25 Sep 2015 Canadian Subscription and E-Commerce Companies Find Savings in the USA
Not that long ago, moving business “south of the border” meant moving production and packaging to Mexico. Today it is more likely to be e-commerce or subscription box operations and the border they are crossing is the one between Canada and the USA.
We noticed a sharp increase in the number of Canadian based companies that are considering or have moved their packaging and fulfillment to the USA, and of course, we became interested in what might be driving it. We asked a few of our Canadian friends and customers and received answers we can all learn from.
The USA obviously has a larger overall population with many large geographic consumer markets to offer. Unless the product being shipped is exclusively of interest to Canadians (which is not usually the case), it is likely if not probable that the majority of the subscriptions and customers will be in the USA.
Inbound Shipping Cost Savings
Setting up a fulfillment operation in the USA can save a lot of money in terms of inbound shipping whether the suppliers of products and packaging are in the USA or even in Canada. LTL common carrier shipping is all about “lanes” and the more companies and trucks that go there, the more likely you are to find a competitive situation that produces real and in many cases, substantial savings.
Outbound Shipping Cost Savings
As most subscription box and e-commerce shippers discover, the cost of shipping the product to the customer is usually the single greatest cost and can make the difference between making money or losing it. One of our Canadian friends shared that shipping to some USA customers from Canada can cost as much as three times more. Few margins can support that type of shipping cost differential.
A Larger Supplier and Service Base
The three things any packaging buyer seeks are quality, service and of course price; and the USA will typically offer more potential sources to choose from. More options will usually result in better quality and service, but it will always result in greater savings due to the larger, more compettive market.
An Exchange Rate that Currently Favors the USA
Unlike a few years ago when the USA dollar was weak compared to that of our Canadian neighbors, the current exchange rate has shifted dramatically in favor of the USA. Buying USA products and services with Canadian dollars is not as favorable as it used to be so at least for now, setting up a USA based operation makes a lot of sense and money.
At Salazar Packaging and Globe Guard Products we study and learn from the market and these are the current conditions. Everything is subject to change but for now, setting up in the USA might be beneficial to many Canadian based companies. I think everyone will agree that this is smart business whether you are just starting out or have thousands of subscribers.
If and when that move is made, we hope you will consider us when looking for a great supplier of beautiful e-commerce and subscription boxes. Please contact us at Salazar Packaging or call us at 630-551-1700.