Canadians are pretty thrifty when it comes to finding deals via online shopping - but navigating the hidden costs of shipping and customs duties when buying from foreign countries is a different story.
In 2010, Canadians placed nearly 114 million orders online, worth $15.3 billion, according to Stats Canada. On average, Canadians who order online spend about $1,362 annually and nearly 90% pay using credit cards.
In May, U.S.-based Forrester Research released a report that showed 25% of online spending by Canadians goes through international websites - purchases that were subjected to often overlooked duties.
Why You'll Shell Out For Shipping
When you purchase products online from companies located south of the border, you have to pay a duty to import that product, much like if you drove stateside and bought a stack of DVDs or clothing.
A third of shoppers surveyed for Forrester’s report said they weren’t concerned with taking the additional hit for duties while 17% even considered having purchases shipped to a friend in the U.S. or using a cross-border postal box service.
Coping With Refund Pain
Another challenge facing Canadian shoppers is the convoluted process that is the international online shopping refund.
It was this frustrating issue that prompted the creation of e-commerce tax refund startup Duty-Back. The founders, Richard Vining, Jessica Kerr and David Gustavson, estimate Canadians are letting nearly $240 million annually in duties slip to the wayside because returns are just too complex.
Their simple service helps Canadians get refunds for their online purchases. For a fee (15% of the rebate) the company does the work, collecting client’s information via an online form and submitting a full refund application to the government.
“We conservatively estimate that we can help Canadians get back $126 million in duty rebates every year,” says Vining, chief operating officer of the company.
Making Up For Distance
Duties aren’t the only challenges Canadians have with e-commerce - our relatively small population combined with Canada’s massive geography makes shipping logistics a bit of a headache.
A study, entitled The Impact of Logistics Services on E-Commerce in Canada, by Supply Chain Surveys Inc. found that the cost of shipping a six-pound, medium-sized box from Toronto to Vancouver (4,370 km) using Canada Post’s Expresspost service was 3.6 times more expensive than the cost of shipping the same parcel from New York to Los Angeles (4,443 km) via the United States Postal Service’s (USPS) priority mail service.
Frankly put, Canada doesn’t have the same population density and demand as the United States when it comes to online business.
Facing The Canadian Conundrum
When buying online from a location in the U.S., shipping might be less but it results in duties and taxes. If you’re buying from out of province in Canada, you skip the duties but the shipping will cost more. So, how can you navigate the e-commerce system and get the most bang for your buck?
Here are a few tips: Compare prices!: RATESDOTCA is, after all, a comparison site – you should have seen that coming. But really, try digging around and seeing if the product is available in your city or nearby. And if you need to return it, you can return it in-store.
Try a cross-border mail service: Do a quick Google and you’ve got four options right there.
Do a direct order between stores: Many companies offer free shipping between their own locations, even when shipping from out of country.
No matter which route you take, when it comes to e-commerce do your research before you click “confirm”.
