A Forrester report points out challenges faced by some business-to-business firms working online.
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OneStopPlus.com works with package delivery service i-parcel to charge the appropriate tax, customs and delivery fees to foreign consumers so they know, at checkout, what the full charge is for the order. When a Canadian consumer goes to the checkout page of OneStopPlus.com she is connected to a OneStopPlus.com-branded page operated by i-parcel, which calculates the total and accepts payment.
OneStopPlus.com pays i-parcel an undisclosed percentage of the value of each order. OneStopPlus.com fulfills the order from its warehouse in Indianapolis, ships it to i-parcel in New Jersey, which, through its own service or through a commercial carrier, gets it across the border. Once the order clears customs, Canada Post delivers the package. Lofgren says it typically takes between nine and 12 days from the time of order to delivery, depending on where in Canada the consumer lives.
Used to it?
Other U.S. e-retailers also work with international shipping vendors that calculate and collect payments and duties, and navigate customs. Toy e-retailer HobbyTron.com, which began selling to Canadian consumers two years ago, now collects about 10% of its sales from them, says vice president Ben Ibarra. The e-retailer works with Bongo International for payments and shipping.
Like OneStopPlus.com, HobbyTron.com ships orders placed by Canadian consumers to Bongo and Bongo forwards them on and files all the customs paperwork; delivery usually takes about a week, Ibarra says. HobbyTron.com pays nothing, as Bongo makes its money on the shipping fees it charges shoppers. A Canadian consumer can expect to pay about $21 to have a 2-lb. package delivered via Bongo.
Such shipping fees might scare away many U.S. consumers, but Canadians are used to it, says Terry Rowinski, chief operating officer for BuySeasons Inc., which sells costumes and party supplies to Canadian consumers through two of its e-retail sites, BuyCostumes.com and CelebrateExpress.com. "They know how their infrastructure works," he says.
BuySeasons, a subsidiary of Libery Media Interactive, typically ships to Canada via United Parcel Service, which moves parcels across the border and then either hands off to Canada Post for delivery or delivers itself, depending on the service level selected by the consumer. BuySeasons collects the customs duty and applicable taxes at checkout using a program it built in-house. The shipping fees are commensurate with BuySeasons' costs to deliver the order to the consumer, Rowinski says, but the cost does have an effect on how Canadian consumers buy. "We don't see many impulse buys," he says. "Most folks are planning for their events and parties and buy everything at once." The average order value shipped to Canada is about 10%-15% greater than domestic orders, he adds.
Ben Huffman, vice president of operations at Legendary Whitetails, an e-retailer of hunting gear, says low-value orders from Canadian consumers are rare. A $30 t-shirt, for example, would cost an additional $28 for shipping and the customs duty. "The biggest negative impact of this pricing model is that it creates a huge barrier to entry for a low dollar value order," he says.
Legendary Whitetails has not marketed to online Canadian shoppers, Huffman adds, but would promote its goods in Canada if it could find ways to cut delivery costs.
If he discovers the secret to inexpensive delivery to Canada, other U.S. e-retailers undoubtedly would be anxious to learn it.