Amazon Gets Green Light in Canada

A Canadian government agency has cleared Amazon.com (Nasdaq: AMZN) to sell books through its newly launched Canadian Web site, saying the e-tailer is not subject to a law that regulates foreign investment in booksellers.

The Department of Canadian Heritage issued a statement Wednesday saying that Amazon's Canadian site is exempt from provisions of the Investment Canada Act that would have required Amazon to seek permission before selling books in the country.

The agency said it determined after a "thorough review of the available evidence" that the law does not apply to Amazon because the e-tailer is neither establishing a new Canada-based business nor buying an existing one. The Act seeks to monitor foreign impact on businesses thought to influence cultural heritage, including the publishing industry.

Already There

The decision comes about three weeks after Amazon launched its Canadian site, its fifth international incarnation. The company already operates German, French, UK and Japanese sites.

Amazon has maintained all along that it is exempt from the Investment Canada provisions and has been careful to comply with Canadian law. The company cited its desire to comply as one reason it delayed its Canadian launch until now.

But rival booksellers, including Canadian online competitor Indigo Books and Music and the Canadian Booksellers Association, pressured officials to review the e-tail giant's move into the country.

They focused largely on the fact that Amazon plans to ship books through Canada Post, the national mail service, which is subsidized by the Canadian government.

No Big Deal

Despite the positive outcome for Amazon, the e-tailer has downplayed its Canadian launch, and with good reason, Morningstar.com analyst David Kathman told the E-Commerce Times.

"A lot of Canadians have already been buying books from the U.S. site, and Amazon will have no physical presence in Canada," Kathman said. "Canada is a natural market for Amazon to want to reach, given its physical proximity to the United States and the similarities of language and culture. It's not as important as Europe or Asia in terms of number of potential customers, but on the other hand, launching a Canadian site is logistically much easier."

Dear Customer

Meanwhile, back in the United States, rival e-tailer Buy.com is trying to capitalize on any momentum it might have gained from two recent price challenges to Amazon.

On the heels of a move to offer free shipping with no minimum purchase and to undersell Amazon on all books, Buy.com founder Scott Blum ran an ad in The Wall Street Journal directly addressing Amazon customers.

"I wanted to offer my personal commitment to Amazon customers that they would have as positive a shopping experience with Buy.com, if not better," Blum said in the letter. He also included his "personal" e-mail address and said he is eager to hear from Amazon customers.

Most analysts seem to believe Buy.com will be able to battle Amazon for only a limited time before the larger e-tailer wins the long-term price war. But Buy.com has said its own book sales have skyrocketed since it introduced free shipping and lowered prices.