Automaton and other Canadian stores and US Dollars

[Goaliebot]

Originally Posted by Shockwave 75

What I think would solve all these problems is just have the items listed in Canadian on your site.

Like, if I'm a retailer, and I buy something to sell that cost me $10 USD (all in), that converts to $12.57 CAD. So I list said item on my site at the Canadian price plus whatever my profit margin is. So lets say a 20% mark up (for argument's sake); then I charge $15.08 CAD on my site.

That way I'm not losing money and the Canadian customers of my Canadian store can pay in Canadian dollars.

Problem is pre-orders, which are most of the items listed on Automaton. Mario knows what he'll pay when they are shipped to him in US dollars, not what the equivalent Cdn amount will be on that future day.

The only alternative is to not state a price, just take a deposit and people pay whatever it ends up costing when it ships.

Or have a website that lists cdn prices for in-stock items and US prices for preorders, which might just be a mess.

Originally Posted by Einstein

I'd like to hear one of the retailers chime in here.

Slayback = Madhaus Toys & Collectibles

[Einstein]

Originally Posted by Goaliebot

Slayback = Madhaus Toys & Collectibles

No offense but that's just a random facebook page, there's no store there. I was meaning more like Automaton or Ages Three and Up, unless Slayback makes huge orders? Does he? I don't really know, I've never heard of his store.

No disrespect intended, just trying to understand.

[BigBot79]

I think we are making this out to be more complicated than it is.

As far as taxes are concerned we are not paying any more than we would anyways as someone else mentioned a few times, the tax rate is being charged on a lower amount so there is no difference in cost to us for taxes.

I used to have a retail store but regardless any company and anyone can have any currency as a bank account so when they collect taxes in US funds they then have to convert it to CAD to pay their retail sales tax to the government, how they collect it individually has no meaning as long as they collect it and remit it to the government that's all that they care about in Ottawa.

Here's my rationale for why Canadian stores are going USD...

Stores like Automaton went to the USD on their site because most of their business is in pre-orders and they pay for their inventory in US currency. If $100 US is $125 CAD today and in 6 months the same $100 US is now $135 CAD they now lose $10 profit for every $100 US an item is priced at if they had guaranteed a pre-order price of $125 CAD. If they priced their items in CAD to begin with the risk is way too high to gamble because all inventory is bought in US money not Canadian. BTW as we all know most pre-orders especially 3rd party ones are more than 6 months wait as well so my example is being conservative on potential losses. By using US currency the risk is not theirs anymore but ours as the customer.


The only way around this would be if the manufacturer charged in CAD to the retailer but this not an option for our e-tailers, they are not big enough to have it this way where-as a store like Toys R Us is which is why they can have a CAD price on a pre-order Hasbro item for instance.

Bottom line is this is about the bottom line, they need to do this to keep their doors open and be competitive with the US e-tailers. Using US money for the price allows them to guarantee a price point just as their competitors do in the US like TF Source or BBTS.

The way I see it is that if I was a Canadian e-tailer selling TF and 3rd party etc....if I wanted to have all pricing in CAD I couldn't guarantee a pre-order price without knowing my margins within reason so I would have to have a caveat to my items listed for pre-order that the price can and will change based on currency rates and knowing the Canadian dollar is falling rapidly like it has......who wants this??? No-one is going to do business with you if you can't give them a price. Yes by using USD it does the same thing really but at least you keep your business open. If you did go as I described above then in the end it would be the exact same situation just more risk of not getting orders and having to close shop so I can't blame these companies for going this route.

One solution to help customers could be to allow us to pay up front for our orders in US money, that way we get the current exchange which is likely to be better than the exchange in 6 months or whatever. If the e-tailer keeps the funds we paid upfront sheltered in a US dollar account until the order arrives in-stock they could then get the proper exchange at that time so they don't lose anything either. Doing it this way would be a win-win situation in my mind.

Or take it a step further and open your own USD account so when you pre-order something you can put the money aside right away and use it when your order arrives in-stock and you have to now pay, sheltering yourself from an exchange shock. This is what I have been doing as much as is possible for a while now to try and save myself a few bucks when dealing with a US or Canadian store, or even Robot Kingdom in China if you use them.

[Goaliebot]

Originally Posted by Einstein

No offense but that's just a random facebook page, there's no store there. I was meaning more like Automaton or Ages Three and Up, unless Slayback makes huge orders? Does he? I don't really know, I've never heard of his store.

No disrespect intended, just trying to understand.

He does a lot of business with us on the boards, & at the shows. But yes it's true his online presence is less formal than A3U or Automaton. Mario on Automaton did post his reasons on his site, that might help shed light:
http://www.automatontoys.com/blog/fo...-of-automaton/

[RageD]

Originally Posted by Einstein

No offense but that's just a random facebook page, there's no store there. I was meaning more like Automaton or Ages Three and Up, unless Slayback makes huge orders? Does he? I don't really know, I've never heard of his store.

No disrespect intended, just trying to understand.

He's one of the top places to buy from online and at shows.

[elburrito]

What is perhaps getting lost here, is that we talking about Canadian retailers. I went out of my way (and paid more) to buy from Canadians every release. This was to support Canada, not because of any other reason. That is, I was out money to support Canada. Now those same retailers refuse to do the same. So I am not supporting Canada by supporting those retailers and the extra money spent becomes pointless. At the end of the day, if a retailer loses 10% of its customers, that will impact profits too and from reading this thread, it looks like more than 10%. Time will tell.

[Shockwave 75]

Originally Posted by RageD

But you would be losing money if its listed at that canadian price based on the usd price on Monday and then someone buys it on Friday and by then the dollar has changed value. currency changes value ever single day.

This logic doesn't track.

Using my example, if my I paid $10 USD for something to sell in my store, it gets shipped and arrives, and is in my possession, then the CAD dips again, I don't suddenly owe more on the items that I already "own" for sale in my store. I just have to sell it at the price I already bought it at.

The comic shop I go to deals with this all the time. I've seen two of the exact same thing selling for two different prices because they were bought under two different exchange rates. He doesn't take that first item and raise the price to match the second item that was purchased at a less favorable exchange rate.
I remember seeing things that were really expensive when the USD and CAD were equal because he had purchased them when the CAD was down, and to do otherwise would mean he would lose money on them.

[RageD]

Originally Posted by Shockwave 75

This logic doesn't track.

Using my example, if my I paid $10 USD for something to sell in my store, it gets shipped and arrives, and is in my possession, then the CAD dips again, I don't suddenly owe more on the items that I already "own" for sale in my store. I just have to sell it at the price I already bought it at.

The comic shop I go to deals with this all the time. I've seen two of the exact same thing selling for two different prices because they were bought under two different exchange rates. He doesn't take that first item and raise the price to match the second item that was purchased at a less favorable exchange rate.
I remember seeing things that were really expensive when the USD and CAD were equal because he had purchased them when the CAD was down, and to do otherwise would mean he would lose money on them.

Sorry but your still losing money if your expected profit margin changes based on the currency of the day. How could you even conduct a business with a floating profit margin? if you are buying a product to sell, expecting to earn $5 on it, but the currency shifts and you actually now are only earning $2.50 on it, you've lost money.... It has nothing to do with having the item in hand. If you then raise your prices to accommodate the shift in currency to maintain your expected profit margin that's bad business practice.

Let me clarify what I am saying.

You buy Fort Max at $100 USD to sell in your Canadian Shop. You expect to sell it for $150 USD = $185CAD. You list it for $185 CAD. Then the dollar shifts and all of a sudden, you should be selling it for $200 CAD to Maintain your expected profit margin, but you can't adjust the price now, that's bad business, so you eat the loss. Remember currency's can fall significantly in a single day, eating big chunks out of your margins.

Same scenario. You buy fort max at $100 USD to sell in your Canadian Shop, You expect to sell it for $150 USD. Then the dollar tanks and.........Nothing. Your Insulated from the CAD currency shift and you maintain your expected profit margin.......Therefore, you don't lose any money.

Also your example doesn't work, (Plus its crazy to sell the same item at multiple price points) as we are not talking about the stores cost to BUY the item....so exchange rate is irrelevant since they are buying their stock in USD, there is no exchange. We are talking about the cost of SELLING the item in CAD vs USD and expected profit margins of doing so.

[Einstein]

Originally Posted by Goaliebot

He does a lot of business with us on the boards, & at the shows. But yes it's true his online presence is less formal than A3U or Automaton. Mario on Automaton did post his reasons on his site, that might help shed light:
http://www.automatontoys.com/blog/fo...-of-automaton/

That explains the reasoning for switching, which is exactly what the others have said and I suspected.

My point was regardless of what dollars they list on the site, when they send out the invoice (which usually must be paid within a few days), they could still send out paypal invoices in Canadian dollars thus saving people from paying expensive conversion fees.

[Goaliebot]

Originally Posted by Einstein

That explains the reasoning for switching, which is exactly what the others have said and I suspected.

My point was regardless of what dollars they list on the site, when they send out the invoice (which usually must be paid within a few days), they could still send out paypal invoices in Canadian dollars thus saving people from paying expensive conversion fees.

True, but then they would have to absorb the conversion fees, as they have to turn around and pay the supplier in usd. They could bury that amount inside their margin, but it simply increases their margin, so we still pay it (just hidden).

Someone has to pay the conversion fees, just like someone has to pay the credit card fees, and someone has to pay the taxes. And something has to pay the margins to keep the business alive.

In the end, all the money comes from the final consumer: in one way or the other we pay for:

- item cost from supplier (usd)
- margin per item for store to exist and operate (cdn)
- conversion rate cdn to usd
- credit card fees

For mathematical simplicity, let's say the item cost the vendor $100 usd, margin is 10%, tax is 10%, credit card processing fee is 2%, usd is at 1.20 cdn, conversion fee is 2%.
These aren't meant to be the real figures, just examples. And we'll ignore shipping for the example.

So vendor needs to take in:
$120 cdn (item cost converted to cdn)
+ $12 cdn (margin)
+ $13.20 cdn (tax on cost + margin)
+ 2.90 (credit card processing fee)
+ 2.40 (2% conversion fee on the $120 cdn he needs to convert to $100 usd to pay his supplier for the figure)
---------------
= $150.50 cdn

That's what he needs to charge the customer to stay in business and not go under.

Now, he can either send a bill that looks like the above list to the customer, OR he can bury some of those fees inside his margin. He needs to clear 10% to stay in business, so his margin needs to inflate to 14% to cover the credit card and conversion fees.

In the "don't bury the fees in the hidden margin" column, pros are a lower selling price on the page ($132, which is cost + 10% margin) *but* the cons are angry customers when they get charged a list of things on top like that (or have to pay the conversion fee themselves, etc).

In "bury the fees" approaches, you get a higher listing price ($136, which is cost +14%), but no surprise billing statement to the customer (just $136 + tax, which we are used to). But customers ask why your prices are higher than the $120 guy.

In neither scenario is the customer actually paying more or less, and both cause anger or frustration from some customers.

Paying in USD vs Cdn does a couple things:

1) puts conversion fees on the customer's side of the transaction (remember, you pay them anyway one way or another)
2) allows a site to do preorders.

I can't stress #2 enough: preorders are the lifeblood of these sites.

Their options are:

1) don't do preorders.
2) take preorders without giving a price up front
3) take preorders in usd, in-stock items are in cdn
4) put the whole site in usd

All have pros and cons.

But you guys have to realize that no matter how they break down the bill:

- you always pay for the item cost
- you always pay a margin to the seller
- you always pay the credit card processing fees (may be hidden in higher margin)
- you always pay to convert the item cost from cdn to usd (also may be hidden in higher margin)

Sellers from Asia can help lower conversion fees (cdn to yen) and dodge taxes, and might have a lower margin due to lower overhead and cost of living.

But the Canadian retailers are neither ripping us off nor being unpatriotic by charging what every retailer in Canada has to charge. Most just bury fees in the margin.