The Man Who Smuggles Trader Joe’s into Canada
priceonomics.com
priceonomics.com
Trader Joe's is a great brand name: they sell OK products and have developed an incredibly loyal customer base. Pirate Joe's is trading on that popularity.
I'd love to understand the business logic behind Trader Joe's response to this. It's not like they'd have to open up a full national operation. Franchising in Canada is fairly simple and straightforward, so it's hard to believe that licensing Canadian franchises wouldn't be a more profitable approach to this than suing Pirate Joe's. There may be hidden costs, but clearly things like creating Canadian-compliant labeling is a pretty small barrier.
So as a business strategy:
a) refusing to operate in a territory where there is demonstrable demand for your products
and
b) spending oodles of money suing people who are fulfilling customer demand for your products in that territory
seems like the least sensible thing to do. It would be interesting to see the economic reasoning behind it, which has never been clearly explicated ("Trademark protection" clearly won't suffice, as this article points out.)
Seems like starting to franchise would not necessarily fit with their long term growth goals.
I'd assume this is mostly just about brand control. A store selling their products that they don't control will not necessarily have the experience they want for their brand. Even if they can't shut it down, just harassing them can prevent the store from growing very large and causing issues with their brand perception.
That said more media coverage around this could paint Trader Joe's as a bully and be more damaging to their brand than an unauthorized seller.
It's certainly damaged their brand in my eyes, and it's not painting them as bullies: they're being bullies.
This is a person who's buying a product fairly, taking it to a place where that product doesn't exist, adding a minor markup, and selling it. There's absolutely nothing grey about this practice, it's 100% honest and legal. For Trader Joe's to sue him for doing something that's completely within his rights is beyond loathsome. He's a customer who's buying a huge amount of their products at retail price, they should be sending him thank you letters.
I think I might actually stop shopping at Trader Joes over this, as much as it pains me. It's just utterly repugnant behavior on their part.
What if, one of the buyers transporting food improperly chills some steaks and 15 people come down with food poisoning. Then, you have the media blaring out "OVER A DOZEN PEOPLE SICKENED BY TAINTED MEAT FROM TRADER JOES"?. It doesn't matter that the media report is inaccurate, all of a sudden, you have people associating Trader Joes with unsafe food handling practices and the PR damage from one incident alone is more than any possible profit they derive from this tiny store.
So, while I understand how the practice is entirely legal, I can also see how it's a nightmare from Trader Joes perspective and how they'd rather it all go away.
> "Pretty much anything I can buy in the U.S., I can legally import into Canada. There are permits required for meat, seafood and dairy. We stick to vegetarian packaged nonperishable items."
> "I would prefer Trader Joe's accept my long-standing offer to follow guidance on how they would like me to operate," Hallatt says in an email."
http://www.npr.org/blogs/thetwo-way/2013/08/30/217210915/bag...
It's really difficult to change the quality of unopened, non-expired, pre-packaged food. The more I read about this, the less reasonable the company behind Trader Joe's seems. Even companies like Apple allow other channels to sell their products.
Not really. Well, Only channels that Apple allows will are allowed to resell their products. Apple does not take too kindly to the 'gray market' products and unauthorised resellers.
That's not true. There's a huge grey market for Apple products. Just look at Ebay. When you go international it's much bigger.
> Apple does not take too kindly to the 'gray market' products and unauthorised resellers.
They may not be happy about it but they don't sue anyone over it as long as the sellers aren't trying to pass counterfeit merchandise as Apple products, or fake Apple stores as official Apple stores.
Ha! Every Trader Joe's I've ever shopped at has actually been a pretty miserable shopping experience. I keep going back because their stuff is so good, but it's not a carefully curated experience, unless the curators are sadistic. They're ruthlessly efficient, and have sales per square foot figures that are the envy of the grocery industry.
basically pump oils and sugar. instant tasty,
On the other hand, "if it has an ingredient list, it's not food" is much closer to a truism. It's obviously an exaggeration as well; nonetheless, I tred cautiously with ingredient lists.
Apparently not in Germany, where you can buy a small selection of Trader Joe's products at Aldi (they are owned by the same parent company / foundation).
As there people presumably wouldn't be customers of Trader Joe's products without this store, I'm still not sure I understand the issue.
Now their unlikely to win, but by suing and losing they gain some protection. If nothing else if someone get's sick they can say look we tried to stop him but we don't have a choice. On the other hand if they say it's ok that's going to open them to liability.
I don't feel that this is an issue in this case. Hallat only buys pre-packaged foods and I'm sure that Canada's food regulatory bodies don't allow the sale of expired food.
"Pretty much anything I can buy in the U.S., I can legally import into Canada. There are permits required for meat, seafood and dairy. We stick to vegetarian packaged nonperishable items."
http://www.npr.org/blogs/thetwo-way/2013/08/30/217210915/bag....
I don't think they sell anything that needs an expiration date. Best before dates are not expiration dates: http://www.inspection.gc.ca/food/information-for-consumers/f...
from wikipedia (USA law but fuck it let's go for it): n Campbell v. Acuff-Rose Music Inc[22] the Supreme Court recognized parody as a potential fair use, even when done for profit.
http://en.wikipedia.org/wiki/Fair_use#Fair_use_and_parody
Technically, you could probably do it in the states in a location that trader joe's isn't. Although I'd definitely have a very good lawyer on retainer if I was thinking of that :/
Are you implying that his buying their products, transporting them, and reselling them is some kind of performance art which is criticizing Trader Joes in some fashion?
And that this guy is going to stand in front of a judge and claim he's not in the business of selling merchandise, he's a performer?
Seriously, why not save the outrage for cases where you can restate the case without having to gloss over the bits that make your outrage seem ridiculous?
Too bad. When you're in business you don't get to control everything about your product.
The problem I have with the article is that it is too sympathetic to Trader Joe's position. Even the term "gray market" is loaded. What Pirate is doing is not only legal, there's nothing improprietous about it.
I shudder imagining a capitalism where you need permission to resell things that you've bought.
Can't they distance themselves from him and at the same time benefit from selling through him? They'd even have more influence over him if they had a cooperative agreement: ie: don't call himself "Pirate Joe's" and put up a big disclaimer. He wouldn't have to do that, but maybe he would do those things if they gave him a side channel to get goods.
With the reselling of groceries you run in to quality control issues, where Pirate Joe's can be selling expired Trader Joe's goods and making people sick, which can make Trader Joe's liable for harm.
I imagine that spoilage in the hands of an unaffiliated reseller would be considered such a modification, but perhaps you're aware of some precedent that I am not?
Is there any precedence for that? I would love to see a court that put the manufacturer of a product at fault for damage caused by an unauthorized reseller. That would be no different than someone suing a food manufacturer because a grocery store sold their product after it had expired.
If you notice in the article, he already needs to create new nutrition labels for all the food to comply with Canadian law. He is clearly already liable for what he's selling, I don't see how Trader Joe's would ever get implicated legally if there were any issues with expired food.
Are you sure? After all, if I buy expired Kellogg's cereal from a store and get sick, it's the store I sue, not Kellogg's. Right?...
I realize this sounds silly and trollish, but my conclusion from a couple of marketing classes and years of news is that marketing people are aliens. They don't really share perceptions or value functions with the rest of the human race. The highest moral value is the good of the brand, which acquires a sort of religious significance beyond even money. Pirate Joe's doesn't hurt Trader Joe's bottom line or threaten their trademarks, but it's an insult to The Brand. That makes them angry, just like defacing a Bible makes a Christian fundamentalist angry.
This explains, for example, why businesses keep running into the Streisand Effect over and over and over and never learning. In Business Land, the only moral and rational response to threats to The Brand is to suppress them, and the only proper tool for resolving grievances is the lawsuit. It's not that they're mustache-twirling villains; they've genuinely forgotten that humans respond to censorship with moral outrage, or that it's possible to open a conversation without a legal threat.
Also, I've heard that Trader Joe's only expands in groups of three stores at a time. It has to do with their distribution centers or something. So they need the demand in order to make opening up a new distribution center worth it.
I doubt Trader Joe's is "refusing" to operate in that part of Canada, it's just that it's lower on their list of places to open new stores.
The US has exactly the same law.
Trader Joe's not wanting to open up in Canada doesn't validate anything about what he's doing. Perhaps TD has a longer-term strategy, that doesn't involve anyone who can live near the Canadian border selling their stuff at a marked-up price.
We're not talking about importing fruits and vegetables to save money for people at "the Safeway across the street," which the author didn't bother to justify. How anyone would go to this length to sell chocolate-covered almonds, or peppermint cookies, and pretend that selling more snacks is just doing everyone a political/ethical justice is beyond me.
A letter from British Customs official writing a complaint home on the nature of his work:
"In this country an officer of the customs ought to see his way very clear before he ventures to make a seizure. Because he sure of having every possible difficulty thrown in his way. He is looked upon as an enemy to the community and treated accordingly. And whether he succeeds or not, he is sure never to be forgiven, and thinks himself fortunate if his punishment is deferred to a future day." [1]
Joseph Harrison, collector for the port of Boston:
"Large quantities of dutiable goods have been smuggled in a most audacious manner. But publicly known and talked of, such is the temper of the times that no legal information could be obtained so as to prosecute or make any seizure of them. "
And finally a letter from the owner of a small smuggling vessel to the Captain of the Speed Well, a government ship that had confiscated his ship, taken his goods and seized his men.
"Sir: Damn thee and God damn thy two purblind eyes thou bugger, thou death-looking son of a bitch. O, that I had been there (with my company) for thy sake when thou tookest them men of mine on board the Speedwell cutter on Monday, the 14th of December. I would drove thee and thy gang to Hell where thou belongest, thou Devil incarnet. Go down, thou Hell Hound, unto they kennel below and bathe thyself in that sulphurous lake that has been so long prepared for such as thee, for it is time the world was rid of such a monster. Thou art no man but a devil, thou fiend. O Lucifer, I hope thou will soon fall into Hell like a star from the sky, there to lie unpitied and unrelented of any for ever and ever, which God grant of his infinite mercy. Amen."[2]
[1]http://www.cambridgehistory.org/content/boston-tea-party-and...
[2]http://www.libertarianism.org/publications/essays/excursions...
http://www.bbc.co.uk/programmes/b04d4sbs
The BBC website also gives instructions on navigating the Old Bailey Online website.
The case that went to the Supreme Court is unrelated to either Trader Joe's or this guy; the article is just juxtaposing it because it was also a case about international resale. But it was about someone importing international editions of textbooks for resale in the U.S., and the main arguments in the case turned on interpretation of a totally different area of law, copyright (so it's not really all that relevant here).
What sort of capitalism is this where you don't have ownership rights in what you buy?
Trader Joes: http://www.amazon.com/s/?field-keywords=trader%20joes
Ikea: http://www.amazon.com/s/ref=nb_sb_noss_1?field-keywords=ikea
Both on .com and .ca. Note the huge markup.
Whether you like it or not, for vast majority of people, consumption power is THE most important indicator of quality of life, NOT healthcare, NOT social welfare system and NOT even democratic political system. People's ability to buy things at will is what regular people care about the most. And yet, this issue is never on the table. I fail to understand why.
The mark-up is the cost of healthcare and other social programs, not gouging. TANSTAAFL.
http://en.wikipedia.org/wiki/There_ain%27t_no_such_thing_as_...
By never being on the table, isn't the issue by default not what people care about the most?
How do you interpret the quote "People's ability to buy things at will is what regular people care about the most"?
> Most people don't know the issue exists
I really doubt this. There are multiple "stuff is more expensive in Canada than in the States" stories in the media every shopping season.
One possible reason for the issue never being on the table is that it's not actually that important. Ask Vancouverites about a move to Seattle and food prices will be a small irritant but nowhere near the deciding factor - entirely dwarfed on the pro side by jobs and housing prices. Ask Seattleites what their quality of life is and you'll probably hear about traffic and crime way before Trader Joe's.
https://www.google.com/search?q=cbc+canada+retail+prices stories from 2014, 2013, 2011...
If CBC isn't your thing, it was in the Sun too: http://www.torontosun.com/2013/10/04/bridging-the-canada-us-...
Also we went from jsnk's 10-20% to your 25-50%. If a third person chimes in, we might learn Canadians pay double.
Point conceded, possible if you don't watch news.
> Like I said, I have asked people. That's the point.
Anecdotes. Your original claim, "Most people don't know the issue exists", doesn't follow from "I have asked people" unless you've asked a thousand randomly selected people.
> I said 25-50% because that is the correct figure
Citation requested.
I live in Russia and e.g. Apple products are notoriously over-priced here, so lots of local resellers make profit by doing grey imports. iPhones and iPads imported from practically any other contry turn out to be cheaper, even from nearby Finland, which, being Euro-zone country, is not cheap by American standards at all. Note that mobile operators in Russia are not in a position to subsidize phones, so all iPhones are being bought at full price. Mobile operators tried to sell iPhones, too, but could not compete and all balked out, taking great losses. At the same time, prices for most PC hardware seem to be at about Amazon US level. Bizzare? Sure.
On the other hand, I am a brony and got interested in My Little Pony Collectible Card Game http://mlpccg.wikia.com/wiki/My_Little_Pony_Collectible_Card... (apparently, it doesn't suck? I was at a con in Finland and played with some enthusiastic fans there). No local stores carry the game here, and the developer (EnterPLAY) is very reluctantly replying my persistent inquiries. The best I got from them was:
It’s difficult for me to officially support an event
when I can’t officially sell the game into that country.
As a fan, the worst I can lose so far is the cost of a couple dozen decks, am I right?
The constraint on global distribution is Hasbro, who owns the MLP intellectual property and chooses to license it out on a per country basis. Enterplay is not Hasbro and cannot take and sell the MLP characters where Hasbro doesn't permit it. The Enterplay game developers can't help this, they are far removed from this situation, it's all at the corporate management level.
Hasbro has an odd relationship with MLP CCG in the first place. Hasbro owns Wizards of the Coast and is fearful of introducing competition with their own other successful CCGs.
In other words, you think Hasbro hasn't made up their mind whether they want to sell MLP TCG in Russia? That's what I thought, too. Though I personally think it's kinda stupid from the business POV to pay for producing the intellectual property and not selling wherever possible (look at Apple, I think lately they maintain their profits just by selling their wares in even more countries, and even faster) Also, there's much evidence that shows that companies can successfully sell several similar brands in parallel, effectively expanding their profits by market segmentation, price discrimination or whatever. But Hasbro is a big сo., moves in mysterious ways and has the right to it. What ticks me off is that Enterplay representative wouldn't (couldn't) even tell me as much as why they can’t sell the game into my country. Indeed, it took pestering him with repeated inquiries to even admit that they can't! Enterplay is a small company, and should be approachable in theory. It doesn't look like they are overwhelmed with demand for their game and can easily afford ignoring honest inquiries from fans that wont to help promote it, either. I think I can well be the first Russian (or one of the few, anyway) to email them. So it almost looks to me like they are afraid to talk to me because they don't know if they can. The few times they did reply, they did pretty fast.
Hasbro does license MLP brand in Russia, to some extent: the first couple of seasons were dubbed and shown on kids' channel (no love from the fans for that, of course) and the merchandise is selling, too. So I really don't think there's a reason to not license MLP TCG, when they do already sell other MLP stuff.
Speaking of which, I haven't up to this moment thought that the situation with Hasbro or with Trader Joe's can do something with licensing, or that apparently parallel import _can_ be illegal at all. I guess I naively believed in the primate of private property and that if you are selling something you may not forbid buying it (unless it's some kind of regulated thing e.g. guns or drugs).
All this makes me want to become an anarchist of some sort.
Hasbro has an odd relationship with MLP CCG in the first place.
I talked to Finnish fans at Crystal Fair con, who introduced me to the game. I was a couple of minutes late to the start of the panel and I was used to GDC (used to take part in Russian one), so when I saw guys confidently explaining how the game works, I thought they were the developers (that's the way it is at developer conferences). Turned out, those were the enthusiastic fans who learned of the game and wanted to promote it in Finland to create a wider audience, so that Hasbro/EnterPLAY would notice and start selling it officially, which should drop the prices, bring in official tournaments with developer-supplied prizes and expand the audience even further; that's their plan. They arranged the first ever unofficial (draft) tournament in Finland on the next day of the con. Half the people just heard of the game, like me, and I found it fun. So I thought: why not try the same in Russia? Only the situation is one step further removed for me: to the best of my knowledge, there's no store that sells the game in Russia, so thought of buying stuff on Amazon myself to get things going. With the ridiculous markup on TCGs in Russia, I could even break even with all the postage included, if I get lucky.
In Finland, they already had the stores that sell the game, despite not being released there officially; so they only had to find the one that allows them to sit and play, and went from there. Here's the store (Poromagia) representative setting up a stall in Finlandia Hall: http://i.imgur.com/WZoJERP.jpg Everything sold pretty well, even though half of it was the non-pony stuff.
Hasbro does not produce MLP CCG. Enterplay does. Enterplay is a separate company that is not a subsidiary of or owned by Hasbro. Enterplay can only do with the licensed property what Hasbro permits by license.
http://techcrunch.com/2013/11/26/priceonomics-data-services/
No gov subsidies in Canada for milk/cheese so cheaper to buy American products at retail price. There was also a ring of thieves in Canada who imported wrecked cars from the US as scrap metal and ripped the VIN numbers from them, then attached them to stolen cars to sell. They made est 200 million doing this over 10 years.
"The Canadian Dairy Commission is a Crown corporation which was established in 1966 with the mandate of coordinating federal and provincial dairy policies and creating a control mechanism for milk production which would help stabilize revenues and avoid costly surpluses."
http://www.theglobeandmail.com/life/the-egg-police-crack-dow...
This is a Good Thing™ because sellers should never be able to withdraw a product from a consumer's control or have a say in what the consumer is allowed to do with the product once they've bought it. The moment purchase law allows that you get companies adding provisions that purchasers aren't allowed to review a product they've bought or do things like refill a printer cartridge with other ink (witness the DMCA).
None of these consumer protections causes the company to lose control of their brand, and neither does Pirate Joe's.
(Note: I caught onto this several years ago and haven't been to a TJ in a while - it's entirely possible TJ's and Loblaws have changed their suppliers since.)
I can understand how there would be a niche market for their products in areas without direct access to the stores.
The legal complications are in importing all the stuff, making sure you're not perceived as confusing/diluting someone else's brand name, complying with a different country's labeling requirements, and most of all obtaining the goods since Trader Joe's has the right to refuse to sell to "Pirate Joe's" shoppers.
Trader Joes has a right to refuse people who shop there, but again, you can't sue someone for trying to buy from you. Trespassing perhaps. Stalking?
Which brings us to your point about dilution of a brand. They lose that right when they sell it. It's called the first sale doctrine. HBO can stop Netflix from showing Game of Thrones streaming, but they cannot stop them from renting the video out. So, rather than listing things that aren't valid, could someone explain why isn't this covered by the first sale doctrine?
Trader Joeys, clear trademark violation. Pirate Joes, no fucking way. Not in this country.
So, like I said. Maybe it's time for you to go back to law school.
See also, moron in a hurry.
"Grocers Without Borders"Only reason I have nexus pass lol
Oh and my shipping mailbox at tsb shipping
Borderline case, but it's probably ok to use "smuggling" as shorthand for "importing illicitly".
While some people hate the concept it has been enforced in some courts - the Tesco vs Levi Jeans case is one example from England.
That it's unauthorized. Let's not pretend this is your average importing operation. (Not a condemnation; I well know the hardship of having to do without Trader Joe's in Canada.)
> all of these terms explicitly suggest illegal avoidance of tariffs
"Illicit" does not imply that, which is why I used it.
Does not seem to apply here.
But if you really want to understand a word, look at its root. The root of "illicit" is the same "lic" as in "license"—and unlicensed reselling is precisely what the story is about.
I'm going to detach this subthread now, to demote it as off-topic without punishing the root comment.
Dude, you're doing it for the money. And if a lawyer's quote got you to keep going in a lawsuit, you're definitely doing it for the money.
Sorry, this entire article is parroting a very well-constructed (but seemingly BS) storyline. "he still goes to the border", "waits in a white unmarked van", "he envies cabbies salaries", etc.
His ultimate goal is to bring Trader Joe's to Canada? Just doing it to advertise for the Trader Joe's label?
Sorry man, you found the grey area you wanted to (self-admittedly within a few minutes) and then kept going.
You also seem to think that he's "getting what he deserves", as if what he's doing is wrong. It isn't.
Second, while we associate the word "smuggling" with illegal activities in which the smuggler receives compensation for engaging in highly risky activities, he's not going to get any sort of that in this situation. If he's even remotely competitive with the Safeway across the street, as he claims, then there is absolutely no way this is some sort of "rake in the dough" operation. He may be making a modest living but there's no good path to wealth here.
So, if as I think your message implies you think he's really raking it in and covering over that with some good PR moves, I'd suggest reconsidering. I do not see an economic solution in which he could possibly making very much money. To be honest I'm surprised he can run this at a profit at all.