Will GST cut stop cross border shopping?

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Originally posted by 500_Apples:
[b]There's just no chance a GST cut will manage to mkake up for the difference. Cars, books, groceries, electrical appliances, computing equipment, clothing, et cetera are routinely 40% cheaper in the United States. The problem is an issue of corporate gouging, and of lack of competition in Canada. It has little to do with sales taxes.[/b]

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Are the prices really that much higher in Canada? A "lack of competition" could lead to "corporate gouging" but is there, in fact, a widespread lack of competition in all of those industries in Canada? I have a hard time believing that.

If there is significant competition between various companies, such that there are many alternative suppliers, it's nearly impossible for a company to "gouge" consumers because there's going to be another company ready to reduce prices slightly to drive up sales significantly.

A good example is Best Buy and Circuit City. Because if the intense price competition between those two companies, they are making razor-thin margins on their products. They sure aren't "gouging" the consumer.

So, why wouldn't that same phenomenon apply to Canada?

If prices are really that much higher in Canada, there must be something else going on (much more regulation, higher corporate taxes, and other burdens) that result in higher prices to consumers.

[ 30 October 2007: Message edited by: Sven ]

So, what do Canadian companies know that hyper-capitalist American companies do not know, such that Canadian companies can (apparently) freely gouge Canadian consumers and while American companies cannot?

It can't be as simple as "Canadian consumers are less demanding".

Well, if there's a lack of competition, it's difficult for consumers to be demanding. But, why do you think there is less competition in Canada than in the US?

500 has a point. The deals I can get for cellphones and charges are unreal in the U.S. whereas here they uniformly suck.

And cars for example are so much cheaper in the U.S. than canada that the big 3 have threatened their dealers with loss of their dealership if they sell to canadians in the U.S.

As a result a class action suit in canada is being launched.

The price differential has much to do with distribution channels and market size. End of line/cycle products are routinely dumped into the U.S. market, putting more downward pressure on all prices there, and creating the perception that all prices are significantly lower, rather than just sale prices (which are much lower).

Add to that the fact that most consumer hard goods companies no longer have direct relationships with Canadian branches or distributors. Everything comes in through the States (who take their regular cut), is shipped to a Canadian distributor (who take their 10%+), is sold through a marketing agency (who take their 5 to 10 points), and then, finally, it gets to the retailer - at more than the going retail cost south of the border.

BTW, prior to Mulroney's FTA, we had our own distribution channels - ones that imported directly, and as a bonus, provided sales channels for start-up Canadian manufacturers. But the FTA allowed the larger American distribution companies to write contracts that "threw in" rights to the Canadian market for themselves. And that was the end of Canadian-owned distribution channels in Canada.

I was in Chicago and priced beer (the most important commodity in the known Universe):

My favourite is Grolsch (spell?) In Chicago it is 10.99 for 12.

Molson Golden, Moosehead and other Canadian beers are that price too.

If you want low quality you can get 30 cans of some beers for 14$. I think that is cheaper than Pepsi.

What are prices in BC and Quebec? etc

Alcohol isn't the best point of comparison. They have cheap booze and cigarettes, we have cheaper prescription pharmaceuticals. It's a values thing.

LTJ: Do beer versus drug prices reflect values? Exactly how do common citizens like me influence prices? Most people I know would value low beer prices over drug price.

"SmellyDeposit"

i had to admire that nom de plum.

when i was in Vancouver it was about 15%. i was glad to pay it, thinking that the money was going to "people stuff" like education & health care.

I’ll be derned.

Just did a quickie price check between bestbuy.com and bestbuy.ca for three randomly-selected identical items:

Panasonic 50" Widescreen Plasma HDTV: [b][i]$2,299.99 in Canada[/b][/i] and [b][i]$1,999.99 in the US[/b][/i] (i.e., 15% more in Canada)

Apple - iPod (classic MP3 Player with 80GB* - Silver): [b][i]$279.99 in Canada[/b][/i] and [b][i]$249.99 in the US[/b][/i] (i.e., 12% more in Canada)

A DC14 Dyson vacuum cleaner: [b][i]$649.99 in Canada[/b][/i] and [b][i]$569.99 in the US[/b][/i] (i.e., 14% more in Canada)

Out of curiosity, I looked at the pricing of a couple of my company’s products in the US versus Canada. The very few (of the thousands) of products that I checked, the prices were 5% to 20% higher in Canada. And, we produce [b][i]in Canada[/b][/i] almost all of the products we sell in Canada. I didn’t get into details with the person in our operations group, but she said that it costs more to produce the products in Canada than in the US (hence, the higher price), although it’s still cheaper to produce the products in Canada than to produce them here and incur the shipping costs to transport US-made products into Canada.

Anyway, I’ll have to do some more digging to find out why things appear to generally cost more in Canada.

Also, did a quickie spot check of one item’s pricing at The Source (owned by Circuit City and Best Buy’s biggest competitor) versus Circuit City here in the US:

Apple - iPod (classic MP3 Player with 80GB* - Silver): [b][i]$279.99 in Canada[/b][/i] and [b][i]$249.99 in the US[/b][/i] (i.e., 12% more in Canada).

That differential is identical to the bestbuy.ca versus bestbuy.com differential.

Maybe prices reflect what the stores paid 6 months ago when currency was different. For beer wine and spirits the price differences are taxes.

Or: Canadian retailers charge what the market will bear. In the US there may be more alternatives.

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Originally posted by Lard Tunderin' Jeezus:
[b]As I pointed out earlier, Canadian retailers haven't been bleeding you at all. They've been going bankrupt instead.

Bur the large American retail chains, with their internationally integrated supply chains, have been sucking you dry for years now. They've had no reason whatsoever to charge higher prices in Canada - but they do[/b]

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[url=http://www.cbc.ca/money/story/2007/02/08/circuitcity.html]The Source closes 62 unprofitable stores in Canada in 2007.[/url]

It's not like "large American retail chains" can charge whatever they want...and that Canadians have no choice but to pay inflated prices. In fact, it’s quite the opposite. The “large American retail chains” are fiercely competing with each other (and with Canadian chains) to drive prices ever lower.

My company is no more profitable in Canada than it is in the US (even though we charge more in Canada) because our costs are proportionately higher in Canada.

No, I’m guessing that there’s something systemic—something that is unrelated to the (presumably evil) intentions of businesses (i.e., higher taxes, more costly regulations, more worker protections)—that increases the cost of doing business in Canada (and, hence, higher prices for you). Otherwise, if the companies could simply “gouge” consumers with high prices, there’d be no unprofitable chain stores (American or Canadian).

If that’s the case, then people shouldn’t complain about higher prices (they are simply paying the costs associated with a more activist government—relative to the US).

As they say, there’s no free lunch.

[ 31 October 2007: Message edited by: Sven ]

I have heard that part of it is higher shipping costs in Canada than the US. Is there anything to that? That it costs a lot more for companies to get stock shipped to Canada than it does to the US?

Still seems to me like a pretty steep difference to me, though. That can't explain it totally.

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Originally posted by Michelle:
[b]I have heard that part of it is higher shipping costs in Canada than the US. Is there anything to that? That it costs a lot more for companies to get stock shipped to Canada than it does to the US?

Still seems to me like a pretty steep difference to me, though. That can't explain it totally.[/b]

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Does it cost more to ship a chinese product to vancouver than to florida?

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Originally posted by mudman:
[b]As Vancouver is closer it should cost way less.
Maybe the opening of the Northwest passage will reduce costs to Florida from China.[/b]

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And raise relative costs in Canada, as Canada will have to pay for environmental cleanup on waters we will have no international right to regulate.

Sven, as a Canadian, I have to say that your perspective is less than useless here. It is arrogant and offensive.

Take a look in the mirror. You are the ugly American that the world hates with good reason.

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Originally posted by 500_Apples:
[b]Does it cost more to ship a chinese product to vancouver than to florida?[/b]

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I don't know. But it's possible that, since the population density in the US is many times the density in Canada, that distribution centres and exporters in Florida might be importing 10 or 20 times as many units as ones in Vancouver, and you know how it goes - the bigger the bulk order, the cheaper the unit.

Also, there are things that are manufactured in the US (e.g. book publishing for instance) that might cost considerably more to ship into Canada.

Again, these are just guesses. I have no idea if this is valid or not because I don't know enough about importing and exporting and shipping and stuff. I just don't have the industry knowledge.

Let's just say that I don't think that bankrupting the Canadian retail sector is a constructive suggestion - very hard to take from stupid fellow Canadians, and intolerable from a citizen of the country causing and most benefitting from the situation.

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Originally posted by Lard Tunderin' Jeezus:
[b]You are the ugly American that the world hates with good reason.[/b]

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Why, because I shop for the lowest price?

Go fuck youself, Lardass.

So, I take it that you, Lard Ass, don't shop for the lowest price?

That makes you not only a provincial nationalist, but also a moron.

Pay more. Get less.

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Originally posted by Lard Tunderin' Jeezus:
[b]Add to that the fact that most consumer hard goods companies no longer have direct relationships with Canadian branches or distributors. Everything comes in through the States (who take their regular cut), is shipped to a Canadian distributor (who take their 10%+), is sold through a marketing agency (who take their 5 to 10 points), and then, finally, it gets to the retailer - at more than the going retail cost south of the border.[/b]

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It would appear that your understanding of business is strictly limited to pulling shit out of the “business” end of your Lard Ass. But, even when it comes to excrement, it's painfully obvious you don't know the difference between shit and shinola.

You are claiming that a product's cost to Canadian retailers is "more than the going retail cost south of the border". That is so laughable that you would be embarrassed if you understood what you were claiming. And, since you’re not embarrassed...well, even you should get the picture.

If a product's retail price in the US was $250 (and, hence, according to your claim, at least that much in cost to a Canadian retailer) and if a Canadian retailer was only selling it for $280 (one of my examples above), the Canadian retailer would go out of business in one day. Retail gross margins (look up the term yourself, bright boy) are, of necessity, significantly greater than that (they have to be—or, again, the retailer wouldn't last a single day).

But, how did you arrive at your conclusion in the first place? Easy answer: You don’t know anything about product distribution. Zilch. Zero. So, you make shit up...all the while sounding righteously indignant.

Brilliant.

It's not just the product, it's the business. I've never seen the inside of a Walmart myself. I have seen the devastation Walmart's arrival can reek on businesses, particularly in small communities.

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Originally posted by Michelle:
[QB]I have heard that part of it is higher shipping costs in Canada than the US. Is there anything to that? That it costs a lot more for companies to get stock shipped to Canada than it does to the US?

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when i lived in Canada, i shipped a lot of my stuff. i had to fill out customs forms going and coming - one for every box - but only for Canadian customs.

if i had counted that time as money, yes, it costs $$ to get stuff through Canadian customs, shipping in both directions.

but - maybe they're just doing their job ?

getting stuff through American customs, at least at that border - no problem, breeze right through, never heard a word.