A Blog by Jonathan Low


Jun 30, 2018

Welcome To Blaine, WA, the Town Amazon Prime Built. Inadvertantly.

And everyone thought borders were so 20th century. JL

Alexandra Samuel reports in The Verge:

Blaine isn’t just any small town: it sits right on the 49th parallel that divides the United States and Canada. For Canadians, Blaine is simply a mailing address: the nearest, cheapest, and most convenient way to order packages from Amazon. In 2017, Blaine collected nearly $1.7 million in sales tax, which is two to five times the amount collected by comparably sized towns not on the Canadian border.
Roll off the highway into Blaine, Washington, and the first thing you’ll notice is Edaleen Dairy; on a summer day, a dozen people might be lined up outside waiting for ice cream. Across the street from Edaleen is 5D Packages and its competitor Mail Boxes Plus. Turn onto H Street, which passes for a main drag, and before you hit the US Post Office, you’ll spot 24/7 Parcel, Border Mailbox, and Security Mail services. Take a right at the post office and loop back around to Peace Portal, and you’ll also find Blaine Enterprises, Pulse Packages, and Hagen’s mail pickup.
That may seem like a lot of mailbox stores for a town of 5,000 people, but Blaine isn’t just any small town: it sits right on the 49th parallel that divides the United States and Canada. As the only US border town located in the shadow of a major Canadian city, Blaine’s economy is uniquely dependent on the relationship between the two countries. It’s a position that also leaves the town vulnerable to the vagaries of e-commerce trends and exchange rates. That vulnerability has only been exacerbated by mounting tension between Washington, DC and Ottawa, an emerging trade war, and the looming threat of a boycott.

For the past decade Blaine has flourished, thanks to the discrepancy between the explosion of e-commerce in the US and the still-developing e-commerce network in Canada. Blaine’s handful of residents have grown accustomed to a regular stream of Canadians who come to town specifically to pick up their US packages. For these Canadians, Blaine is simply a mailing address: the nearest, cheapest, and most convenient way to order packages from Amazon and other major US retailers.
But as Amazon continues to step up its Canadian operations and a growing number of American (and Canadian) retailers have made it easier to ship to Canada, Canadians are no longer as dependent on their US mailing addresses. Between economics and politics, Blaine will soon be forced to reckon with an uncomfortable question: is there a future for the town if it no longer serves as Canada’s front porch?

It wasn’t too long ago that Blaine boasted only a handful of mailbox options. Then came the dawn of online shopping. As e-commerce operations for major US retailers like Macy’s, J.Crew, and Best Buy took off in the early 2000s, they tempted Canadian shoppers who were already familiar with the brands. Although Amazon hung out a shingle in Canada in 2002, its operations were initially limited by regulations intended to protect Canadian publishing. While Amazon.com expanded into more product categories, Amazon.ca contained only a tiny fraction of its US offerings well into the 2000s. And Canadian retailers were in no rush to match the e-commerce boom of the US: imagine selling to a population the size of California’s, but shipping products across the entire land mass of the United States. (Amazon did not respond to a request for comment.)
As a result, Canada’s armchair shoppers were left to drool over the online offerings of retailers to the south — many of which, if they could be delivered to Canada at all, arrived with an unpredictable bill for shipping, taxes, and / or customs duties. Just as US e-commerce was taking off, the Canadian dollar went through one of its rare periods of strength (even surpassing the US dollar at various points in 2011–2012), making it that much easier for Canadians to shop in US dollars. No wonder Canadians close to the US border soon opted to ship directly to the States: the selection was larger, shipping was cheap or free, and customs duties were often nonexistent (depending on your honesty at the border and on the moods of the border agents).
I’m one of those cross-border e-shoppers. As a dual citizen who has spent many years living on each side of the border, my Blaine mailbox, Trader Joe’s, and Target runs have allowed me to scratch my American retail itch even after settling in Vancouver. My family set up our Blaine mailbox in 2010, and we now make monthly pilgrimages to pick up such elusive goodies as Hanna Andersson’s kid clothes (cheaper to ship to the US), a round of Rent the Runway outfits (won’t ship to Canada), or a new set of drinking glasses (so much more expensive on Amazon.ca, you wouldn’t believe it). These pilgrimages became even more frequent when Ben & Jerry’s stopped distributing New York Super Fudge Chunk in Canada. Once you’ve committed to hitting Blaine for a monthly ice cream restock, you might as well order some shoes, board games, or toilet paper from Amazon.com.

Cross-border shoppers like me have helped drive a major boom here, swelling Blaine’s population from a sleepy 3,770 in 2000 to an almost-bustling 5,075 in 2017. That impact is felt not only in the number of parcel shops in town but also in the volume of business they’re doing. An employee at 24/7 Parcel told me that their customer list has grown from about 8,000 to nearly 40,000 in less than five years.
There are so many parcel shops, in fact, that it’s causing a disturbance. “People are annoyed to see more and more parcel places open when they’d rather see a bakery or grocery store,” said a local diner worker. “We used to have another grocery store, but it closed 20 years ago. We used to have a bakery, but it closed.”

Spend an hour at 24/7 Parcel, and you’ll see a magnificent cross-section of Canadians and their purchases. A father and daughter unboxed two massive boxes of premium puppy treats for their beloved huskies. A young man hobbled up the shop’s six steps on crutches to pick up a pair of Rockports and a mysteriously long package. A woman unboxed a bra and underwear while comparing notes with me on the hazards of buying underwear by mail. While this particular mailbox operation is notable for its self-serve lockers, a staffer is also available to help with oversized items, package returns, and — maybe most importantly — fashion advice on the unboxed purchases.
The real impact of all these Canadian shoppers is felt the most at City Hall — or more accurately, City Floor. The City of Blaine now does business out of the top two stories of an office tower that the city purchased from the enterprising businessman who’d dared to dream that the city needed a four-story building. That’s where I met with Jeffrey Lazenby, the city’s revenue officer, who recalled a time when city staff worked out of a run-down edifice with mushrooms growing out of the damp carpets.

All that changed, thanks to the e-commerce boom and state tax policies. Lazenby traced Blaine’s revenue windfall to a sales tax agreement that was put in place in the mid-2000s which allowed states to levy sales taxes based on where a package was delivered, rather than where it was sold. Though the agreement only led to municipalities keeping a sliver of those state sales taxes, that sliver can really add up when you’re the point of delivery for tens of thousands of Canadian residents. In 2017, Blaine collected nearly $1.7 million in sales tax, which is two to five times the amount collected by comparably sized towns not on the Canadian border.
That $1.7 million in sales tax isn’t all earned from Canadians who are buying discount housewares on Amazon: some of it comes from local purchases or online purchases by actual residents of Blaine. But between the sales tax and a penny-per-gallon gas tax that’s largely paid by the many Canadians who cross the border to fill their tanks, Lazenby calculates that taxes paid by Canadians make up 5–10 percent of the city’s revenues. And that’s just the direct revenue. Lazenby estimates that three-quarters of Blaine’s employment is related to the border in some way.
But just as Amazon.com helped drive Blaine’s cross-border boom, Amazon.ca now calls Blaine’s future into question. In the past two years, Amazon’s Canadian arm has driven up growth in its Prime memberships, introduced same-day delivery in select cities (including Vancouver), and vastly extended both the range and number of products available in its Canadian store. That strategy is paying off: according to Canadian financial analysts, the company’s Canadian revenue grew from $2 billion in 2014 to $3.5 billion in 2016.

If you want an indicator of Amazon’s growing commitment to a Canadian presence, look no further than downtown Vancouver. Amazon recently purchased a monolithic building that, until recently, served as Vancouver’s main post office and one of Western Canada’s largest mail-processing facilities. (You’ve probably seen this historic building in one of the many sci-fi TV shows and movies filmed in Vancouver.) The company recently announced that it is redeveloping the building to house 3,000 software engineers and other corporate types.

Even habitual cross-border shoppers like me can now hold out hope that Amazon may eventually close the persistent, puzzling, and much-discussed price difference between US and Canadian prices for many items.
But what’s good news for Canadian shoppers could be bad news for Blaine. Just a few years ago, the city manager named Amazon the number one contributor to the city’s sales tax base. And you only need to eyeball the piles of Amazon boxes in the recycling bins of local mailbox shops to know that it still dominates among Canadian shoppers. Now, Canadians can not only get their electronics, books, and housewares from Amazon.ca, but they can also access a comparable range of clothing, shoes, and other goods. So it’s unlikely that they’ll still submit to the hassle of cross-border package pickup.
Improved Amazon.ca shipping isn’t the only threat to Blaine’s e-commerce economy. If Amazon sets up its own lockers in Blaine — as Amazon.com has in more than 50 US cities and Amazon.ca has in Toronto and Vancouver — it’s hard to imagine that more than one or two of Blaine’s mailbox shops will be able to survive.
Until then, the City of Blaine will continue to reap the benefits of Amazon Canada’s shortcomings and the town’s unique geographical location. The residents of Blaine will have to endure the polite hordes of Canadians who sojourn here regularly, congesting local roads, patronizing the booming parcel economy, and emptying grocery-store shelves of their favorite products. And as long as Rent the Runway refuses to ship to Canada, I’ll be one of them.


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