Virtual presence pays off

I was thrilled the other day to come across an article from one of my favourite clients who also happens to be a close person friend, highlighted in the National Post on Tuesday with a focus on using an online presence to attract and keep U.S. customers Richard Burke of the Brochure Place was interviewed by the National Post and shared some great insights on selling to U.S. customers without setting up shop in the across the border.

Enjoy the read,

Canadian entrepreneurs eshew setting up bricks-and-mortar in U.S.

Another Canadian company that has found success in the U.S. market by operating from Canada is Mississauga, Ont.-based specialty printer Brochure Place Inc.

A "virtual" Internet-based company, Brochure Place attributes about 90% of its $1-million in annual sales to the U.S. market. And that's without a physical presence south of the border and with thousands of competitors in the low-cost, small-run printing business. Its main business is printing brochures in batches of 5,000 for US$397 or 1,000 business cards for US$57.

"Let's put it this way, it is cheaper for somebody in Los Angeles to have us print 5,000 brochures for them here and pay for the shipping costs, than it is for them to walk across the street and have it printed," says Richard Burke, president and chief executive of the three-person company.

At startup in 2000, Brochure Place's competitive advantage was the weak Canadian dollar. That has since disappeared, although the company's prices have not changed, and competition in the United States has dropped its prices from US$1,000 for 5,000 brochures to about the same as Brochure Place charges. Mr. Burke says his company is still doing OK because "they don't offer the same quality of printing or the same quality of service. We snuck in there and managed to hold on to our market space because of those things, it is difficult to hold on based on price."

Brochure Place has survived by increasing efficiencies and boosting order volumes. He no longer has a building and the three employees all work from home offices. Printing is contracted out to a local printer that gets about an hour of work each day from the company.

Mr. Burke has also lowered shipping costs by using UPS's cross-border shipping service, which charges a flat rate of $25, despite the number of separate orders he has, an essential advantage given many of his individual orders are for US$57 apiece. Because shipments are sent from Buffalo, he can, in all good conscience, tell U.S. customers their orders will be coming from a U.S. city.

Mr. Burke says U.S. customers are markedly different than his Canadian clients. "In many ways [Americans] are a lot easier to deal with, they are used to making a decision. U.S. customers will phone up and say 'I want 1,000 cards in this name and 1,000 in that name.' Canadians, on the other hand, will phone and say '$67 for 1,000 business cards? Can I get 250 for $20?' It's just a difference in culture, we are so very cautious here."

Like Edmonton's Kinnikinnick, Mr. Burke has no urge to set up shop in the United States. "There are many reasons why you would not want to do that and very few reasons why you would want to do that," he says.

He notes that the United States is a "spiderweb" of tax regulations. Setting up a business in one state can mean you have to collect taxes in some but not all other states you might ship to. As well, operations on both sides of the border means two sets of books, two accountants and perhaps two legal firms and potentially double the overhead and taxes.

"I'm all about efficiency," Mr. Burke says. "As an online organization, a virtual organization, we have done what Google and Paypal have done. And people used to laugh at Google."