Shopping Discussion

Zappos to stop shipping to Canada

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  • Mar 29th, 2011 7:03 am
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Deal Expert
Jan 7, 2002
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Waterloo, ON

Zappos to stop shipping to Canada

http://canada.zappos.com/

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(This is effective April 1st so maybe it's their idea of a joke.)
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Deal Addict
Jul 18, 2009
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Ridiculous bureaucracy, greedy couriers over-zealous CBSA have killed the business model.
So much for NAFTA!
Popular online shoe retailer Zappos.com says it is pulling out of Canada because of high brokerage fees and confusing cross-border shipping policies.

“We have struggled with general uncertainty and unpredictability of delivering orders to our Canadian customers given customs and other logistics constraints,” Zappos chief financial officer Chris Nielsen said in a memo posted on the company’s website.

“We have made the difficult decision to shut down the canada.zappos.com site and stop shipping to Canada.”

Zappos, which will end Canadian sales April 1, said confusing distribution agreements that limit the brands of shoes Zappos can sell in Canada also contributed to its decision.

Contacted Thursday, the company refused to offer further comment.

Zappos, founded in 1999, quickly became the go-to place for shoe lovers to get bargain basement prices on their favourite brands of footwear. The company hit $1 billion U.S. in annual sales by 2008.
Read more: http://www.ottawacitizen.com/Shoe+retai ... z1Hc6XitkG
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Oct 14, 2003
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Most footwear is not manufactured in North America, therefore not part of NAFTA.
Science
is the new
rock 'n'
roll.
Deal Expert
Jan 7, 2002
29710 posts
29129 upvotes
Waterloo, ON
You're a little late with this "news" http://forums.redflagdeals.com/zappos-s ... a-1019465/
apn64 wrote: Ridiculous bureaucracy, greedy couriers over-zealous CBSA have killed the business model.
So much for NAFTA!
OTOH, Some US vendors are taking the opposite approach, e.g. LL Bean: Announcing FREE SHIPPING to Canada

[IMG]http://www.llbean.com/freeshipping/imag ... _intro.gif[/IMG]

Note that with LL Bean all duties, taxes, brokerage, etc. is calculated and charged at time of order and shipments are precleared into Canada. ISTM Zappos could have done the same thing if they wanted to. (Their owner, Amazon, already does this, although shipping isn't free.)
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Deal Expert
Jun 14, 2001
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Ojam wrote: Most footwear is not manufactured in North America, therefore not part of NAFTA.
Still sucks tho that we have one less option. I never shopped there (umm...I'm wearing shoes I bought at the supermarket) but it's this type of retail bunk we need to work out along with stuff like being able to sub to Dish Network etc.
Should we have open retail markets to bring more UK and US retailers to Canada?wegmans-tops-trader-joes-americas-favou ... #p27788812
Deal Expert
Jun 14, 2001
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Ha! Just read the Ottawa Citizen article. Funny that UPS had nothing to say about Brokerage Fees since they're the worst gouger of Canadians for land shipments.
Should we have open retail markets to bring more UK and US retailers to Canada?wegmans-tops-trader-joes-americas-favou ... #p27788812
Deal Expert
Jan 7, 2002
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Waterloo, ON
NG wrote: Funny that UPS had nothing to say about Brokerage Fees since they're the worst gouger of Canadians for land shipments.
I despise Unmitigated Pond Scum as much as anyone for the rapacious brokerage fees they charge. But what I don't understand about Zappos' decision is why they don't do what their parent Amazon, as well as other large retailers like Newegg, LL Bean, Eddie Bauer, etc. do: enter into an arrangement with CBSA so that all sales to Canadian addresses are preprocessed, prepaid and precleared before they get to Canada. That way Canadian customers know up-front how much an item will cost them, delivered to their door and they know that those items won't be delayed for excessive time periods at the border. That option works. It even works when UPS provides the shipping/brokerage services. Why don't more large US sellers use it?
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Deal Addict
Jul 18, 2009
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Ojam wrote: Most footwear is not manufactured in North America, therefore not part of NAFTA.

Irrelevant where the product is produced, since at most, it just adds a small amount of duty. Does this country even have a domestic shoe industry to protect?

The issue is that an American internet retailer has called it quits on Canada, citing the complexity and cost of getting merchandise over the border.

The bureaucratic border bullschitt should have dissolved under NAFTA, and whether we like it or not, UPS probably does have some costs, which it seems to exploit into exorbitant brokerage fees. It's simple: streamline the border and costs will fall as the complexity is removed from the process! Again, it's called N-A-F-T-A.

I loathe UPS' border shipping costs as much as anyone, but they're a great shipper if you can operate within the constraints. What's most unusual about this story IMHO, is why Zappo's isn't integrated into its AMAZON parent's highly efficient e-commerce infrastructure.
Deal Expert
Jan 7, 2002
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apn64 wrote: The bureaucratic border bullschitt should have dissolved under NAFTA, and whether we like it or not, UPS probably does have some costs, which it seems to exploit into exorbitant brokerage fees.
Canada Post performs the same "service" for $5, presumably at break-even if not at a profit, so your beef isn't with NAFTA or cross-border bureaucracy but rather with UPS' rapacious brokerage fees.
What's most unusual about this story IMHO, is why Zappo's isn't integrated into its AMAZON parent's highly efficient e-commerce infrastructure.
I asked the same question in the post above yours. But again, Zappos' decision seems to have little to do with NAFTA and government bureaucracy because a good solution not only exists but is being used effectively by their parent company.

I suspect that there's more at play here. Consider for example that Zappos sells only shoes. Buying shoes online that fit properly is difficult to do. Shoes also tend to be bought based on style which is also difficult to assess online. To encourage online purchases Zappos offers very generous return policies including free return shipping. Returning items to the US creates additional complexities because the customers want to make sure that they're credited the HST and duty they've already paid (or not charged it again on the replacement shipment.) It seems to me that selling shoes across borders simply may not make much business sense, especially with Zappos' high level of customer service.

So perhaps (a) Zappos realized that their business model simply isn't viable across borders, (b) they didn't want to spend the cost of building domestic Canadian infrastructure to find out if they could make it viable and (c) by suggesting that the reason for quitting Canada is our bureaucracy they can bow out more gracefully than if they acknowledged the real reason.

(Note: this is only my speculation. But it makes more sense than blaming everything on NAFTA and/or bureaucracy.)
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Deal Addict
Jul 18, 2009
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^ I hear you, but;

1. CanPost is a crown corporation, so we don't know the true cost of providing the service. I'm not defending UPS' border practices, but I think it's unreasonable to compare prices between a govt-funded/sponsored organisation and a private corporation.

2. I'm not blaming NAFTA for anything. My beef is that despite NAFTA, it's still a royal pain in the arse to get stuff into this country. Add a population of 1/10 the USA and many enterprises decide it's just not worth the hassle. The consumer loses because lack of competition yields higher prices.

3. If it wasn't for the GST, there might not be an incentive for the feds to sniff every package for revenue opportunities, which in itself led to all the bullcrap of HST collection, refunds et al.

The Americans certainly have their problems (DHS etc.), but tax collection and other govt. bureaucracy created this problem, and NAFTA didn't go far enough to streamline cross-border commerce.

Did you see this? http://money.canoe.ca/money/mymoney/can ... html#texte

Fortunately for me, I travel to the US frequently enough for business/personal reasons that I seldom ship anything over the border. However, I dislike seeing options shrinking for all Canadians, especially at a time when C$ > US$ and domestic retailers refuse to pass on the savings.
Deal Fanatic
Mar 21, 2002
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Manitoba
apn64 wrote: Irrelevant where the product is produced, since at most, it just adds a small amount of duty. Does this country even have a domestic shoe industry to protect?

From what I recall the duty on footwear from outside N. America runs at about 16 -18% and then GST/PST are on top of that. I wouldn't call that a small amount. Footwear and clothing are, I believe, amongst the last remaining high duty items. They are the worst items that you would want to build a cross border business on because of this. Returns to the US would be a big hassle because I believe the US itself has a 10% duty on such footwear so returns have to be properly cleared to avoid getting snagged by this.

As far as a "domestic shoe industry to protect" most of that is long gone but there was some remnant I believe mostly in Quebec which makes the issue of duty elimination very politically sensitive so don't hold your breath for that to happen quickly.
Deal Expert
Jan 7, 2002
29710 posts
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Waterloo, ON
woof wrote: From what I recall the duty on footwear from outside N. America runs at about 16 -18% and then GST/PST are on top of that. I wouldn't call that a small amount. Footwear and clothing are, I believe, amongst the last remaining high duty items. They are the worst items that you would want to build a cross border business on because of this. Returns to the US would be a big hassle because I believe the US itself has a 10% duty on such footwear so returns have to be properly cleared to avoid getting snagged by this.
But even if the duty was small, the hassles involved in collection and brokerage, in both directions plus as you say, at both borders for returns (with Canada Customs on the way out to refund the HST plus duties and then with US Customs on the way in to avoid the 10%), would seriously impact the business viability.
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Feb 26, 2008
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bylo wrote: Canada Post performs the same "service" for $5, presumably at break-even if not at a profit, so your beef isn't with NAFTA or cross-border bureaucracy but rather with UPS' rapacious brokerage fees.

I asked the same question in the post above yours. But again, Zappos' decision seems to have little to do with NAFTA and government bureaucracy because a good solution not only exists but is being used effectively by their parent company.

I suspect that there's more at play here. Consider for example that Zappos sells only shoes. Buying shoes online that fit properly is difficult to do. Shoes also tend to be bought based on style which is also difficult to assess online. To encourage online purchases Zappos offers very generous return policies including free return shipping. Returning items to the US creates additional complexities because the customers want to make sure that they're credited the HST and duty they've already paid (or not charged it again on the replacement shipment.) It seems to me that selling shoes across borders simply may not make much business sense, especially with Zappos' high level of customer service.

So perhaps (a) Zappos realized that their business model simply isn't viable across borders, (b) they didn't want to spend the cost of building domestic Canadian infrastructure to find out if they could make it viable and (c) by suggesting that the reason for quitting Canada is our bureaucracy they can bow out more gracefully than if they acknowledged the real reason.

(Note: this is only my speculation. But it makes more sense than blaming everything on NAFTA and/or bureaucracy.)

Zappos also sells clothing,jewlery,cosmetics- so not only shoes.
Deal Expert
Jan 7, 2002
29710 posts
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Waterloo, ON
Bookpreviews wrote: Zappos also sells clothing,jewlery,cosmetics- so not only shoes.
Your point?

All of which have the similar characteristics to shoes for the purposes of this discussion: (a) they attract duty in addition to HST, (b) they come in a variety of sizes, colours, styles that are often hard to fit via online purchases, and (c) their aesthetics are subjective. Contrast with buying a book, DVD or computer, etc.

They also sell other stuff. But all that notwithstanding, shoes still represent, by far, the bulk of Zappos' business.
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Newbie
Feb 23, 2011
8 posts
I will start buying in my own country (Canada) when the suppliers stop screw*ing us. Our dollar as been par on higher than the U.S. for about 2 years. Now since most retailers order stock 1 year in advance, some of the savings should be passed on to us the consumer. And by the way, now the HST and Environmental Handling Fees on electronics. I'll continue to shop in the U.S. And don't give me the patriotic "Buy in your own country and support the economy". BS!!!!!!!!!!!!!!!!!! Nothing is made here anyways. I just bought an Onkyo 7.2 from the States for $500.00 shipping included. The cheapest I can find it in Canada is $569.00 + 13% and Eco tax. I think not. Do the math.
Deal Addict
Jul 18, 2009
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^ While I wholeheartedly agree w/ your sentiment, doing the math suggests it might not have been worth the trip to Ogdensburg or Watertown;

Your domestic price is actually;

($569 + $9.95 ECO ) * 1.13 = $654.21, assuming the HTB ECO tax is applied. If classed as an audio player, this is reduced to $2.75, but govt. usually rounds UP :(

Assuming you paid no State sales tax and declared the item coming home, your US cost is;

$500 * 1.13 = $565

...and then the $89 saved was offset by ~$20 in gas and ~$5 in bridge tolls, plus Fx costs.

Was it really worth spending 2-3hrs driving to save just over $60 on a $500 item?

Hopefully, you got waived through, thus avoiding the HST hit.

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