Smart retailers worldwide recognize the e-commerce opportunities in Canada, one of the top 10 richest countries in the world.
This wealthy nation is currently enjoying an increase in global online retailers selling goods to its discerning consumers. But, introducing your brand to such a vast country, outside your local market, can be intimidating. How can you provide a top-notch customer experience to Canadian online shoppers and ensure your e-commerce website has the best chance of success there?
We speak to Gary Shunk, Senior VP Marketing, Pricing and Partnerships at Asendia USA, for his advice on the Canadian e-commerce landscape, its consumer preferences, and its customs regulations.
Here are Gary’s 5 things online retailers need to know when shipping to Canada.
- Growth of International e-Shopping
The great news for global online businesses wanting to sell to Canada is that international e-shopping is booming! In fact, most Canadians purchase both domestically and overseas (56%) while just 8% of Canada’s online shoppers buy exclusively from other countries. Clothing is the most popular shopping category (56%), followed by household goods (41%), then books (40%). Canadians are true lovers of online shopping – the average annual spend of e-shoppers is $634, which is very high in global terms.
- Tech-Savvy Nation
Another key aspect of Canadian culture that e-commerce businesses should be aware of is their command of technology. Canada is the world’s fastest adopter of smartphones and a global leader in internet usage – an impressive 91% of Canadians are online. M-commerce is growing at a rapid pace here with almost half of e-purchases done on mobile last year. Perhaps Canada’s ease with technology comes down to its young population, since most Canadians are aged between 25 and 54. Younger populations not only make up a higher percentage of online shoppers, but they are also more demanding about delivery standards.
- Price-Conscious Consumers
Why do Canadians flock online for their goods? An overwhelming 87% of Canadians made an e-purchase last year, and the most popular reason was ‘price’. This reason was followed by not having to go out, the availability of products, time saving, and the wide choice of products. What we can learn from this is that convenience is very important for Canadian consumers… but not as important as value! This may be quite surprising given the high average income per capita of $57,387. If you’re looking to establish your brand in Canada, make sure you sell your goods at highly competitive prices – a study found that Canadians are more price conscious than brand loyal.
- Customs Procedures
Unfamiliar customs regulations may unnecessarily intimidate online retailers that are thinking about selling to Canada. The truth is, Canadian regulations are fairly straightforward. To start with, Canada’s de minimis threshold is $20 CAD – this is the value below which goods can be shipped into the country before duties and taxes are assessed. It’s one of the lowest in the world.
In Canada, different customs duty rates apply depending on the type of goods etailers are shipping and where they were made. The majority of goods being cleared at the Canadian border are textiles and clothing, which have a duty rate from 16-18%. Foodstuffs have a higher customs tariff of up to 30%. Some sectors are protected to a degree.
Most goods imported into Canada are subject to the federal GST, which is calculated at the rate of 5% of the duty-paid value of the shipment. Several Canadian provinces have combined the GST with their provincial sales taxes on various categories of goods, creating a Harmonized Sales Tax (HST).
Finally, be aware that Canada has signed a number of customs agreements for preferential rates, especially the Comprehensive Economic and Trade Agreement CETA (free trade between Canada and EU members) and the North American Free Trade Agreement NAFTA (free trade between Canada, Mexico, and the US).
- Delivery Preferences
When planning your delivery strategy for Canada, keep three things in mind: convenience, reliability, and information. Three-quarters of Canadian consumers prefer home delivery. This is followed by delivery to the local post office, their place of work, a specified location, and finally retail outlets. Make sure your packages will be delivered by the time promised: 82% of e-shoppers think delivery within the agreed time range is the most important element of their experience. They also need full visibility and tracking, and prefer electronic notification of delivery. If you have these things in place, then you will be well on your way to fully satisfying your new Canadian customer base.
So, if you’re thinking about offering international shipping to Canada from your online store, bear in mind you’ll be sending goods to tech-savvy consumers who love shopping globally, especially if the price is right and the brand can deliver on what they promise.