Does not ship to this address

Dad wants a golf ball retriever for Christmas. I found the perfect one on Amazon - the #1 selling Callaway 15 foot golf ball retriever for $27.80. But when I went to check out my purchase, the dread message appeared: "Does not ship to this address." I had been browsing on amazon.com, not amazon.ca. 

On amazon.ca the Callaway retriever is only available through a third party seller, at a price of $90.04. Instead, I have a choice of a Intech I99063 18-Foot Hinged Cup Retriever for $21, a 2M Stainless Steel Shaft Scoop Telescopic Golf Ball Retriever for $18.99, or a Pride BWBR002 Black Widow Ball Retriever for $15.95.

I don't want to pay $90 for a retriever that generally sells for more like $30 or $40 (the Callaway retriever retails for $34.40 at Golf Town, but they're out of stock). But I don't want to buy Dad a sub-standard retriever either. Plus, I'm annoyed: why do Canadians have a choice between paying more, or settling for sub-par retrievers? (I checked out Walmart too - the Callaway retriever is available through walmart.com but not walmart.ca). 

I'm not sure what the economics behind this phenomenon is. Perhaps because Canadians have, for many years, been less wealthy than Americans, cheaper models sell better in Canada and more expensive models sell better in the US, hence Canadian retailers don't bother to stock high end products. The demand-driven explanation seems at odds with the fact that the Golf Town is completely sold out of Callaway retrievers. But perhaps Amazon will only sell products with large sales volumes.

Perhaps there are supply chain issues, so the manufacturers of Callaway golf retrievers are unable to get a truck-load or two of retrievers up to Amazon's Canadian warehouse. I can see that - but then why not let me buy the Callaway retriever from the US site and pay shipping and duty? I'm prepared to pay somewhat over the odds to get Dad the best.

Perhaps it's the explanation favoured by pundits, that the Canadian retail industry is just not as competitive as the US industry. Retailers can sell inferior products here and get away with it. That begs the question: why? I can see lack of retail competition being an issue in the rural or Northern parts of Canada, but in Toronto, Vancouver or Montreal? I would have thought that amazon.ca couldn't afford not to be competitive.

I'd welcome your  comments and thoughts - both about the economics of the issue, and also on how well the different models of golf retrievers work. Has anyone had a good or a bad experience with the Intech retriever or the Black Widow one?

Comments

[Jciconsult]

Product availability may be determined by marketing arrangements made with local distributors who may have granted exclusive rights. There are multiple golf town sites in Ottawa and several in Toronto. Did you let your fingers do the walking? If you check the online merchants list on the Callaway site, you will find several that offer international shipment.

[Frances Woolley]

Jciconsult - thanks, I hadn't spotted the second Golf Town store in Ottawa. I'll check out that online merchants list too.

Frances

[Frances Woolley]

Jci - I can't see that list of on-line merchants on the Callaway site - could you post a link?

[Simon van Norden]

Your dad doesn't read your blog, does he?

[Simon van Norden]

You could try www.google.com/shopping to try to find a retailer that will ship to Canada

[Frances Woolley]

Simon, ;) My mother does, my father doesn't.

Thanks - I didn't even know google.com/shopping existed.

[Phil]

You can have amazon.com ship to the UPS Store in Ogdensburg and then go pick it up there (paying duty and taxes at the border). I've done that for tires; worked great. Costs you an hour each way, though ... although, if you drive to Toronto every few weeks like I do, it's almost on the way.

The UPS store charges $5 per package received.

[kevin]

Hi Frances,

This is one of the things that leads Lower Mainlanders to ship things to Point Roberts WA. I was in your exact situation with some presents a couple of years ago.http://www.cbc.ca/news/canada/british-columbia/story/2012/12/06/bc-point-roberts-parcels.html

[tyronen]

If there was genuinely free trade between the US and Canada, retail selection and pre-tax pricing would always be near the same in the two countries, or it would quickly be arbitraged away.

We don't, of course, because the ridiculous security in the US-Canada border is what should be called a "non-tariff trade barrier".

@Phil: Duties at the border? Really? So much for free trade. It seems these deals benefit everyone except consumers.

[Evan]

Here is an interesting argument for a related question: Why is software more expensive in Australia than the US?

http://economics.com.au/?p=9092

[Joseph]

"If there was genuinely free trade between the US and Canada, retail selection and pre-tax pricing would always be near the same in the two countries, or it would quickly be arbitraged away."

For ecommerce, I suspect that a lot of it is that Amazon had a very bad (for Canada) policy of not collecting sales tax in a lot of jurisdictions. Amazon.ca seemed to show up at the same time as the government started taking counter-measures against people ordering from the US to save on paying sales tax.

I wonder if we might see a more unified market once Amazon decides to collect sales tax by default.

[Frances Woolley]

Phil - interesting, yes, that would be worth doing for something like tires.

@kevin - Ottawa's a bit far north for that to make sense for me personally, but I can certainly see why people would do that - plus Port Roberts is a nice place to visit, and buying a tank of gas, a few litres of milk and a couple of blocks of cheese would be enough to pay for the gas/travel time.

[Frances Woolley]

Evan, that's a really interesting argument. I'm not convinced by the idea that cheap software would induce Australian computer manufacturers to raise prices, however.

[Jon]

"For ecommerce, I suspect that a lot of it is that Amazon had a very bad (for Canada) policy of not collecting sales tax in a lot of jurisdictions. "

From a federalist perspective p, I don't see that a government has the right to conscript merchants outside its borders into becoming tax collectors. Rather than stick to principle, people seem to be treating amazon like a cheat.

Meanwhile, there is a very sensible tax regime that would fix this problem: assess sales tax as a flat rate on income and allow deductions for savings. Far from being a huge undertaking, we already have such a mechanism for retirement accounts.

[Frances Woolley]

Actually - on duties and free trade agreements etc - any good that's made in the US or Mexico is just subject to GST/PST/HST when it's imported - which is basically standard practice under a value added tax regime.

So there's no differential treatment of corporations/individuals

[Frances Woolley]

Jon,

There are some serious issues with amazon and tax avoidance - see, for example, here, also here for an account of the "double Irish Dutch sandwich" used by google to avoid Australian taxes.

Though I don't even know that amazon.com could collect and remit Canadian sales taxes even if they wanted to - that's an interesting question.

[Curmudgeon]

Canadian retail trade policies make sense only if you assume that both official and business policies are designed to screw over Canadians.

No one who lives in Canada benefits from being prohibited or officially discouraged from being able to buy goods at market prices. Exclusive distribution agreements, extortionate shipping charges, and customs harassment of retail trade, however, greatly benefit the foreign owners of Canada's major retailers, distributors, and logistics firms.

The federal government could do a great deal to fix the problem, but it's quite clear they're very happy with the current situation and the rents it generates. It would be nice to have a federal government which was more interested in the wellbeing of Canadians than in the wellbeing of foreign (mostly American) capital, but the habit of selling out Canadian people for foreign money has so many decades of history that expecting anything to change for the better is foolish.

[genauer]

did you try to get a statement from Amazon ?
would be interesting

[Chris J]

Frances, do you remember the book-price revolt of a few years ago? When CAD became greater than USD the two prices stamped on a book were glaring. People starting asking at Chapters/Indigo for cheaper books and prices did come down. Prices will come down when enough people say "That is too much money" and demand that the the retailers pass that along top distributors.

[Frances Woolley]

Jon - "assess sales tax as a flat rate on income and allow deductions for savings"

This is something that's been discussed a number of times in this blog. In theory an expenditure tax (i.e. a tax on income minus savings) should be equivalent to HST/GST only better in that it allows for more flexibility in the rate structure. The differences have to do with the costs of enforcement, the ease of evasion etc. Since (by definition) we don't know much about the extent of (successful) tax evasion it's hard to know for sure which taxes have higher rates of evasion. I tend to be of the view that having some taxes collected when people spend money and some taxes collected when people earn money leads to a higher level of compliance overall than trying to collect taxes when people earn money only.

Collecting taxes on income minus savings are particularly problematic when people are self-employed and end up paying all of their taxes in a single (or a series of) instalments - what happens when people haven't set the money aside and aren't able to pay?

[Determinant]

@Phil: Duties at the border? Really? So much for free trade. It seems these deals benefit everyone except consumers.

One of my previous jobs was at a company that did extensive cross-border trade. "Free-Trade" does not mean non-dutiable, it means that duties are exacted only for revenue, not for protectionist purposes. When you send goods from Canada to the US and vice-verse, there are lots of customs forms to fill out, not to mention a thick binder of goods classifications.

Goods aren't people. Freight doesn't drive right across the border and just pay a toll to Customs. Most of the time freight shipments are coordinated by a Customs Broker who manages all the duties and regulations. These brokers have warehouses at border crossings to hold goods for customs. This is going from Canada into the US.

Collecting taxes on income minus savings are particularly problematic when people are self-employed and end up paying all of their taxes in a single (or a series of) instalments - what happens when people haven't set the money aside and aren't able to pay?

The same thing that happens now: they get charged daily interest on the unpaid balance until it is settled.

[Jacques René Giguère]

Frances: this week, to complement the gin I bought for my mother ( the dear old crossword lover mentionned last year...) with high-qulity tonic water ( Q, FeverTree and Fentiman's). Not possible to get them from the U.S. Exclusive distributor arrangement. I had to buy from a retail grocer who shipped it by bus , way more expensive than UPS-FedEx...

[Frances Woolley]

Jacques Rene - Interestingly, we can get Fentiman's at the local lebanese grocery store - it's the only place in Canada I've ever seen it sold, and why they stock it I have no idea. I would guess that they get it from somewhere in Montreal because they sell quite a bit of produce and dairy from the Quebec also.

B.t.w., the Golf Town store on the Gatineau side was much better stocked than the local one here in Ottawa. I think that's a case of the similar products being shipped to stores everywhere across Canada, and local tastes and buying habits being quite different.

Determinant - the question then becomes: why can't this customs brokerage process be speeded up and automated?

[CJOttawa]

I believe the reason for this type of restriction is much more simple:
"bureaucracy" and "ignorance."

Some things sold in America will likely never be available to Canadians, things like "switchblade knives" and "fully automatic handguns".

Other things - say, "pocket knives" and "handgun holsters" - are very clearly legal but because they are related to items that clearly aren't, retailers shy away from offering them for sale into Canada.

You can buy variants of them here in Canada. Walk into Canadian Tire or LeBaron Outdoor and you can buy both of those, though not necessarily the best models - which sends me to Amazon, where I can see but can't buy.

So, I come back to "bureaucracy" - there's paperwork required to legally sell certain items (say, a "TPS report" certifying the pocket knife you're selling doesn't have a switch blade) and "ignorance" - a seller doesn't understand what they need to do to sell something so they just don't bother, focusing on the other 90% of things they can sell with no effort.

I suppose you could argue "laziness" instead of bureaucracy and ignorance.

I work for the federal government, having left a private sector job where I dealt with the government almost daily and I see this type of thing *daily* which I where I draw my conclusions about cross border retail.

[RPLong]

When I lived in Canada, I got really tired of having to pay bizarre duties on seemingly ordinary imports. So I actually dusted off the NAFTA guidelines and read the relevant sections, the ones that pertained to those things I wanted to import.

What I found was that I was being charged duties that were not supposed to be there. Go try telling UPS or FedEx that they've passed a bureaucrat's fee to you in error and see how much traction you have when you produce the actual NAFTA text and argue your case.

I don't think a lot of people understand what charges are and are not supposed to be there. And in many times, the duties are discretionary, left to the border agent who makes the decision arbitrarily. Because this happens, it's understandable that many US retailers have given up trying to export shipments to Canada. There is a lot that can go wrong, and nobody really seems to have the answer.

This is what happens when a "free trade agreement" grows to thousands of pages and the lawmakers leave it to ordinary people - to non-experts - to figure out what they're supposed to do.

[Bob Smith]

Tyronen,

Buying from Amazon.com isn't much of a gst/hst dodge, since physical goods get assessed for gst/hst when they cross the border (at least in theory - the cbsa os lften hit and miss)), ditto for duties on goods originating outside of NAFTA.

Obviously that doesn't work for intangible property (ebooks and software) downloaded on line - although Canadian recipients of those goods have an obligation to self-assess for GST/HST. I think its safe to say the no one does, but that's really on us rather than on Amazon (so much for people being willing to pay more taxes).

Amazon.com could probably voluntarily register for gst purposes and collect gst if it were so inclined on the basis that it regularly solicits orders for supplies of tangible personal property for delivery in Canada (244(3)(i) of the ETA). Of course, it would have to file monthly gst returns and post security equal to half of its expected net tax, so I can understand why its not so inclined.

[Bob Smith]

Just to follow-up on the last point, the issue of duties is a real one given the quantity of goods we consume that are ultimately sourced in non-NAFTA countries - clothing is the obvious example, since tariff rates are often preposterously (and disgracefully, in the case of children's clothing) high on textiles. Even if the tarrif itself isn't prohibitive, the administrative cost associated with processing it may deter sales.

Similarly, differing health and safety standard may deter imports - the cost of getting a US car adapted to meet Canadian standards is often enough to largely offset the hefty price differential between Canada and the US - though not on high-end cars. Who knows, maybe we have safety regulations on golf ball retrievers (although sounds unlikely)

[Jciconsult]

Here is the link. It is on their global store.
http://locator.callawaygolf.com/global/en-us/shop/callaway-authorized-online-retailers.html

[Frances Woolley]

RPLong, Bob, CJOttawa -

This is what I love about WCI - people have so many different insights from so many different perspectives.

It seems that the assessment of duty could be simplified and made more transparent - how hard would it be to write a program that would, through a series of simple questions, work out the duty to be paid on a product?

The duty issue explains why amazon.com doesn't ship to Canada. It doesn't explain why amazon.ca doesn't stock Callaway ball retrievers - if that brand is the #1 seller in the US, why not distribute it in Canada?

[CJOttawa]

One other thing to add: opaque business contracts between manufacturers, wholesalers, distributors and retailers can affect availability of specific products, lines or model years.

A particular item may fall under a particular contract, say, the "2012 Callaway Distributor Territory Agreement". (fictional title, based on actual contracts I've signed as a distributor in past).

Bureaucracy: a law clerk may have forgotten to copy-paste a paragraph from last year's contract thereby omitting the distribution rights for Callaway ball retrievers into Canada but leaving everything else intact.

OR, there might be a new minimum quantity threshold for items under $50 in the 2012 contract. The Canadian distributor didn't want to buy 10,000 Callaway retrievers because they still have a bunch from last year.

Unfortunately, the Callaway distribor contract may also prohibit the US distributor from selling into the Canadian distributor's territory. Result: the consumer can't have ANY of the new retrievers.

I wish I were making any of that up but I've seen very similar things pop up when I was a distributor (albeit for aircraft parts, not golf equipment.)

[Jim Sentance]

Not surprised we have trouble with the international border when we can't even ship freely across provincial borders. PEI announced this week they're raising the alcohol limit so I can now freely bring a case of wine into the province, but apparently I can't ship it, even from a Canadian winery.

At least not legally.

[Determinant]

RPLong, Bob, CJOttawa -

This is what I love about WCI - people have so many different insights from so many different perspectives.

It seems that the assessment of duty could be simplified and made more transparent - how hard would it be to write a program that would, through a series of simple questions, work out the duty to be paid on a product?

The duty issue explains why amazon.com doesn't ship to Canada. It doesn't explain why amazon.ca doesn't stock Callaway ball retrievers - if that brand is the #1 seller in the US, why not distribute it in Canada?

In order to pay duty, you must first determine which customs category the good falls into. There is a thick binder full of these categories, all with its own rate. Of course a CBSA Officer can come to a different conclusion than you, so you still might have to pay.

I once tried to purchase a favourite BBC series of mine when it came out on DVD. The BBC said it wouldn't ship to Canada because

[Bob Smith]

CJOttawa's scenario sounds entirely plausible.

Mind you, it could just be that the demand for gold ball retrievers (particularly in December) is marketly different in Canada than in the US. After all, after the golf equipment market in the US is likely different from Canada's - this time of year people are actually playing golf in vast swaths of southern states, whereas we're still a good 4 months and change away. Maybe there's not much demand in Canada for high-end golf ball retrievers?

[Determinant]

Grr....

I once tried to purchase a favourite BBC series of mine when it came out on DVD. The BBC's Canadian customer service agent said it wouldn't ship to Canada because it had a distribution arrangement with the US and Canada (Region 1 in media distribution circles) and the distributor had not put out the DVD's.

I was told online by a friend in publishing that British publishers generally retain Canada as part of their own territory (which is why we got the British edition of Harry Potter) and contract out American distribution while American publishers keep Canada and contract out British distribution.

[Frances Woolley]

Jim - just don't tell anyone about the bottles of single malt I smuggled out of Alberta last time I was in Calgary....

[Jacques René Giguère]

Frances: single malt, Fentiman's, ice cider. This blog is the most civilized place in economics...

[Determinant]

Ah, the Importation of Intoxicating Liquors Act. ;)

[Jim Sentance]

Frances - if you ever visit, I'll have to swear you to secrecy before showing you my cellar.

[Neil]

"I don't think a lot of people understand what charges are and are not supposed to be there. And in many times, the duties are discretionary, left to the border agent who makes the decision arbitrarily. Because this happens, it's understandable that many US retailers have given up trying to export shipments to Canada. There is a lot that can go wrong, and nobody really seems to have the answer."

I don't find this to generally be the case, as I've often purchased products from the US online. What I have noticed is that those that ship UPS always have extra fees (usually not enough to fuss about, though) while those shipped through the postal system (USPS/Canada Post) rarely even get dinged for GST. Lesson learned: UPS is incompetent. And it's not like Amazon won't ship to Canada - they do a product-by-product decision, which pretty much guarantees that it's related to their distributing contract, not anything to do with the bureaucracy or tax regimes of the two countries.

[Gusgutoski.wordpress.com]

The explanations I've read so far in this thread apply only to physical goods; none addresses the fact that even ebooks cost more to download from Canada than from the US. Example: "The rent is too damn high" by Matthew Yglesias can be downloaded in the US for $4 USD but costs $5 CAD. (To get the US rate you need an American credit card, which is how they enforce the discriminatory pricing.) How can they get away with this?

Incidentally, Ryan Avent's "The gated city" is very similar to "The rent is too damn high" but it sells for $2 in both the US and Canada (in either currency) and is available in more open formats such as epub with no DRM. Go figure.

Also, Frances, I have a crush on you. Do you have any money for a postdoc?

[Matthew]

I think the reason is almost certainly price discrimination. Canadians and americans probably have different willingness to pay, and US law is riddled with tons of provisions allowing firms to prohibit unauthorized import/export of their goods, which really exist for no other reason than price discrimination. The classic example is with textbooks, where copyright law allows publishers to prohibit importation of their books sold in foreign countries, with the result that Americans pay hundreds of dollars for books that cost maybe twenty or thirty dollars in most of the world.