Today’s guest post, “Cross-Border Shopping Analysis”, is from Glenn Cooke, a life insurance broker with Life Insurance Canada.com Inc.
I’m always looking for a good deal. The first place I want to look is south of the border. Joe has pondered before the age-old question: is cross-border shopping worth the hassle and costs? I wanted to answer it for myself. The answer is: it depends.
On a recent shopping trip and family vacation to lovely Auburn Hills, Michigan I looked at prices at an American Costco and compared them to the costs of identical items available at a Canadian Costco. Individual deals abound on either side of the border, but my limited research indicates a clear winner. The USA.
The methodology for my shopping analysis:
- I ignore the exchange rate. Any given day as of late the Canadian dollar fluctuates around par.
- As for product selection, I basically just wandered around Costco looking for interesting or higher-priced items. Comparing certain goods like dairy would result in an automatic win for the US. I was interested at bigger ticket items like major electronic purchases or things that might be given as a Christmas gift to a close family member.
- For taxes on the American Costco items, I used the Michigan sales tax rate. For the Canadian prices, I’ve used Ontario’s 13% HST but have not applied “Eco-Fees”.
Here are the products and respective prices:
|Product||American Costco Price||Canadian Costco Price|
|Keurig® Single Serve Platinum Brewer||$149.99||$164.99|
|HP Envy DV7 Laptop||$874.99||$921.64|
|Neato Robotic Vacuum||$279.99||$289.99|
|Yukon Charlies Snowshoes||$69.99||$119.99|
|Pelican 75 Sled||$179.99||$269.99|
|Samsung 55 Inch TV||$1149.99||$1442.99|
Over $750 in savings on a $3700 spend is nothing to sneeze at!
Except, to get such prices, a Canadian would have needed to do an overnight stay in the US. Plus gas and meals. Oh yeah, a person’s duty-free limit is only $200 for a 24-hour stay.
After 48-hours, the duty-free limit rises to $800. Now we’re talking. If a family of four stayed for 48 hours and, if they divvied up their purchases correctly, they could bring home $3200 in purchases duty-free. A two-day trip for four people to save $750 might not be an awful idea, but it’s certainly not as impressive, especially after deducting the costs.
Let’s add it up: $200 on hotel rooms, $200 in gas, and another $150 in meals and you’re looking at only $200 in real money saved. Is saving $200 a worthwhile way to spend the better part of a three day weekend? I don’t think so.
There are mitigating factors.
- If you need to do the shopping anyway, then the savings can be looked at as paying for the travel costs – basically you get a free family vacation if you’re looking to spend a few thousand. We didn’t spend anywhere near that, but we did treat our trip as a vacation rather than savings.
- It may also make sense if you’re buying a big ticket item like a boat or a car, where the savings substantially outweigh the travel costs. We’ve all heard the story of Johnny Canuck dashing across the border, buying a car, declaring it at the border, paying the duties, and coming home a huge winner with extra cash in his pocket.
- Finally, because I just found some products at Costco and compared them, my cross-border shopping analysis doesn’t include the fact that you can buy things on sale, and perhaps at even bigger discounts. Smart shopping could increase your savings.
In the end, if you do your research and are shopping for something specific, you may find the savings outweigh the costs. But if you’re looking at just a general shopping trip, it turns out that financially there’s likely to be little to no actual savings from cross border shopping.