Joshua Seraj founded his own business in his bedroom back in 2016, moved to his basement in 2017, and eventually made his way to a retail location in 2020.
As the owner of Tools420, Seraj primarily sells vaporizers – a device used to heat cannabis, oils, waxes, and other substances to a point that allows them to be inhaled without smoke. It’s supposed to be a healthier alternative to smoking. These are legal items, and Tools420 does not sell cannabis or tobacco itself.
Around 95 per cent of business sales come from online customers, who are not receiving packages due to the ongoing Canada Post strike. More than half of Tools420’s sales are to U.S. customers, many of whom are unaware of the Canada Post strike.
“For November, we’re looking at a 16 per cent loss in revenue from the U.S. side,” Seraj said. “Canada was around five percent, so it was better, people were understanding. But the returns we had to do in comparison to last year was 2,202 per cent higher.”
Last November, the company issued $118.49 in refunds. That number catapulted to $2,727.76 last month.
With Canada Post not an option to get goods across the border, Seraj has had to find other options that often cost more and are not as proven.
“Sendle is a new company, and they basically do what Canada Post does, they’ll hand packages over to USPS, who deliver in the States,” Seraj said. “They’re like a third party that buy these services at a cheaper rate.”
Seraj clarified he is not affiliated with Sendle, and had to go through a few other shipping companies including UPS before finding an option that was financially viable. UPS wanted Seraj to sign on for a one-year contract, which cost nearly double what Canada Post charged, and had a fee of several hundred dollars if he chose to switch to another company part way through.
When shipping a package with Canada Post within Ontario, Tools420 expected to pay around $12. With UPS that number is closer to $26, and can go as high as $40 - $50 to ship to the coasts.
On a good day, Tools420 fills around eight orders per day, with expectations that the number would double around Black Friday. However, with so many refunds having to be issued due to delays in shipping, a banner had to be added to the website.
“We put up the banner saying there will be some delays, and the sales dropped significantly,” Seraj said. “We were getting one or two sales per day from the U.S.”
Those numbers are not sustainable, and Seraj has employees who need to be taken care of.
The small team working out of the Guelph Line warehouse is aware of the issues, and adapting to them as each new obstacle pops up.
“I’m worried about my employees, it’s Christmas time,” Seraj said. “What am I going to do with them? We have savings for three or four months, but what if it continues and we can’t recover?”
"Cannabis and tobacco are still taboo items to ship," Seraj said, so anything related to the consumption of those products sees carriers shy away. It’s difficult to find a carrier who will play nice with the paraphernalia Tools420 sells. He has also had web-hosting companies, newsletter advertisers, and more drop them without notice after deciding not to be affiliated with cannabis.
“Take our online payment processor, people are familiar with PayPal or Stripe, but 95 per cent of these companies don’t like to operate in the cannabis or vape sector,” Seraj said. “There’s no way to work with a lot of these well-known brands. The ones that do work with us, we have to pay double.”
Seraj added a typical payment processor fee is around three per cent, while Tools420 pays six per cent to its processor.
Each of these fees, setbacks, and strikes are hindering small businesses. According to the Canadian Federation of Independent Business, the Canada Post strike costs small businesses $76 million per day. The CFIB added that number was expected to be around $1 billion total as of Wednesday, Dec. 4.