November 13, 2004
cross border e-commerce has never looked more appealing
A thought occurred to me as I was doing some christmas shopping research on-line.
The under performing US economy - coupled with the downright nutty spending policy of the Bush administration has finally brought the long time overvalued greenback down to earth.
As a result the long time undervalued Canadian currency has been on a steady rise.
This is good news for Canada and Canadians in both the Long and Short term. Not only will this rise in the dollar force Canadian manufacturers to be more competitive and improve their productivity (the long term benefit), but manufacturer suggested retail pricing (MSRP) is, as usual, lagging behind the current exchange rates.
This second point has two short term benefits for Canadians. 1) Canadian retailers who import goods from the US and sell at or near the MSRP have a built in profit margin above and beyond the normal markup. 2) Canadians that shop direct from the US at american MSRP can save oodles.
Of course as more people become wise to the savings to be had shopping across the border the benefits to Canadian retailers will decline - but it is at that point that you will start to see much of the MSR pricing come back in line.
The area that consumers will notice the biggest lag in pricing this holiday shopping season is in Books, CDs and DVDs. Luckily these are just the sort of gifts that people tend to buy the most.
Take for example The Simpsons Complete Fifth Season. (Something that I would love to see under my Christmas tree - hint hint)
Amazon.ca says that title has an MSRP of CDN$69.98- but being a high volume item they are kind enough to offer a 30% saving and sell it to you for CDN$48.89.
Amazon.com says that the same item has an MSRP of US$49.98 - but offer a larger 35% discount and sell it for US$32.49.
So that means if you order from the US site at today's exchange rate you will end up paying CDN$38.66. A savings of over CDN$10 - or an additional 20% off the already discounted Canadian price.
Even if Amazon.com only offer a 30% reduction on the american MSRP - the price would be US$34.98 or CDN$41.63 - A full CDN$7 off - or 15%.
Of course keep in mind that I have used amazon simply as an illustration. If you factor in the shipping costs for amazon.com to Canada most of your savings get gobbled up... Even so you are still ahead by a tiny margin. Try to find sites that have lower shipping rates... or simply make a jog across the border.
If you were planning on spending about $1000 on these type of gifts this year - you could save up to $200! Now that's what I call a happy holiday.
But, if you want to take advantage of these savings for the holiday shopping season you need to act fast. Not because I expect the pricing to change before the holidays - but rather that if you want to get those orders here on time, you have to place them soon.
andre