Amazon outsources for Canadian expansion

TORONTO — Online retailer Tuesday launched its Canadian Web site but Canada Post Corp. will be doing all the heavy lifting.

In the past year more

than 250,000 Canadians ordered products from Amazon’s U.S. site and Canada represents the company’s largest export market, according to Marven Krug, general manager for But aside from Krug, will have no Canadian corporate presence to speak of. All back-end operations have been outsourced to Canada Post, which will handle domestic deliveries. Its subsidiary Assured Logistics (part of Progistix-Solutions, which was purchased by Canada Post last year) is handling supply chain services like warehousing, inventory management and order fulfillment.

Assured Logistics was chosen by Amazon after “”an incredibly vigourous selection process,”” said Krug. The company has warehouse facilities in Calgary and Ottawa and recently opened a distribution centre in Mississauga, Ont.

“”We help to translate the virtual order into the physical order. This is all about supply chain management,”” said Jim Eckler, president and CEO of Assured Logistics. “”Our goal is to insure that this very complex and specialized role is transparent to customers.””

Now that it has landed the Amazon contract, Assured Logistics will be pursuing other online operations to handle their order fulfillment. Eckler said he spoken to other interested parties and aims to bring other U.S. online retailers to Canada and perhaps expand Assured Logistics’s operations south of the border as well.

Eckler estimates that the Canadian outsourcing business is growing annually 15 to 20 per cent overall. He said it’s important to emphasize to potential customers that they’re gaining a partner, rather than losing control.

“”This is very much on strategy for us,”” said Stewart Bacon, senior vice-president of customer relationship management at Canada Post. “”We do this in an effort to remain relevant, not just to Canadians but to Canadian businesses. It proves to Canadians that Canada Post is relevant in the online world. Canada Post is there to provide that infrastructure in order to be successful.””

Online fulfillment and delivery has been a slow but steady business for Canada Post, he added. About 300 Canadian companies are using Canada Post for a combination of its delivery, shopping and shipping tools. “”It’s an underground phenomenon in a sense,”” he said. “”We’re getting geared up to become a player in the marketplace. . . . The fulfillment piece is the most daunting piece for an online retailer to put in place.””, Amazon’s fifth international launch, carries an unofficial slogan, according to founder and CEO Jeff Bezos: “”Same great features, better country.”” will feature bilingual Canadian content and 1.5 million items at launch. Shopping cart technology is available in both official languages. The site will also draw French and English content from two of Amazon’s other international sites, the U.K. and France.

Amazon spends US$200 million a year on technology to keep its American operation running, said Bezos, but that cost isn’t incurred in its international sites. He wouldn’t specify, but said there was a “”relatively small”” outlay cost to get started.

Amazon outsourced its Canadian operation, but there is no hard and fast rule when it enters a new market, said Cayce Roy, vice-president of fulfillment. It depends on market size and complexity and how essential it is to establish a local presence. In Japan, it made sense to outsource. “”(Online retailing) is IT-driven, process-driven. There won’t be somebody stocking a shelf. We have to be perfect and we expect our partners to do the same,”” he said.

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