When it comes to the maturity of e-commerce, what’s the difference between the U.S. and Canada?
To get a quick read, we can look to Blaine, WA. Blaine is one of several West Coast border towns that has seen a spike in mailbox stores over the last decade or two, primarily because it’s cheaper and faster for residents of the greater Vancouver, B.C. area to buy and ship American goods to a mailbox in Blaine than it is to buy products from Canadian sites. The reasons for this vary, from international taxes and the exchange rate, to slower delivery and fewer incentives for brands to invest in online capabilities (all of which are changing).
To offer a touch of context, cross-border shopping in border towns is not a new thing; it goes back to the days of catalog shopping. But only recently has it been this aggressive and obvious. According to an OPB article, there are 15 private mailbox and parcel receiving stores in Blaine, whose population numbers only 5,000 residents. The recent daily influx of traffic in Blaine is largely attributed to folks flowing in to collect their purchased items – and the culprit, everyone knows, is mostly Amazon.
There are two storylines we’re watching here.
One is that the growth of online shopping (and Amazon, more specifically) in Canada continues to find an outlet in the U.S. – at least in places where a mailbox across the border is a reasonable option. Even with the current challenges to growth, e-commerce is gaining traction.
This observation fits into the broader picture, as Amazon’s presence in Canada is something that everyone, from retailers to brands, continues to monitor. In 2017, Amazon reported that Prime memberships were up 80% year over year. This is driving the necessary development of platform updates that make it better and easier for brands and customers to use the Amazon marketplace.
Amazon is responding to these signals by sticking to its own playbook: focussing on shoppers. Earlier this year, Amazon kept Canadian Prime membership prices at $79 while the price down south in the U.S. increased to $119.
Long term, as Amazon invests in fulfillment centers and teams in Canada, all indicators point to a marketplace up north that mirrors the speed and selection in America. With more products, competitive prices, and better delivery added to Amazon.ca, there’s the assumption that fewer people will cross the border to collect their parcels.
This should be seen as a windfall for brands that are contemplating entering the Canadian marketplace. However, they need to have a real interest in the Canadian market, understand where their products fit, and have a partner who can successfully navigate the landscape. In addition, if they haven’t already, they’ll need to introduce their brands to brick-and-mortar stores to build recognition and establish a following while online channels mature.
This brings us to the second storyline: What happens to Blaine when Amazon’s Canadian marketplace gets as robust as it is in the U.S.? Is such a marketplace only viable in a consumer nation like the U.S.? And will rising trade tensions, and the taxes that come about as a result, draw out the timeline?
Time will tell. That’s what it tends to do.
In a recent article by The Verge, Alexandra Samuel poses the uncomfortable question business owners in Blaine should be asking: “Is there a future for the town if it no longer serves as Canada’s front porch?”
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