How sending goods through Canada can simplify online selling into the U.S.
When two of France’s biggest cosmetics companies, L’Oréal and Yves Rocher, receive an online order for say lipsticks from a U.S.-based customer, they ship the goods to a distribution center in Canada first.
The orders are then prepared, electronically processed through U.S. customs and trucked to a distribution center in Pennsylvania. Next, they are sent to the closest U.S. post office for final delivery to the customer’s door in all 50 U.S. states. International companies are increasingly attracted to the booming U.S. e-commerce market. Sales totalled $154.4 billion dollars in 2010, a 14.8 percent increase from the $144 billion dollars recorded the previous year, according to figures from the U.S. Commerce Department.
But many non-U.S. groups remain wary of entering this potentially lucrative market because of strict U.S. import regulations and customs formalities. “Failing to comply with the complex regulations can cost time and money,” warns Benoit Mercier, the Montreal-based national sales director for SDV Canada. For groups such as L’Oréal and Yves Rocher, the easiest route to U.S. customers is through the Canadian border.
The advantages of passing through Canada include speed and cost, says Mercier. For example, SDV recently sent a five-pound package from Montreal to California in less than seven days, he adds. The operation, including collection from a distribution center in Montreal as well as customs clearance, cost less than eight dollars, he says. Conveniently located just 80 kilometres from the U.S. border, Montreal offers access to simplified border formalities because of the high level of trade between the two countries, Mercier adds. The U.S., for example, represents more than 80% of Canadian exports.
For the past six years, SDV Canada has offered a door-to-door service for companies selling into the U.S.. Today, SDV transports over five thousand packages daily for L’Oréal and Yves Rocher through the Canadian border and into U.S. homes, Mercier estimates.
In order to manage the high volume of transactions for e-commerce clients, SDV has developed a communications channel with the U.S. Customs and Border Protection and with the U.S. Food and Drug Administration. This channel allows for the electronic processing of all information, allowing companies to save time and effort, Mercier says. The scheme makes SDV one of the largest clients of the U.S. Customs on the East Coast, measured by the amount of information transfers, says Mercier. SDV sends electronically a massive 45,000 lines of information to the U.S. every evening, he estimates.
In addition, bolstered by the 700,000 packages distributed in the U.S. every year, SDV can negotiate attractive rates with other partners to ensure a cost-efficient delivery to the final customer, Mercier adds. “The U.S. remains a tough market for foreign distributors because of the strict rules and regulations,” concludes Mercier. “But shipping through Canada allows companies to focus on sales and marketing and less on logistics.”