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02 Part Deux: Canada, eh? e-Commerce Strategies for Shipping between the USA and Canada, and within Canada
Bonus Episode • 21st February 2024 • Outside the Box with Asendia USA • Asendia USA
00:00:00 00:14:20

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John & Nick continue the conversation with our special guest, Dave Mays, CEO Broadreach, an Asendia company, discussing the advantage of growing and evolving your e-Commerce business in Canada without dramatic supply chain disruption.

About Dave Mays:

Dave Mays, CEO of Broad Reach, brings over two decades of experience in cross-border e-commerce logistics with a specific expertise in developing best-in-class solutions for retailers selling to Canada. Dave Mays has a wealth of industry experience and a proven track record of establishing and growing market-leading cross-border e-commerce logistics businesses, with a special focus on US to Canada. Mays works closely with Asendia USA to boost its offering to this market with more robust e-commerce solutions than ever before.

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Host:

Welcome to Outside the Box with Ascendia USA a podcast educating US based e tailers on international shipping topics and how they can expand their global e commerce footprint.

Nick Agnetti:

Hey guys, this is Nick Agnetti here with Ascendia USA from the Outside the Box podcast upcoming is part due of our Canada a podcast.

Nick Agnetti:

John, you have anything to add?

John:

No.

John:

Nice.

John:

Frank said.

Nick Agnetti:

Thank you very much.

Nick Agnetti:

Yeah so stay tuned and thank you so much for listening.

Nick Agnetti:

Dave, Going back to how you guys handle the multi skus per package and some of the challenges associated with that because anybody, especially in the subscription space that's listening would know that that is a challenge for many folks.

Nick Agnetti:

How do you guys handle that?

Dave:

It's an art meets science conversation.

Dave:

When you're talking about multiple items within a kit that have a blended or total value.

Dave:

When you have one item, one consignee on one day and that shipment contains multiple items, it could be something that's regulated combined with something that's a commodity combined with something that has extremely low value.

Dave:

We do have to look at shipments daily and make educated documented decisions based on sometimes literally doing Google searches and applying an acceptable customs value to items that are in kits.

Dave:

Things that are two for one or buy one, get one free or ship for 12 months get the 13 month free.

Dave:

So there's a lot of complications to it, but very diligent.

Dave:

We database every item, every order and we're constantly revising values and ensuring that customs accepts our methodology.

Dave:

With that being said, anytime something crosses the border, the declared value is what the consignee paid for E Commerce orders.

Dave:

E Commerce orders originating in the US that are sold going to recipients in Canada.

Dave:

There is no gray area on value.

Dave:

Value is what the consumer paid.

Dave:

Now if it's a commercial ship, it's going B2B 2C.

Dave:

It's wholesale, it's inventory transfer to a Canadian distribution point value becomes much more subjective.

Dave:

You quite literally need to get auditors and KPMG involved for intercompany evaluations.

Dave:

There's tax and there's duty implications there.

Dave:

So there's a lot involved on the commercial side.

Dave:

But speaking to the express courier and or casual rotation stream what we're talking about.

Dave:

So the subscription box companies are usually value based, meaning they give you $100 worth of goods for 20 and you know, stilling down, sorting and applying proper values to the items which is needed is a challenge.

Dave:

But that's what we do, that's what we're paid to do.

Dave:

And I've been doing this for 23, 24 years.

Dave:

I am the messenger of all this expertise that all of my team members have.

Dave:

So these are all subject matter experts and I'm just a consolidator of those experts in a way that hopefully is efficient for the company to bring on 100%.

Nick Agnetti:

No, and that's a good point.

John:

lse are you seeing going into:

John:

I know you're always looking to improve the customer experience.

John:

Is there anything else that you're seeing other than things like that you've demonstrated, just working with you and helping the customer, that you are forward thinking?

John:

Was there anything else that you see on the horizon that could benefit and make the customer experience better?

Dave:

I'll tell you all the evolutions that I believe in the last two years and in the next two years we're going to be driving, if not ourselves, industry wide.

John:

Right.

Dave:

Anything being measured in business days is I think a tragedy.

Dave:

We can order 24, 7, we can receive, we should be able to receive 24, 7.

Dave:

We should be measuring our service and calendar days.

Dave:

Our network moves seven days a week.

Dave:

Our warehouses are open up to 24 hours.

Dave:

There is no reason why every carrier provider and every merchant shouldn't be able to commit seven day delivery.

Dave:

We do have a restriction and limitation with Canada Post.

Dave:

I wish that was a ship I could turnaround in terms of the direction on that that will be will not be able to.

Dave:

Right now our delivery mix with Canada Post, depending on your weight profile and where you're going is anywhere between 10 and 20% of the overall distribution.

Dave:

So outside of that, our other carrier partners, we either give it to them where they can best perform or we do it ourselves.

Dave:

We are going to have three solid levels of service and even our slowest, slash, most price efficient ground service is going to be smoking fast relative to where it's starting and, and where it's going to.

Dave:

But really engineering both a very cost effective expedited solution which we are doing now, and even engineering a express service to compete with true airport to airport fundamental deliveries on through integrated courier network.

Dave:

The evolution out of the Northeast that we've done most recently, again this is Canada specific, this couldn't happen in the States.

Dave:

But our delivery profile unbelievably is somewhere between 20 and 28% into what we would call Southern Ontario or Greater Toronto depending on how you, how you carve up the map.

Dave:

We are able to get next day service out of many major cities in the Northeast and upper Midwest.

Dave:

And I'm not going to tell you exactly how we do it.

Dave:

I'M sure some of you know.

Dave:

But the bottom line is we are going to compete with anywhere between 20 and 28% of the total deliveries in Canada on a next day basis out of major centers in the upper Midwest and Northeast.

Dave:

And this is something that has really pushed a lot of our competitors to rethink how they're doing things.

Dave:

And I think it's an important feature of our service that is a differentiator between us and our competitors.

Dave:

We do again, as I said previously, run our own team driven, fully dedicated, owned, operated middle mile network.

Dave:

So wherever that parcel is going, we're going to drive it down as far as we can toward the final mile recipient and give it to our partner for anywhere between 10-30km of range for.

Nick Agnetti:

The shipper that's listening for the logistics person listening for whomever's listening.

Nick Agnetti:

Here's a couple of really interesting statistics about Canada when it comes to the buying group within the country, right?

Nick Agnetti:

So 29 million digital buyers within the country of Canada.

Nick Agnetti:

Millennials are the top generation for online purchasing within the country.

Nick Agnetti:

That's the 11th largest E commerce market in the world.

Nick Agnetti:

In terms of your expansion from a just a US based online retailer to including Canada in that mix, English is the number one, is the primary language within Canada, French being the second largest language in Canada.

Nick Agnetti:

They're very affluent in terms of, you know, level of education with high levels of discretionary income.

Nick Agnetti:

They're familiar with US Brands and desire US based goods.

Nick Agnetti:

It is what it is.

Nick Agnetti:

Statistics, right?

Nick Agnetti:

Largest brand or largest online store in Canada?

Nick Agnetti:

Of course it's Amazon.

Nick Agnetti:

So in terms of why should you expand to Canada or maybe even more?

Nick Agnetti:

Why, why should we put additional resources into marketing and advertising to grow our Canadian business?

Nick Agnetti:

There's plenty more.

Nick Agnetti:

I'm just trying to give you a little bit of fuel to go back to your team.

Nick Agnetti:

Why not take the time to invest in growing revenues into a market outside of the domestic US which may be saturated for your particular brand of product, and then just kind of go from there fast.

John:

That's impressive.

Dave:

Yeah.

Nick Agnetti:

You know what, Pittsburgh, Google Notebook, you never know what you can do.

Nick Agnetti:

So you know, can I.

John:

Is there.

John:

Last one.

John:

Is it True?

John:

Is it 85% of the population lives within 100 miles of the U.S.

John:

good Lord.

Nick Agnetti:

Johnny said that at the beginning of the podcast, right?

Dave:

I usually say 80.

John:

Okay, it's 80, but that's plus or.

Dave:

Minus a few percentage points.

Dave:

That is true.

Dave:

And again, because the border is so long, that's either easy to get to or difficult to get to.

Dave:

I mean Halifax is probably within 80 miles of the border.

Dave:

Halifax is the Atlantic province around the Atlantic and it is not close geographically or easy to serve.

Dave:

Same thing with some of the those prairie cities we talked about.

Dave:

I mean our trucks literally run daily through Idaho and Montana.

Dave:

I don't, it's pretty wild to be up north of Montana.

Dave:

I mean we have to avoid deer and elk on the way up.

Dave:

We get into this very, very strong market of Alberta.

Dave:

You have Calgary, of Edmonton and you have surrounding cities.

Dave:

You have the Canadian Rockies between Alberta and B.C.

Dave:

which is, can be treacherous.

Dave:

And then B.C.

Dave:

lower mainland B.C.

Dave:

especially another great center.

Dave:

And these are all north of US border.

Dave:

I mean one of the couple, a couple stats are and a couple opinions.

Dave:

One if anybody is wondering, you know, should they enter the market of Canada, I would ask well do you want another California?

Dave:

And I would hope the answer is yes.

Dave:

Because California and Canada are roughly the same size in terms of population geographically.

Dave:

Clearly it's much bigger and more sparsely populated.

Dave:

But that is an important distinction.

Dave:

You don't need to set up another warehouse, you don't have to set up systems, you don't have to set up technology.

Dave:

You don't have to set up a Canadian business on the ground with all the compliance things that one may or may not engage in the future.

Dave:

To start to do business in Canada you need to be able to accept payment.

Dave:

You need to be able to collect duty and tax.

Dave:

And by the way something that's really changed in the last four years is the duty threshold for Canadian imports.

Dave:

For casual consignees used to be 20 Canadian, now it's 150.

Dave:

So you can ship individual items, individual orders to Canada from the U.S.

Dave:

or Mexico.

Dave:

Duty free up to 150 Canadian.

Dave:

That is, that is nice.

Dave:

I mean textiles are 18 have an 18% duty.

Dave:

Shoes and a lot in that old fashioned sector those are very dutiable up to 150.

Dave:

That's a nice, nice feature.

Dave:

There is no duty and tax is very easy to calculate.

Dave:

Somewhere between 5 and 13% depending on which province we're talking about being shipped to.

Nick Agnetti:

For you listening or for any potential customers or conversations of knowing that, hey, if you have any questions we've got a whole team of people behind us to help when it comes to exploring the Canadian market.

Nick Agnetti:

And so I'd go back to my original question is if you're not shifting to Canada today, but you have a company wide goal of growing revenues, of expanding outside of just your domestic profile, why not?

John:

There seems to be like A misconception.

John:

You need something in Canada.

John:

But you said there were benefits not to do that.

John:

Right.

Dave:

So it really depends on somewhere between eight and 12 answers to really important questions.

Dave:

For example, what's your order velocity?

Dave:

How many orders are you shipping a day?

Dave:

Where are they shipping from the States, what are the order value, what are the commodities, where are they made?

Dave:

Right.

Dave:

So what HTS code drives what duty or not?

Dave:

And what are the value of the goods when you cross the border, bring them in.

Dave:

At what duty are they applied?

Dave:

Sorry, what value would drive duty?

Dave:

So if you bring product into Canada and you clear it on a cost of goods basis or wholesale basis or intercompany basis, you're going to pay less duty as the value is lower.

Dave:

With that being said, fuel, labor, warehousing, everything's more expensive, especially in Toronto.

Dave:

And Toronto is a top five city in North America in terms of size of population.

Dave:

It's also very expensive.

Dave:

Vancouver, one of the most expensive cities in the world, Alberta is not cheap.

Dave:

If you're going to go in Canada with infrastructure, you want volume, you want a very deep, not only logistics review, but financial review.

Dave:

And what you can always do is go into Canada at a future point in time based on understanding the market.

Dave:

Better to start.

Dave:

Shipping from the States to Canada is usually 90% of the companies do that.

Dave:

And again, a lot of this is product driven.

Dave:

If you have 63,000 SKUs, do you want to set up a warehouse in Toronto when you have one in Ohio?

Dave:

Maybe.

Dave:

Depends on how many orders you're shipping a day.

Dave:

Are you going omnichannel?

Dave:

Is there retail?

Dave:

Is there direct to consumer?

Dave:

Is there direct to consumer through other platforms like Amazon or other aggregators?

Dave:

So there's just a lot of questions that you have to ask before.

Dave:

But I mean we see some of the warehouses that some of our big customers have and these warehouses in the US are highly automated, highly automated, highly efficient, high volume output.

Dave:

Replicating that in Canada, we're talking about somewhere between 2 and 10 million just to ship parcel one.

Dave:

So again, it's a difficult answer, but what I do know is you don't have to make dramatic changes to your supply chain to have your business grow and evolve.

Dave:

If you achieve certain revenue thresholds in certain regions around the world, Asia, Pacific, Europe, South America, Latin America, you're going to go on the ground in that region.

Dave:

You don't always have to go on the ground in Canada because you the US is so close to Canada.

Dave:

So that's a kind of a feature that very, very, very Much favors continuing to ship from the state's cross border.

Dave:

Yeah, we have warehouses, retail locations and hybrid facilities all over Canada.

Dave:

We're going to be opening more every quarter.

Dave:

We have the ability to do pick, pack, chip, fully automated.

Dave:

We have the ability to do, to liaise with other government departments if products need registration.

Dave:

And we have a variety of resources to do an intra Canada domestic solution.

Dave:

I'm sorry, I've never, I've never been so harassed to get out of a hotel room in my life.

Dave:

I go, I have a meeting down the street, it's a 10 minute walk and housekeeping and then the front desk are calling me.

Dave:

It's not even noon yet.

John:

Dave, last thing.

John:

So you did mention pick, pack and chip.

John:

I mean obviously we can do some sort of fulfillment, right?

Dave:

Our staff, that staff that I keep referring to has experience in every product and service that we're talking about.

Dave:

Trade services, compliance, technology, pick, pack element, the whole bit.

John:

Well, I think that's it.

John:

Dave, do you have anything else to add before we close it out?

Dave:

Really appreciate you taking that time with me.

John:

I know your business.

John:

Thank you very much.

Nick Agnetti:

Dave, we just want to get you.

Dave:

Out of there before 12.

John:

Okay.

Dave:

Yeah.

John:

For checkout.

Dave:

Yeah, they're going to send security in and wrestle me maybe once a year we should do this and I can give you network updates and fun stuff like that.

Nick Agnetti:

Yeah, about 100%.

Nick Agnetti:

We might even do it every six months.

Dave:

Okay.

Nick Agnetti:

Content driven.

John:

Okay, thanks again.

Nick Agnetti:

Thanks David.

Nick Agnetti:

Have fun telling you Dave's.

Nick Agnetti:

Dave's the man.

Nick Agnetti:

He knows what's up when it comes to Canada, so.

John:

Yeah, it was really good to have him on there though.

Nick Agnetti:

No, I thought this was great.

Nick Agnetti:

A lot of content here.

Nick Agnetti:

Any questions?

Nick Agnetti:

Concerns, emotional outbursts?

Dave:

Just.

Nick Agnetti:

Well, message the message the podcast information.

John:

Join us next month for discussion on the cost of international shipping.

Nick Agnetti:

Thanks guys.

Nick Agnetti:

Have a great day.

Nick Agnetti:

If you want to support our podcast, the number one thing you can do is share it on your social media and tag Ascendia.

John:

That helps us get the word out.

Dave:

And we really appreciate it.

Host:

Be sure to subscribe and download our podcast.

Host:

If you want to learn more about today's topic, email us at e commerce usaasendia.com and check back frequently for new discussions on E Commerce shipping to Canada and worldwide.

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