

The answer (at least partially) I guess is the Universal Postal Union (UPU). They're in charge of how much countries reimburse each other for the cost of delivering each others mail. Apparently this typically takes place once a quarter. So that $6 to ship a parcel from LA to Yellowknife DOES also go towards paying CP. A small portion of it is added to a 'change' bin which is later handed over to CP at the end of the quarter. Well, looks to me like the UPU needs to review the cost of shipping in Canada because the US basically has us doing volunteer work for them at the current rates! Time to pen out that letter to the MP, at least that won't cost me anything to ship...

I just wonder, regardless of cost, why it takes so damn long to get a parcel from Milwaukee WI to Hamilton ON.

Don't know the actual answer but the UPU can also help here. Apparently a country that delivers enough late parcels will be punished by having part of their quarterly fund deducted. I wonder if Canada has ever been 'punished'?