Is the Canada Post Postal Code System the best in the world?

By Lee Smith, P.log, B.M., CEO of LSL holding Company.

I was recently on a trip in US and I began thinking about the Postal Code of Canada vs. the Zip Code of the US. Which was the better system in terms of identifying a region and making it easier for Courier companies and individual users to find a specific location. So I did some comparisons.

Interesting facts about the Postal code (wikipedia)

• Implemented from 1972 to 1974.
• There is a theoretical limit of 7.2 million postal codes.
• 830,000 active postal codes represents about 12% of the total.
• Not used are: D, F, I, O, Q or U, and the first position also does not make use of the letters W or Z (In some cases it would make it difficult for the automated system to figure out the letter, as this is used to identified hand written addresses as well as mechanical ones).
• Includes a very special code for the North Pole: H0H 0H0

Interesting facts about the Zip Code (wikipedia)

• Implemented 1963.
• ZIP: Zone Improvement Plan.
• ZIP+4 introduce in 1983.
• There are just over 42,000 ZIP codes being used in the United States.

Ease of use

Reading from right to  it is easy to identify any part of Canada by the first letter in the postal code. Quick what state(s) does the number 3 identify in the US?

What makes up a Postal Code?

Postal District: All the Provinces are easy to identify by the first letter of the postal code. It is very easy to tell whether you after dealing the Newfoundland (A) or British Columbia (V), or somewhere in between. The larger cities of Montreal (H) and Toronto (M) have their own unique postal district in keeping with the large percentage of the population that call these cities home.

Forward Sortation Area. This is equivalent to the first 3 digits of the zip code. It is important to note that the second space in the FSA is very important. It denotes whether this is a urban Postal Code (1-9) or  Rural postal Code (0). As much of Canada can be sparsely populated the rural Postal Code can cover some very large areas geographically. This system allows a rural code to be changed to an urban one if there is a population increase in that area.

Local Delivery Unit. This provides the Postal Code with the great versatility. It allows for the the LDU to identify a block, building, a floor in a building, a suite on a floor in a  building, a customer in that suite, etc… It is all dependent on volume of mail and availability of unique postal codes. With only 12% being used, they have room to grow.

What is a Zip Code

A Zone Improvement Plan (ZIP) Code is the numerical code assigned by the U.S. Postal Service to designate a local area or entity for the delivery of mail. ZIP Codes may consist of 5, 7, 9, or 11 digits, and may refer to a street section, a collection of streets, an establishment, a structure, or a group of post office boxes.

ZIP codes are numbered with; 

• The first digit representing a certain group of U.S. states, 
• The second and third digits together representing a region in that group (or perhaps a large city)
• the fourth and fifth digits representing a group of delivery addresses within that region.

Other uses

As big data becomes more relevant large shippers are finding the Postal Code a great way to triangulate on their customers and provide more specific target marketing. The government has also used the Postal Code for census measurement, electoral boundaries and for allocating resources.  The Zip Code provides a looser, but still functional grouping, and with the +4 allows for finer calibrations of location in the US and Territories.

Canada Post has provided a great tool for those who need to find a Postal Code quickly (postal code lookup )   You just typing in the number and name of the street and it does the rest. Give it a try.

The USPS also has a tool to view Zip Codes. It takes some more effort to get to the final Zip Code. 

Checklist: The Winner is?

Easy to use. Postal Code

Easy to read visually. Postal Code

Easy to expand. Postal Code

Adding new combinations. Postal Code

Look up tool. Postal Code

Conclusion

The Postal Code system is the best fit for Canada. There are others in the world that have used the Alphanumeric system such as Great Britain, Argentina and Australia. The zip code is limited by the having only 10 possibilities in each position, where postal code has 26 possibilities in 3 of the 6 positions. The ZIP plus 4 is one of the ways that the US tried to get the pin point address location that comes with the Postal Code. That takes up 10 spaces for the information versus 6 for the Postal code. It is too late to change the ZIP code but I am sure the USPS would love a do over for 1963.

Disclaimer: There are many options that should be considered before deciding on the best method for clearing the border for your customers. It is best to review with a professional before making any major decision on your supply chain.

Lee Smith is the CEO of LSL Holding Company, a leader in the Supply Chain selection and Courier optimization consulting. Whether you are new to the Canadian Market or looking for ways to improve your existing supply chain to Canada they can help.

        lee@lslholdingco.com

www.lslholdingco.com
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Managing Returns and exchanges of merchandise from Canada

By Lee Smith, P.log, B.M., CEO of LSL holding Company.

I was very surprised to to visit a client a few years back to find out that they were experiencing a 20% return rate of goods that they sold on the internet. With some effort we were able to reduce the return rate to a more manageable 6%. The difference of 14%, was the difference between making a profit and losing money on the eCommerce part of the business. 

This shows the importance of returns on the bottom line of any business, but it becomes even more complicated when crossing the border is introduced into the mix. If you have been following my series of blogs (click on this link to my blog site) on Non-Resident importer status and Carrier Low value shipment Clearance, now you are ready to look a the options for returns from Canada.

Return options

• Reship: Have the customer keep the item and just reship a new one. If that items is less than $20, you are better off just shipping a new one if you do not have a consolidation point in Canada.

• Consolidation: Have all items return to a consolidation point in Canada. This is a great option if you have the volume or if your items are valuable and you want to make it simple for your customer.
• • Triage: As an option of consolidation some suppliers will offer triaging. Great way to identify bricks (items of no value, but costly to return) and having them stay in Canada instead of paying for crossing the border.
  • Consolidated shipment: The supplier in Canada will hold the items until there is enough volume to ship back to your location (that level can be decided on upfront)
  • Destroy: The Canadian supplier can provide destruction with various level of certificate. No point in bring the items all the way back to your location in order to destroy them.
  • Liquidation: This is another option that saves the items have to be returned to your location, and generates some revenue for your company in Canada.
  • Fulfillment: If the item is still sellable, this provides an option to reship it to another Canadian consumer. Reduce your cost from your location.
• Customer generated return: This is where the consumer returns the items to your location at their expense. This is one that where it is very important to work with the customer to ensure that the item is identified as a returned item as this has taxes and duties implication for your company. It is also important to make it clear to the client, that they will have to apply with the carrier to get their duties and taxes back on a return item. E-14 forms for Mail services, B-15 Forms for Courier services.

Checklist of questions for building your returns and exchange program.

What is the volume that you expect?

What is the percentage of returns that you currently experiencing?

How important is it for you to have the items returned to you?

Can you delay the returns of these items if it will save you money by consolidating?

How easy do you wish to make it for your customers?

Once you can answer these questions you will be well on your way towards creating a return policy and program that meets your needs and he needs of your customers.

Disclaimer: There are many options that should be considered before deciding on the best method for clearing the border for your customers. It is best to review with a professional before making any major decision on your supply chain.

Lee Smith is the CEO of LSL Holding Company, a leader in the Supply Chain selection and Courier optimization consulting. Whether you are new to the Canadian Market or looking for ways to improve your existing supply chain to Canada they can help.

        lee@lslholdingco.com

www.lslholdingco.com
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The Non-Resident importer (NRI) or how to make the border disappear for your Canadian Customers.

By Lee Smith, P.log, B.M., CEO of LSL holding Company.

The Non-Resident importer(NRI) program is an easy way to remove one of the biggest irritants to a Canadian shopper when purchasing goods online.  They have one question in mind; “What is my final Landed Cost?"

Typical Canadian story

Almost every Canadian has a story of purchasing an item and having the duties, taxes, shipping and custom surcharges be more than the original item when delivered. A few years ago my son purchased a skateboard shoe online. He got a great deal for $70, but then you added shipping of $30, duties and taxes of $20, and custom fee of $26 for a total of $146. He was very disappointed to see that same shoe in the store a month later on sale for $129. He was one unhappy online shopper. Lesson learned!

Due to no fault of their own this shipper had a very unhappy customer because they were not able to provide him with the final landed cost. Most likely the shipper in the US had no idea what the final price would be to the receiver.  That is where becoming a  NRI is beneficial to any shipper with deliveries to Canada. You can give your customer the great feeling that this is the final cost and there will be no addition cost at the door when your goods are received.

Who Qualifies as a NRI?

A non-resident importer (NRI) is a company or individual who does not reside in Canada, but elects to act as the Importer of Record (IOR) for a shipment, or shipments, imported into Canada. The IOR is responsible for all accounting related to the importation including, but not limited to, any duties and/or taxes payable to the Government of Canada as well as the maintenance of all records pertaining to each importation.

Business Number

From CRA

If your company is serious about Canada it is recommended that you also apply for a Business Number (BN) at the same time you are becoming a NRI. This allows you to collect the GST/HST (see side bar), and allows you some other taxable benefits such as the ability to claim back for taxes on returns, or for items purchased in Canada.

The benefits 

• Provides a seamless offer to the Canadian shopper.
• The final landed to the door price is very clear. No surprises.
• Combined with CLVS (Courier Low Value Shipment) leads to shorter more predictable delivery time.
• Leads to happier Canadian shopper who will shop more.
• Increase your profits

NRI= Happy Customer

Checklist

Get a Business number for Canada.

Register for GST/HST

Work with a professional to update your information to show the fully landed cost to your Canadian consumer.

Disclaimer: There are many options that should be considered before deciding on the best method for clearing the border for your customers. It is best to review with a professional before making any major decision on your supply chain.

Lee Smith is the CEO of LSL Holding Company, a leader in the Supply Chain selection and Courier optimization consulting. Whether you are new to the Canadian Market or looking for ways to improve your existing supply chain to Canada they can help.

        lee@lslholdingco.com

www.lslholdingco.com
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Unlocking the mystery of Courier Low Value Shipment Clearance (CLVS) for companies shipping from the US to Canada. part 2 of 2

By Lee Smith, P.log, B.M., CEO of LSL holding Company.

See Part 1 of 2

How to use the CLVS and how can my customers benefit from this service?

The great news about using Courier Low Value Clearance for items being shipped from the US to Canada, is that all of the onus to meet the customs regulations falls to the Courier company and the Broker responsible for clearing the border. 

Under the regulation the Courier must use the ACI eManifest to alert Customs that they have CLVS items and the PARS paperwork must be filed by the broker (links included if you want to do some more research.)

What information do I as a shipper have to provide?

The more information you can provide on the documentation for customs the smoother the clearance will be?

Required;

• a commercial invoice
• current price list
• bill of sale
• Country of origin
• or other similar document that describes the goods and contains information sufficient to enable an officer to determine the tariff classification and appraise the value for duty of the goods.

Optional

• Tariff classification code
• Duties and Taxes (only if collected on behalf of the Canadian Government)

Every competent courier service will have the software that will prompt you to provide the information required to cross the border. They need to provide your information to customs one hour before arrival at the border.

How does CLVS affect my customers and my business.

Speed

There is an area of Customs called “Secondary”, otherwise known as a place where parcels go to die. This area is reserved for taking a closer look at an item crossing the border. This can lead to delays from 1 day to 7 days depending the location that your item is crossing the border, the time of the year,  available personel or some other factor that you do not control. In the past this has led to late deliveries and customer dissatisfaction with the buying process on the part of the Canadian consumer. CLVS does not eliminate this all together, but it does provide a separate streaming of items outside of the Commercial Clearance which requires more screening. It makes the work of the Border agent easier and the end consumer gets to benefit from the speed.

Confidence

eCommerce is a world supported by ratings and trust. Every order that is placed, there has to be a level of trust that the item will be delivered, as advertised. By being part of the CLVS program you are showing the Canadian consumer that you are very aware  of the steps required for crossing the border, and this increases the level of confidence that the Canadian consumer can have in placing an order. Using the rule of thumb that every happy eCommerce customs leads to 5 more orders, raising confidence of the consumer is a great way to increase your sales to Canadian consumers.

Checklist

CLVS is an important process for Shipping to Canadians.

It requires little input from the Mailer, as the Courier service is responsible for documentation

It is important for you as a Shipper to be aware of this program and how it will affect your customers in Canada.

Disclaimer: There are many options that should be considered before deciding on the best method for clearing the border for your customers. It is best to review with a professional before making any major decision on your supply chain.

Lee Smith is the CEO of LSL Holding Company, a leader in the Supply Chain selection and Courier optimization consulting. Whether you are new to the Canadian Market or looking for ways to improve your existing supply chain to Canada they can help.

       lee@lslholdingco.com

www.lslholdingco.com
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