A Canada Post worker delivers parcels. According to a 2007 study conducted by marketing research firm NPD and Canada Post, far fewer Canadians than Americans shop online, but those who do spend about the same amount per visit and per year.

Like most 8-year-olds, Charlie Svensson really wants a Nintendo DS. When his dad, Matt, went online, he found one of the handheld video games at Amazon.ca for $149.99 and the same one at Amazon.com in the U.S. for $129.99.

"With the Canadian dollar around par, that's quite a savings," he said. "And while I had to pay a few bucks for shipping, it was a lot less than the tax I would have paid."

And he didn't stop there. He found bargains on a variety of items, including books by Canadian authors and CDs by Canadian artists, some at very substantial savings.

A Canada Post employee sorts parcels from the U.S. that were shipped into Canada via the Borderfree program. Founded in 1999 by frustrated consumers who wanted to buy from U.S. online retailers and later taken over by Canada Post, Borderfree.com allows users to shop at a variety of U.S. online retailers and automatically calculates currency exchange, taxes, duties and shipping costs.

Svensson, a suburban Toronto auto-sales representative, is part of a large and growing number of Canadians who are shopping at American online retail sites, rather than their Canadian equivalents or rivals.

There are so many people doing it, according Jeffrey Grau, senior analyst for New York City-based research firm eMarketer, that it has actually had a visible effect on the U.S. economy. He pointed out that while the U.S. retail sector as a whole has been sagging, online sales are brisk and growing, and a significant part of the growth, he said, is coming from Canada.

"Cross-border shopping always increases with a strong Canadian dollar," he said. "But not everyone wants to drive to the border, so e-commerce gives them an alternative."

Svensson said in addition to the lower prices, he found the U.S.-based Amazon site was easier to navigate and gave him more options.

"On the Canadian Amazon, there's not much more than books, movies and video games,” he said. “But on the American one, you can buy a camera, a stereo, even jewelry — I didn't have to go anywhere else."

Grau acknowledged that U.S. retail sites, even those with the same parent companies, generally offer more products and better customer service than Canadian ones, which he attributes to the size and age of the different markets.

"Canada has one-ninth the population as the U.S., but Canadians spend just one-thirtieth as much money online as Americans do," he said. "It's growing, but slowly."

He said that online retailing had a long head start in the U.S. and that Americans have become increasingly comfortable with it.

"It's a more established market and the sites reflect that," he said. "In Canada, there just hasn't been the incentive or any urgency to move online — look at Wal-Mart, they are a huge retail presence in Canada, but their site up there is just for marketing. You can't buy anything on it." Wal-Mart's U.S. site is largely dedicated to online shopping.

According to a recent study conducted by marketing research firm NPD and Canada Post, far fewer Canadians than Americans shop online, but those who do spend about the same amount per visit and per year. It also showed that while Canadians have been quick to adopt online banking and will readily book travel or buy media (like books and DVDs) online, they are less likely to go to their computers to buy other items, especially apparel and home furnishings.

Grau said a long-standing tradition in the U.S. — especially in rural areas — of shopping through mail-order catalogues is one of the reasons Americans are more likely to buy such items online.

"Historically, Canadians have preferred a more hands-on approach to such personal items," he said.

Canada Post's Borderfree service is one innovation that has helped boost U.S. online retailers' sales in Canada. Founded in 1999 by a number of frustrated consumers who wanted to buy from U.S. online retailers and later taken over by Canada Post, Borderfree.com allows users to shop at a variety of U.S. online retailers and automatically calculates currency exchange, taxes, duties and shipping costs. It also offers customer service help specifically for Canadian customers.

And it's growing.

According to Canada Post senior retail strategist Paulina Sazon, Borderfree revenue set a new annual record this year well before the holiday shopping season began in earnest. She attributes much of the program's success to the strength of the Canadian dollar.

"We see tremendous spikes whenever the dollar goes up," she said. "On the day it hit its highest, we recorded an 82-per-cent increase in sales over the same day in the previous year."

That success has not gone unnoticed south of the border.

Sazon pointed out that two premium U.S. retailers — home furnishings seller Crate & Barrel and upscale cosmetics giant Sephora — are opening brick-and-mortar outlets in Canada this year after having tested the waters through Borderfree.

"When Sephora began e-commerce in Canada with us, it took off like gangbusters," she said. "And it convinced them that Canadians wanted more exposure to premium U.S. retailers."

Of course, Canadian online retailers are not willing to let all that money flow south without fighting for their share.

"We've made major price adjustments on our Wishbook — our primary online presence — this year," said Vincent Power, spokesman for Sears Canada. "That's not something we often do."

Sears is also offering free shipping on some items — as are other Canadian online retailers — to help compete with the Americans, who traditionally do so in late November and much of December.

Those incentives, Grau predicted, will soon be exceeded by similar ones from U.S. merchants. "You can see it already. Now the Canadian sites are offering lower prices and other incentives," he said. "And American sites are becoming more aggressive about marketing to Canadians as the home market matures and they recognize the value of the 33 million consumers north of the border."

Expect to see retailers on both sides of the border offer lower prices, faster shipping and more intuitive websites with better security in an effort to woo consumers.

That, Grau said, is a good thing not just for Canadian consumers, but for Canadian business as well.

"The increased competition will raise the level of e-commerce for both sets of retailers," he said.

The author is a Toronto-based freelance writer