Marketing Podcast for Shopify Merchants: The Ecommerce Coffee Break

Ecommerce Shipping to Canada with No Surprises | #179 Monty McCallum

May 02, 2023 Claus Lauter: Ecommerce Podcast Host | Shopify Partner | Marketing Optimizer Season 4 Episode 42
Marketing Podcast for Shopify Merchants: The Ecommerce Coffee Break
Ecommerce Shipping to Canada with No Surprises | #179 Monty McCallum
Show Notes Transcript

In this Ecommerce Coffee Break Podcast edition, Monty McCallum, innovation lead at, joins us to discuss efficient ways to enter Canada's $77 billion market and ship products without any unexpected complications.

On the Show Today You’ll Learn:

  • Why is it challenging to ship from the US to Canada
  • Why do merchants face obstacles when shipping internationally
  • How to properly configure shipping to Canada
  • How to track your international orders
  • The recommended approach for merchants when shipping high-priced items to Canada

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Claus Lauter: Hello and welcome to another episode of the E-Commerce Coffee Break Podcast. For a lot of us merchants, they are aware that there is a huge market, just laws of them. There's about 35 million Canadians waiting to buy products, but a lot of merchants shy away because of. Customs trade matters, high broker trades, import fees.

So it can be quite complicated actually to get your shipment into Canada, there is a solution for that and we wanna talk about that today. So on the show today as a guest, I have Monty McCallum. He is the innovation lead of border and he's working for over 20 years in the field of customs international trade.

Yes. Worked previously for the Freight network, where he provided expertise on customs and international trade matters. So he's a perfect person to talk to and I would like to welcome him to show. Hi Monty, how are you today? 

Monty McCallum: Hey, Claus. Thanks for having me. I'm great, Monty. As I said, 

Claus Lauter: Border crossing with shipments is not the easiest task.

A lot of smaller, medium enterprises shy away from that because they want to avoid the red tape and all the complications that can come with it. Now, tell me a little bit what makes it so difficult to get shipments from the US into Canada? 

Monty McCallum: There are a number of complicating factors, but I'll start at the core couple and one would be, The idea that everything that comes into the country needs to be categorized by the government.

And so they want to know what's coming in. And there's literally more than 15,000 categories. Often, it's referred to HS codes or tariff codes, there's more than 15,000 of them. So to start off with the idea of understanding what's coming from the government's perspective is a complicated one.

Then if you follow that through, It's then how do we actually get it to somebody in a cost effective manner? as things have progressed, have as e-commerce has grown, the small parcel carriers, the UPS's DHLs of the world, have done a great job at incorporating customs into their, delivery networks.

However There's always room for improvement. , and currently the way things are configured, the majority of small parcel delivery companies will offer a c o D type of solution where the truck shows up, they ask for payment for customs duties, and there's a really negative effect on the brand, for the customer.

In fact, there's more than 25% of the shipments that show up in Canada are c o d, if you will. So that experience isn't great. And then lastly on the, complicated side is if you do use, , a small parcel carrier, their customs brokerage team, often what they'll do is charge a little bit differently on every shipment that shows up.

Claus Lauter: I wanna go a little bit deeper in there. You said there's these 15,000 different categories where I think that's where a lot of merchants already have a problem to assign their products to all these, or two, a category or more than one category.

And then you need to have an expertise on the custom rules and depending on what the product, if it goes even deeper. So where do you see merchant struggle the most? Is it the paperwork, is it finding the right carrier? What's the biggest problem? 

Monty McCallum: Some of the platforms, such as Shopify where we're living , with our app is, , they bump into how to configure, the shipping properly.

And they are not understood of the transparency problem, right. Recently Shopify did drop an update that allows you to inject duties and taxes at time of checkout, which is great. But then those don't necessarily line up to what the carriers are charging because then they they'll over classify against what you expect it to be on your store. And so those difference in maybe the duty. The taxes are usually the same, but there's an application of duty that also gets involved. So again, the complications around the types of charges. 

Whole piece is now technically catching up. However, there's a disconnect because it's not an integrated solution, right? So it's not pre-calculated and understood of what the product is before the transaction happens. And that's where, one of the heavy lifts that we do. I hope that answered your 

Claus Lauter: question. Absolutely. , it's a very sensitive heart of the buying process if you think you pay one price and at the end of the day it is a different price that you then really get charged to. And in regards of customer lifetime and recording purchases, people might cha shy away.

So, as you said with border, you found a solution to that problem. How does that work? 

Monty McCallum: First of all, border Buddy is a customs broker. Inherently we have, different, lanes of business. Anyone that wants to import anything into both Canada and the US we can help them.

We also work with freight brokers and, freight forwarders as the back end of their holistic solution where we can provide customs brokerage for them. But, in the case of e-commerce, we have an integrated Shopify app that will predict the accurate amount for duties, taxes, and shipping at the time of checkout.

it takes, five to 10 minutes to install our app and get it going. And after that, the customer will see the person coming on buying we'll get the option for three different services. A standard ground express and expedited bundled in there is everything, taxes, brokerage, all cross border charges.

So then they can make a decision on, what that looks like. They choose the shipping service cuz it's all bundled together. They pay for it. We'll deliver a D D P or a duty deliver paid label, to the shipper, including a commercial invoice. So it's all bundled up. Li nicely in that fulfillment pack so the, whoever's shipping it doesn't have to produce more documentation or get into, creating specific terms labels.

And then, the customer doesn't see any surprise charges on the other end and the merchant doesn't get any, Charges after the fact that don't align with what was charged to the customer. 

Claus Lauter: Okay. So basically you do all the paperwork, gets created in the background. The merchants just print it out, puts it with the product, and then it gets shipp out and arrives in Canada. How does it work with, Canadian dollars and US dollars are slightly different. , how does that work or how does that show up in the Shopify for a US merchant? 

Monty McCallum: It's all dictated by the Shopify technology, however they've set up the store.

So if it comes through in Canadian dollars, we can then, apply it against that ratio. Whatever the value ratio is at the time of sale. And then we push it in against that currency. We do, a currency exchange at the time of the declaration, there's no real complications from the customer's perspective on that one. Because if the transaction is in US dollars, we collect in US dollars, and then it's all, apples to apples, if you will, the currency lines up when we push it into the declaration into the Canadian customs there.

Claus Lauter: Okay. How does it go with tracking, , at which points the product journey, , will you track what happens when. 

Monty McCallum: At the time the order is created and paid for, that triggers our service to generate labels, commercial invoices, and, then the fulfillment exercise happens where the packages are, completed. The labels are attached. , commercial invoice is attached. Hand it off to the carrier. As soon as the carrier scans it, we listen for the scan on that tracking pin, and then we'll push a fulfillment, notice back into the store.

So, Traditionally inside Shopify, when an order is shipped using the Shopify shipping service, it'll market as fulfilled as soon as the label is generated. , and it may not be actually true, right? The item might not be packaged, where we actually listen to when the carrier has picked it up and, it's in the actual shipping network.

At that moment, we then start the declaration process. There's no sense starting the declaration process. Before that. So from a tracking perspective, we really lean on the carriers tracking it, and there's been no sideways interruption on that.

In fact, the carriers are good at identifying third party custom brokers. And so it'll say, it's been handed off to a third party customs broker, and, it just sequences, for whatever, the carriers are producing the, statuses, 

Claus Lauter: One thing that happens quite often, specifically in e-commerce are returns for what reasons ever now we need to get the product back into Yes.

So that complicates matters quite a bit. How can you help with that? 

Monty McCallum: That's not a problem. We bump into too much. We don't have a returns application. It's not part of. Our solution. However, all of the merchants that use our app are US-based merchants that ship into Canada, right?

The returns applications that they may employ would most likely work. However, the overarching issue with getting products back into the US. One is the shipping cost. So it's truly needs to be a business decision for the merchants on identifying.

Is like, are we better off just to ship something new , to the customer and let them have it? I've seen, Wayfair do this in the past where they don't bother with all the exercise and the cost, they'll just ship something new. That's a business decision. However, coming back into the US there's something called TA minimus that will allow items under $800 to, clear without much hoopla, if you will. There's not a lot of, formal documentation that goes on with it. Carriers are very, good at handling this. So we don't bump into that side of it too much. 

Claus Lauter: Now talking about, and you touched a little bit on the coast structure, when does it really make sense for a merchant?

To ship into Canada. Correct me if I'm wrong, if you have some cheap Chinese drop shipping products, you wanna send that over. Does that make financially sense or does it only make sense if you have higher priced items? 

Monty McCallum: , I just talked about do minimus under 800. We have customers actually that ship $1,700 lights. We also have customers that send $23 batteries. And so we see, quite a range. And what's interesting about the Canadian consumers that. We don't have access to the selection in Canada and so often we're looking for things that we're super passionate about or really need that we can't get.

And so there's actually more inherent value that we're willing to pay the duties and taxes for because our own personal desire is really going after it. So there's a really individualistic. The sort of value play there. I don't think we've shipped anything under $20.

, I would say our average order value is probably around 150 bucks. 

Claus Lauter: So the point that you mentioned there , that Canadians are basically, happy to pay more. because of the selections. So there, is huge market there, of really motivated buyers.

That basically should also motivate us merchants to look more in the Canadian market. Now, tell me a little bit about the cost structure of, border body. How do you charge. 

Monty McCallum: We charge $15 for the, , declaration. So handling the submission to customs on every order, and that's built into the shipping and the tax and the number, the price of that shipping, that's presented, , at the time of checkout.

So it's a flat fee every time. 

Claus Lauter: That's then easy for the merchant to calculate. 

Monty McCallum: And from a merchant's perspective, never will they see a charge, hit their bottom line. And one of the things that, I think is important to point out is that with the movement of Amazon and Prime, it's really pushed this urgency or this idea that we need to ship everything for free in two days.

And so I think that as we move away from that or as we get normalized to it, even Amazon themselves shipping from the US to Canada right now are now showing in checkout at times, depending , on how it's being fulfilled. They're showing cross-border charges on top of it. We're slowly coming away from that and what we realized is that, merchants need to get back to the idea of healthy margins, not at risk of, and playing and shipping.

And so it's a perfect opportunity to correlate the two, right? Canadians specifically want something and they're willing to pay the freight to get it here. We're not flowing with dollars coming outta our pockets by any stretch, but we're passionate about the certain things that we like, and I think if we can get it, we're willing to pay for it.

Claus Lauter: A hundred percent. Right. I agree on that one. Now you said the Shopify app to install is relatively straightforward and goes very quickly. But is there any kind of homework or training that the merchant needs to do to operate that? I can't imagine that some merchants might not wanna sell.

All of the, products they have to Canada, but only selected once. How does that work? 

Monty McCallum: There's a few nuances there, right? , I bring up , our battery merchant again, and they weren't, able to, send their products expressed because it can't go in a plane. Right. There's some interesting nuances and we're happy to help work through that one by one.

But I would say every merchant needs to have a Canada Shipping Zone set up in the back of their store, specifically for Canada. And recently, Shopify's update was that the in within markets you need to have Canada turned on so they buyers can actually choose Canada as a country.

So, those, are two pieces of homework, that are required. The third would be is that Shopify also requires, third party shipping, and carrier calculated rates to be turned on. And this is a feature that only comes standard with advanced. And basic, customers do get it if they pay for an annual subscription.

And so the, it's been a real sore point for us and our, merchants that are on the basic account that are really excited to get on board. And then they have to, call up Shopify chat. Hey, we've paid for the annual subscription already. Can you turn it on? So we've got some scripting and I do help people do that.

But those are the three areas, from a homework perspective 

Claus Lauter: per se. Okay. 

Okay. Sounds good. Now where can people find out more about, border 

Monty McCallum: We've at border e-commerce.

We've got, everything about the app and some tricks of the trade, as well as a link directly to download our app inside the Shopify app store. So we do live inside the Shopify app store for merchants a publicly available app. 

Claus Lauter: I will put the links in the show notes and you just one click away and then people can reach out to you directly if they have any questions.

Monty McCallum: That's great. Yeah, no, for sure. Thanks 

Claus Lauter: so much for giving us an overview. I think it's a huge opportunity there for a lot of Ians to open the Canadian market for them and get the product to a wider audience. Thanks so much. Yeah, thank 

Monty McCallum: you. Close.