Why is Quebec e-commerce at a disadvantage
- Posted by daige
- On 2017-04-05
- 0 Comments
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Recently, one of my clients contacted me and told about a real problem here in Quebec and Canada in term of e-commerce. It was something that I had already knew and I asked him to explain: he gave me the numbers and I will tell you why it makes no sense at all. If you are involved in e-commerce or if you are interested in e-commerce or retail in Quebec and Canada, that would be interesting for you and I would like your feedback on the matter.
The Government of Canada and Quebec, in addition to not supporting Quebec’s electronic commerce, seem to be encouraging US e-commerce.
You’ll see by the numbers
First, there was Peter Simons last year who made a public outing at the Hop Salon! of the CQCD by saying that it was less profitable to do business in Quebec, but that doing business online was even less profitable because it was necessary to charge the GST-QST to consumers.
I have the impression that the small 15% of GST-QST does not change much, mainly because we see the GST-QST returned to the shopping cart, at the end, when the credit card is presented. I feel that the problem comes from elsewhere and you will see with the numbers that I will give you that it is still ridiculous.
So I asked my client who, by the way is a medium-sized merchant. It’s not someone who ships 3 parcels a day, it’s someone who ships a few hundred parcels a month. A merchant who lives well on the internet, and who does great online business.
I asked him: give me the shipping price for a pair of sunglasses. A pair of sunglasses is about the size of a smart phone once it’s packed. It’s still relatively small. He tells me that 80% of the parcels bought on the Internet come in the format and the weight of a pair of sunglasses.
What is the weight? It was approximately 100-113g that we calculated to make our shipping submissions.
You’ll see, it just does not make sense …
I asked him: Do it as if you were sending a pair of sunglasses to Sainte-Brigitte de Laval, this is the village where I was born on the northern edge of Quebec. The postal code is G0A 3K0. Because there is a 0 to the 2nd character it is considered rural but I can assure you that today it is not as rural as when I was born.
So I said, Ok, you’re in Montreal. Make it as if you wanted to send a pair of sunglasses to Sainte-Brigitte de Laval.
So from Montreal to Sainte-Brigitte de Laval, Canada Post charges $ 14.74 Canadian to ship a pair of sunglasses from Montreal to Sainte-Brigitte. It is about 25min north of Quebec City.
I asked him: Let’s say you took your car and crossed the US customs to ship your package, how much would it cost? So I made the $ US $ CAD conversion. It would cost $ 3.17 Canadian to ship the same pair of sunglasses from US Customs to Sainte-Brigitte from Laval to Quebec City.
It makes no sense.
3.17 $ from the USA and 14.74 $ from Montreal!
It’s 3-4 times more expensive to ship the same pair of sunglasses.
It’s already hard for Canadian merchants, how do you expect them to compete with a low rates like that. Then necessarily they have to raise their price by $ 11. Clearly because the shipping will cost $ 11 more.
$ 11 for a pair of glasses that can be worth 20, 100 is still a major difference.
Do you want to know the best?
With this $ 3- 4 shipping fee: what’s going on? It’s Canada Post who carries the package anyway!
It’s Canada Post that carries the parcel! That’s the biggest aberration!
The pair of smoked glasses that will cost $ 14 to ship from Montreal to Quebec … it is Canada Post who will pick it up from the merchant and will take it to the customer in Quebec.
The same pair of smoked glasses that will cost US $ 3 in Quebec City, USPS takes the pair of glasses at the merchant, Canada Post picks it up and transports it to the customer in Quebec City!
You see? It is the same route, it is Canada Post that will charge 3-4 times more to our Quebec merchants!
That’s the aberration in the end because it’s the same company, it’s the same mileage …
Another example: Canada-Europe
Let’s say that our Canadian merchants in Quebec wanted to ship the same pair of sunglasses to Europe. Exporting is good for the economy.
If they were shipping the same pair of glasses in Europe, it would cost $ 40.59 with Canada Post from Montreal, meanwhile if they take their car to go to US Customs to ship from the US, we are talking about 7,60$ Canadian.
So $ 7 from the US, $ 40 if it’s from Canada.
I mean, it’s impossible: how do you expect our eCommerce from to do business in Europe
It’s expensive! It’s a huge barrier …
We’re talking about $ 33 more shipping. $ 33 on an 100$ item. it’s 33% more expensive. Besides, there is the GST / QST in all of this and a tax system, but we are not supposed to charge taxes to customers outside Quebec outside of Canada.
Example: Ship to Japan
Let’s say you want to ship to the rest of the world. In Japan, the same pair of smoked glasses will cost CAD $ 8.43 shipped from the US, $ 43.63 shipped from Canada. I don’t know if you realize the difference, we’re talking about a $ 35 difference.
Well, in Quebec it makes it very difficult, if not impossible to sell online.
You can ship your merchandise to the United States and return it to your customers in Canada. You are going to be able to have similar rates that are roughly 66% cheaper.
But nonetheless, for a small merchant who launches his online shop … I do not understand how governments think they will survive, but with rates like that, it’s impossible!
Somewhere else the Government or Canada Post will decide to help our traders here.
You may know the statistics: $ 3/4 spent by Quebecers online is sent out of Quebec. $ 3 out of 4. That means there’s only one dollar left here.
But think about it: why would a Quebecer buy on the internet at a Quebec dealer when it’s going to cost $ 3 if he buys from a US merchant in difference of $ 14 if he buys at a Quebec dealer? It makes no sense!
Do business with US consolidators or with Quebec companies that have offices in the US and can ship your merchandise from the US to Quebec consumers. This is the only solution, if not, we are just not in the “game” in Quebec. We can not be in the “game” with shipping rates like this!