Sunday, April 17, 2011

Canadians pay up to 20% more than Americans for the same goods

It's been on the news lately that with the Canadian dollar hanging around par, why are we paying so much more for the same goods here in Canada.

As an online retailer, I am painfully aware that it's pretty easy for people to compare prices and shop south of the border. There are quite a few challenges to Canadian retailers in the the fabric business.

One of them is that there are very few manufacturers of fabrics and textiles in Canada. So retailers often turn to the U.S. for suppliers. These same suppliers often give exclusive distribution rights to Canadian companies. These companies in turn have to pay brokerage, duties and shipping charges that can be very high. In addition, they have to warehouse materials, hire staff etc. So they have to increase the price of goods to the Canadian retailer. The same goods if bought by an American online retailer will be up to 50% less than what the Canadian retailer pays and therefore they have to charge more. But the Canadian buyer sitting on their computer can order the same goods at about 40% cheaper from an American retailer. They have to pay the shipping and HST when the goods arrive.

Here is a link to an article about the matter:  http://news.maars.net/blog/2011/04/14/why-we-pay-20-more-than-americans-for-identical-products/

As one comment points out, we have different labour laws, higher taxes and shipping costs. The U.S. postal rates are often much lower for comparable Canadian services. Retailers here have to absorb those costs.

Ultimately the consumer will decide what they want to do.  For example, I don't shop at Walmart here in Canada because I don't agree with their labour and supplier policies. However, clearly a lot of shoppers do because their stores are all over the place.

Also there are really weird Canadian import laws. For example, if I import a fabric directly from what would be considered a third world country, like say Indonesia, I don't pay duties on that fabric. Of course sales taxes would apply, brokerage fees and shipping charges would be higher than say importing from the U.S. Now if I purchase that same fabric from a supplier in the U.S., because it comes through another country first, I have to pay 14% to 16% duties, plus the brokerage fees, taxes and shipping. The U.S. retailer will not have the duties, brokerage to pay and shipping within the U.S. is much cheaper than shipping cross border or even within Canada.

Having said all the above, if you are one of my customers, you will know that I have been charging prices at par or close to par on most of my products. Folkwear patterns have been sold at par for over three years now. Modular Design patterns with Kayla Kennington have been at par since I started carrying them even when the dollar went down to 75 cents. Ouch! Same with Revisions and Lois Ericson patterns, the Bali Collection and so forth.

There's not a whole lot I can do about shipping. I only charge you what Canada Post charges me. For example, it costs an American 75 cents to send a letter to me but I pay $1.03 to send a letter to an American.

I do my best to charge a fair price and attract business from both Canadians and Americans. I know there are always going to be challenges. But I am happy to be a Canadian and living in Canada. The best I can hope for is that my customers will consider my business when they purchase online.

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