When Canadian entrepreneurs Charlene and Vince Li decided to sell their Eatable alcohol-infused popcorn in the United States, getting their product across the border wasn’t as simple as they expected. The couple became quickly enmeshed in shipping, currency, tax and regulatory challenges as they prepared to launch online sales in the United States. The obstacles faced by Eatable Foods Inc. are similar to those faced by most Canadian small business owners with big ambitions – and offer a window into how to crack the world’s largest economy. 

Study import rules and shipping options
The top piece of advice Ms. Li has for other Canadian companies seeking to enter the U.S. market is to do your homework. “We were reading as much as possible, attending seminars that are focused on the topics of import and export, having conversations with retailers, distributors and marketers that have experience bringing over other brands,” Ms. Li says.

The biggest challenge Eatable faced was shipping, which can be expensive when it involves crossing borders. It can also be a struggle for small businesses to compete with the growing number of U.S. retailers now offering free shipping and Amazon’s two-day or even same-day shipping options.

Eatable turned to national courier companies and shopped around for the best corporate rates. Eatable also increased the minimum amount that U.S. customers would need to spend to earn free shipping to encourage people to spend more, helping Eatable offset higher costs.

Getting a good grasp on shipping regulations is also important, says Mr. Li. Sometimes additional paperwork is necessary, or products must be registered, to provide border services advance notice of what to expect. Courier services can usually help with customs clearances, the couple says.

Packaging is also a consideration when shipping south of the border, Mr. Li says. Depending on the product, labels will also have to adhere to U.S. standards. For example, every item shipped to the U.S. has to be labelled with its country of origin.

Consider incorporating the business
Beyond logistics, the couple recommends Canadian business owners eyeing the United States consult with financial professionals about incorporation, that can often make cross-border transactions more efficient.

Incorporation can also have other advantages, such as lower taxes for corporations in Canada as well as legal protections. However, incorporating can also be costly to set up and lead to higher accounting and legal fees each year.

When Charlene and Vince Li did the math, they decided incorporation was a good idea, but that isn’t always the case for small business owners selling into the U.S., says Scott Bagby, a senior adviser at Torontoʼs MaRS technology and science incubator who has helped companies such as Skype and Rdio with international expansions.

Learning about American taste buds
So far, the Lis say their expansion to the U.S. has produced a steady stream of online orders and taught them a lot about U.S. taste buds. Despite being “well received” by the U.S. market, Ms. Li says Eatable still has plenty of work to do to become a household name. “It’s going to be a challenge, but it’s part of our long-term strategy,” Ms. Li says. “We just need to get the products to more people over there.”

Source: Globe and Mail