At least one Ottawa company is expanding into the United States in response to unpredictable tariffs and economic challenges.
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At least one Ottawa company is expanding into the United States in response to unpredictable tariffs and economic challenges.
With more than 85 per cent of its business taking place south of the border, Ottawa-based advertising software firm Trellis, which works with sellers on major e-commerce sites such as Amazon and Amazon Sellers, has decided to establish a U.S. entity.
“Ever since (U.S. President Donald Trump) took office, we felt that we never knew what he could do or not do,” co-founder and CEO Fahim Sheikh told OBJ. “With the whole unpredictable nature of things, we felt that it was best to actually establish an entity in the States.”
As a result, he said U.S. customers won’t have to interact with the Canadian part of the company anymore. Instead, the new U.S. entity will handle American transactions as a subsidiary of the Canadian entity.
“We are essentially setting up shop in the U.S., just as a precaution,” said Sheikh.
The process isn’t easy or cheap, according to Sheikh. In addition to registering the company in the States, he said Trellis must set up new payment processors and establish a physical location for the business south of the border.
In this case, Sheikh said the company has chosen New York. “Manhattan is an obvious choice because of the image it projects. A lot of brands are in New York, so that was my first choice. It’s a short flight or drive.”
With so much U.S. business, Sheikh said the company has long considered establishing itself in the States. However, he said it was held back during its startup stage due to financial constraints.
“To be honest, we’ve kind of held back from doing it sooner because of the cost,” he said. “If you look at a resource in Canada versus a resource in the States, you’re almost looking at a 30 to 40 per cent cost difference, where the resource in the States is more expensive.”
He added that it’s also more difficult to build company culture when dealing with remote employees.
“We’ve always tried to hire folks locally and ever since COVID restrictions were lifted we’ve always been coming into the office,” he said. “We believe that’s how you build the right culture in the company. It’s very difficult to do remotely.”
Still, he said the company is taking on the challenge. It recently hired its second U.S.-based employee, with plans to add more. He said the company will also be growing its sales presence in the States, which will be advantageous to its bottom line.
“It’s cheaper for our teams to travel in the States than to travel from Ottawa. There are certain benefits of having sales folks in the States, where the bulk of our business is.”
However, Trellis won’t be stopping with the U.S. Sheikh said the company is also looking for potential expansion opportunities in Europe and Asia, which he said make up a significant portion of the Amazon market.
“Most of our efforts right now have been looking at China. If you look at our space, especially e-commerce, we’re talking 60 per cent of our potential client base sits in China,” he said. “Europe, on the other hand, you’re seeing a lot of things with (Prime Minister) Mark Carney doing stuff with Europe in the last few weeks. For us, if you look at Amazon sellers that sell in the U.S. market, the largest number are actually based in China, then Germany, the U.K., France, Italy and Spain.”
In the coming weeks, Sheikh added that he’ll be paying attention to the federal government to see what other support it will provide to businesses as they diversify.
“I think the Canadian government has been excellent, supporting us through entities like CanExport, where they are giving us opportunities to do some exploration,” he said. “But you know, with some of this uncertainty, it starts to get you to think about other areas, other markets. And I think, overall, it's healthy for Canada to reduce that dependency and for businesses to reduce that dependency.”
