But behind the fancy Web site, there are many ways in which this is never really true.

The Web only levels the communications playing field, it does nothing for the operations side of the equation.

A Canadian e-business can look impressive online and offer great products or services that Americans want, only to be stymied by an American border which often hinders the passage of goods.

So why should Canadian businesses be concerned? Gartner Group estimates Canadian online sales at more than US$1 billion in Q4 2001, whereas, in the same period, the U.S.

Department of Commerce pegs American business-to-consumer spending at US$10 billion. That’s a huge market opportunity for an export economy like Canada’s.

The missing piece of the Canadian ecommerce puzzle is the ability to operate like a U.S. company—not to just look like one. Recognizing this, UPS has created Cross Border Services (CBS), a low-risk expansion that lets Canadian business “stay north, grow south.”

“It makes U.S. transactions seem seamless,without any border hassles,”said Amgad Shehata, UPS Canada’s director of marketing. “Your company has a virtual U.S. presence without the enormous capital investment of a real presence.”

How i t works You’ve got an idea and you decide to tap into the U.S. upon launch. You set up three avenues of marketing: direct mail, a Web site and an 800 number.

“Now you come to us.We give you a U.S. business address. Then we’ll buy targeted lists of customers,” Shehata said, adding that the CBS idea was born in the late ’90s to address a growing need among sellers.

If you need direct mail marketing materials, UPS will create a fulfillment package and will mail it from your U.S. virtual office.

UPS will pass along sales leads from business reply cards or an e-mail address, which can be dispatched to salespeople in appropriate territories. “If you have samples of the product or follow-up teaser campaigns, we house them and send them out,” Shehata said.

Activity is chronicled in management reports detailing distribution, response rates, sample packets fulfillment, etc.

Although all of these activities are pre-sale, some of the most obvious value comes after a purchase is made. Mailing product from Canada can be expensive considering postage and duty charges.

So UPS will rent out shelves in its warehouse.

“Send your products from Canada or directly from a third source,” Shehata said.

“We’ll bring them to the U.S.warehouse and even pick-and-pack orders.”

Returns are handled at the UPS warehouse.

Inventories can be checked online and it’s all updated at the end of the day through a secured Web interface.

Payables can be handled as well. Once payment is received CBS will slap on American postage and mail out that day.

“While a customer could use a single service—like direct mail—most require multiple services,” said Susan Webb, UPS Canada’s public relations and advertising manager.

A company can start small with a simple warehouse shelf, which runs for less than US$200 per month. Webb said some clients have shut down real warehouses and gone the virtual route, adding that the average monthly usage cost for Canadian companies is currently between $4,000 and $65,000.

Expanded markets BoardZone.com is a Toronto retailer of snowboards and accessories. After the sport grabbed headlines in the 1998 Olympics, product demand soared and BoardZone now sells more boards online than any other company.

President Don Moscoe wanted to get into the lucrative American market while the sport was booming. He said the company had been preparing orders in Toronto, paying both customs clearance fees and the higher international shipping costs. That was eating into profit.

“Sometimes we ship product from here, sometimes we have stuff from Asia go right to Buffalo,” Moscoe said.

Lower operating costs UPS won’t disclose how many Canadian companies have signed up but claims it numbers in the thousands.

Vancouver-based Lush Canada is one. Lush sells handmade cosmetics and draws U.S. customers to its Web site through search engines and by using online promotions with the likes of Yahoo and VISA.

Lush now has a business presence in Blaine,Wash., a small but busy town on the Canadian border and one of five near-border warehouse sites maintained by UPS (the others are Burlington, Ver., Buffalo, NY, Pembina, ND, and Sweetgrass, Mont., which serve Montreal, Toronto, Manitoba and Alberta, respectively.) “We wanted to get U.S. domestic shipping rates from Canada,” said Sam Azad, manager of Web development at Lush. “The cost of shipping direct from Canada was too high.”

Once in the U.S., product distribution enjoys UPS published rates. “It also cut down on transit time,” Azad said. “Feedback shows customers appreciated it.”

Overcoming e-com caution Studies have found that when two products are otherwise equal, consumers choose businesses in their legal jurisdiction. That’s not good for Canadians.

A virtual U.S. presence eliminates lingering consumer concerns about online shopping. “Americans are not wary of Canadian products, they regard them as high quality,” said Pat Whalen, founder of Fulfillment Systems International, which was bought by UPS in 2000 to create CBS. “A U.S. presence just remove s the border as a consumer issue.”

W e b s h i p p i n g
BoardZone http://www.boardzone.com
Gartner Group http://www.gartner.com
Lush Canada http://www.lushcanada.com
UPS http://www.ups.com