Exports account for roughly a third of Canada's $1-trillion gross domestic product, and the United States absorbs more than 85 per cent of them. Tapping into that massive cross-border revenue stream used to be nearly impossible for small Canadian companies that lacked offices south of the border, but that's all changing.
The Internet has bridged the gap between the two economies, and even the tiniest businesses are finding it relatively easy to make the e-commerce crossing.
A case in point is Essex Cottage Farms Ltd., a private company in Roslin, Ont. Annual revenue has doubled almost every year since Catherine Woodliffe founded the organic dog food business in 1995. This year she expects revenue to hit the $500,000 mark, with more than 80 per cent of sales coming on-line from U.S. distributors, veterinarians and consumers.
And the Internet's about more than sales for the small company, she adds. "We e-mail price lists, contracts and information to clients. We also use it for customer service -- it's quick and direct, and saves us time and money."
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Besides the fact that the market is many times larger than Canada's, Ms. Woodliffe says there are spinoff advantages to offering products on-line to customers in the United States. Targeting Americans with only three print ads to supplement her website and permission-based e-mail campaign, she launched her most recent product line, Urban Wolf, for less than $10,000 in marketing costs. "It was fast and direct and Americans bought it," Ms. Woodliffe said, adding that Canadian dog owners here did not warm to the product until word of mouth "boomeranged" north across the border.
"In the U.S., clients jump in and try a new product," she says. "In Canada we hem, haw, and wait until we hear [about it] from someone . . . when Americans find something good they sing it from the rafters, and then Canadians hear about it."
If not for the Internet and U.S. sales, Ms. Woodliffe says she suspects Essex would be little more than a cottage industry, a sideline to her greater Swiss mountain dogs breeding business. Instead, she now has nine employees and a number of subcontractors, sales are growing, and Ms. Woodliffe is considering turning over responsibility for sales of Urban Wolf and other products to two U.S. distributors so she can focus on product development, manufacturing and growth.
Ms. Woodliffe is not alone. On-line sales by private businesses in Canada jumped by 49.7 per cent last year to $28.3-billion, according to Statistics Canada. Dozens of small and medium-sized Canadian enterprises participating in on-line business discussion forums, such as SOHO-Canada and Canadians Talk Business, indicate that they sell 80 per cent or more of their goods and services on-line -- and most of their sales go to American customers.
For many Canadian companies, the main cost of expanding their on-line business by selling to U.S. customers is merely the extra shipping and brokerage fees, which often amount to a few dollars for each order.
If not for the Internet, Toby Barazzuol says his company would be limited to producing personalized recognition awards for clients locally in British Columbia. Instead, Vancouver-based Eclipse Awards International Inc. conducts business across Canada and in the United States, Britain and Mexico. U.S. corporate clients, associations and non-profit organizations account for 80 per cent of the company's sales -- it has even sold recognition awards to NASA.
Founded in 1998, Eclipse Awards set up an on-line catalogue in 1999. Within six months, the private company was shipping most of its products south of the border. "We expected the website to be an electronic catalogue, but American clients expected it [the website] to serve as a starting point for processing orders," Mr. Barazzuol said.
Eclipse Awards currently lands almost all of its new customers through Google searches and some Google advertisements. Without the Internet, Eclipse Awards would be doing "less than half" its current business and spending far more money on far less effective means of marketing, according to Mr. Barazzuol.
"Pre-Internet, the U.S. was a small part of our business plan. We were going to be a small Vancouver company. Once we saw the potential of the Internet, it changed our course of our business," he says.
Ms. Woodliffe echoes his thoughts -- but that new course isn't without obstacles and challenges of its own. For both Ms. Woodliffe and Mr. Barazzuol, it has meant learning how to deal with cross-border paperwork, customs brokers, couriers and currency exchange. It also required investing thousands of dollars in e-commerce systems.
However, they both agree that establishing a business base beyond Canada's borders has meant growth, and has been worthwhile in unexpected ways, too.
"Right after 9/11, our American clients kept us going; Canadian sales fell off all together," Ms. Woodliffe says.
