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Wolfing Down U.S. Sales

By Paul Lima |

Exports account for roughly a third of Canada's $1.023 trillion GDP. The United States absorbs more than 85% of Canadian exports. So, it is no surprise that exports to the US mean big business for many Canadian companies.

Online sales jumped by 49.7 per cent last year to $28.3 billion, according to Statistics Canada. However, sales over the Internet account for less than one per cent of total revenues so it may come as a surprise to learn that many companies sell 100 per cent of their products, including exports, online.

The annual revenue for Essex Cottage Farms Ltd., a private company in Roslin, Ontario, has doubled almost every year since the organic dog food business was founded in 1995 by Catherine Woodliffe. This year, Ms Woodliffe expects revenues to hit the half a million dollar mark, with over 80 per cent of sales coming online from US distributors, veterinarians and consumers.

Targeting Americans with only three print ads to supplement her Web site and permission-based email, she launched her most recent product line, Urban Wolf, for under $10,000 in marketing costs. "It was fast and direct and Americans bought it," said Ms Woodliffe. Canadians, on the other hand, were slow off the mark. Canadian dog owners did not discover the product until word of mouth "boomeranged" north across the boarder. "In the US, clients jump in and try a new product. In Canada, we hem, haw and wait until we hear from someone in the US. When Americans find something good they sing it from the rafters and then Canadian hear about it," she says.

If not for the Internet and American sales, Ms Woodliffe suspects Essex Cottage Farms would be little more than a cottage industry, a sideline to her Greater Swiss Mountain Dogs breeding business. Instead, she has nine employees and a number of sub-contractors and is looking to turn over distribution of Urban Wolf and other products to two US distributors so she can focus on new product development, manufacturing and growth.

Ms Woodliffe is not alone. Dozens of small and medium Canadian businesses participating in online business discussion forums indicated that they sell 80 per cent or more of their goods and services online. And most of their sales go to American customers.

If not for the Internet, Toby Barazzuol's company would produce personalized recognition awards for clients in British Columbia. Instead, Vancouver-based Eclipse Awards International Inc. conducts business across Canada and in the US, UK and Mexico. American corporate clients, associations and non-profit organizations account for 80 per cent of the company's sales. Mr. Barazzuol, founder and president of Eclipse Awards, has even sold recognition awards to NASA.

Founded in 1998, the private company set up an online catalogue in 1999. Within six months, Eclipse Awards was shipping most of its products south of the boarder. "We expected the Web site to be an electronic catalogue, but American clients expected it to serve as a starting point for processing orders," he said. Initially, America clients use the Eclipse Web site to compare what Eclipse has to offer to the products of other companies. Once they decide to buy, they expect to be able to customize, place and pay for orders online, he adds.

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, says. Mr. Barazzuol.

"Pre-internet, the US 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. Changing course for both Ms Woodliffe and Mr. Barazzuol meant learning how to deal with cross-boarder paperwork, customs brokers and couriers and currency exchange. However, it has been more than worthwhile.

Both companies experienced minor sales slumps post-9/11 but sales bounced back quickly. "Right after 9/11, our American clients kept us going; Canadian sales fell off all together," says Ms Woodliffe.

Neither company has met any overt sales resistance due to political differences between Canada and the US. In fact, Eclipse Awards sales picked up after the last US election, said Mr. Barazzuol, even though most Canadians express dissatisfaction with the re-election of George W. Bush. "In addition to placing orders with us, we received a number of positive comments about how lucky we are to live in Canada," said Mr. Barazzoul.

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