I've written before about the various cross-border market differences between Canada and the United States, both in the realm of
automobiles,
drugs, and timely healthcare services. I grew up in a town where Canadian shoppers would litter parking lots with the wrappers, receipts, tags and bags that came with their cheaper-in-the-US goods. They ditched all the packing material in order to hide their purchases from prying customs inspectors' eyes looking to collect GST, PST and who-knows-what-T. Locals from my side of the border would head north shopping for cars and clothes.
Due to varied marketing strategies and regulatory structures the two countries often have quite disparate pricing structures for equivalent goods and services. Canadians on average earn less, and get to keep less of what they earn after taxes, than Americans. Still, Canada represents a sizable, wealthy market that businesses do not want to give up on by pricing themselves out of reach of its consumers so they price accordingly.
Since my trip to the Maritimes this summer I've suspected that there might exist an exploitable US-Canada pricing differential on DVD movies. My wife and I stopped into a Canadian discount store and I observed that prices on pre-recorded movies seemed to be, Canadian Dollar to American Dollar, not enough higher to cover the difference in the value of the currency. I filed this away, though at the time I did not see much utility in it because I did not see any movies that interested me.
A few years back I helped fund one of my hobbies by arbitraging a product from France to eager domestic buyers. Due to a scarcity of the product in the U.S. market I was able to cover shipping from Europe, ebay fees and domestic shipping and still turn a profit. Such ‘amateur’ arbitrage efforts can be seen on ebay every day of the week, evening out market disparities across the world. Did I miss an opportunity not loading up on DVD's north of the border?
The idea to exploit this market inefficiency came up again after it was brought to my attention that some items in the Amazon Canada store are quite a bit cheaper than in the regular U.S. Amazon.com, when the effects of currency exchange are included. Though I'm not sure I'm not sure it is enough of a price differential to create a viable arbitrage opportunity, but it bears watching.
For example, Canada's Amazon offers the 4 DVD set of 24 - Season One, $53.94 CDN ($US 34.35) versus its $44.98 U.S. price. Granted, shipping internationally will set you back a tick under $7.00 Canadian versus the "free" Amazon shipping so long as you stay in your own country. (Minimum order for free shipping of $25 US, $39 CAN, some exceptions apply.)
The difference becomes even more shocking when you start to look at higher priced items, such as the six DVD set of Band of Brothers. It goes for just $89.67 CDN versus its comparatively astronomical price of $77.99 US. Converted to US dollars the Canadian price represents $57.11 US, an over $20 savings off of the US price. It might just be that the story of some US soldiers in WWII isn't valued as highly in Canada as it in the US.
This affect does not appear across the board on all items.
On many items, it appears that pricing is simply set by scaling the US price by an inflated exchange rate. Witness for example Watchmen, a character from which this blog is named. Dot-Com has it for $13.97 American while Dot-See-Eh has it for $23.07. The two prices suggest an exchange rate of 1.65:1, not a good deal (today) for someone buying from the dot-see-Eh. I suspect this might be a function of what they bother to stock in Canada versus items that have to be shipped in from the US to then sell in Canada, but my supposition is 100% pure speculation (accept no substitute).
Granted some of this has to do with the particularly weak position of the Candian dollar, but there has to me more to it than that. I believe that companies are willing to make less per unit in order to price articles for sale to Canadians.
[Hint: If you want to try this out for yourself you can save an extra $10.00 Canadian (off of a $25.00 purchase) using coupon code "CANADATELUSM" (Don't include the quotes)]
(At the time of writing this post $1.00 US is worth $1.57 CDN.)
UPDATE: Add to my list the DVD set of the third season of Sopranos. US $74.99 versus CDN$ 77.99. The Canadian price represents an over $28 US savings before shipping, around $23 including shipping.