How much time do you spend online in a given month? The average American spends 35.2 hours per month online, according to comScore market research. Canadians spend 36.7 hours per month, the most time online of several major economies that comScore studied in late 2014. The country is also one of the most “connected” in the world with 91 percent of Canadians having access to the internet.
The “connected Canadian” is an enormous growth opportunity for online retailers. By 2019, 9.5 percent of all Canadian retail spending—projected at C$39.9 billion—will be done online, up from 6 percent in 2014, according to Forrester.
Yet many U.S. retailers are surprisingly hesitant to conduct business with our Northern neighbor. The reasons vary from intimidation by the sheer size of the country—it’s second only to Russia in land area—to navigating the financial, tax and customs aspects of exporting.
The greatest risk, however, could be waiting to embrace cross-border e-commerce while ready-and-willing Canadian online shoppers build relationships with other retailers from the U.S. and other countries.
Personalized e-commerce
Canadian shoppers want an online shopping experience that speaks to them—not one that feels like just an add-on to the American site. For example: “Are the prices I’m seeing on a retailers’ website competitive and converted to Canadian dollars? Does the total cost for my order include all taxes and fees? What shipping options are available for me to choose from?” The answers to these questions help determine how likely a consumer in Canada is to shop with retailers across borders.
Personalization plays a huge role in the pre-purchase and checkout experiences. When a consumer visits a retailer’s website, that visit opens the door to collect data on that customer’s interests and geographic location. That data also can be used to create localized promotions and advertising campaigns that drive traffic and engage customers. When you’re talking to shoppers in Quebec, those campaigns should be in French, the official language of the second most populous province in the country.
Retailers can create customized experiences with tools like UPS i-parcel. This technology welcomes online shoppers in their native language, converts pricing to the shopper’s local currency, and offers familiar payment options. All duties, taxes and fees can be displayed in the shopping cart along with affordable delivery options proven to increase conversion rates.
Pay attention to value and total price
International shoppers expect to see the total price when shopping online and not just the cost of the item itself. According to the UPS Pulse of the Online Shopper study, consumers’ top consideration when shopping internationally is the total cost of the order, including clearly stated duties and taxes (75%) followed by all prices being stated in one’s home currency (73%).
Canadian shoppers are well versed in their country’s complicated tax structure and low de minimis value, that is, the value above which customs duties must be paid. Duties are required to be paid on online orders of C$20 or more, which is equal to roughly US$15. Taxes may include Canada’s Goods & Services Tax (GST), Provincial Sales Tax (PST), or Harmonized Sales Tax (HST). Total costs, including tax and delivery, are what determine whether the consumer will make de minimis value—or abandon—the purchase. Engaging a partner that can accurately display duties and taxes at the time of checkout helps protect your business from customer complaints and the expense of refused orders upon delivery.
Price isn’t the only factor that matters to international shoppers. According to the UPS study, top reasons consumers buy internationally are for unique products (42%) and access to brands/products that aren’t available locally (38%). This is where the value part of the experience comes in. The savvy retailer can capitalize on consumer desires for unique and otherwise unavailable products and raise a premium for their hard to come by inventory.
Focus on shipping and returns
Many retailers may not realize that 90 percent of Canada’s population lives within 100 miles of the U.S. border. In some instances, online shoppers living in Canada can be closer to a U.S.-based distribution facility than most customers living in the United States.
Being upfront about shipping costs and delivery times is extremely important to Canadian consumers. According to the UPS Global Pulse of the Online Shopper study, Canada has the highest percentage of shoppers who have abandoned a cart for reasons related to shipping costs. The second most frequent reason for online cart abandonment cited in Canada is the time it takes to receive a package.
Then there are returns: more than four in 10 Canadian shoppers said they would be unlikely to complete a sale if they had to pay for returns shipping, and 65 percent will shop more with a retailer if they offer a hassle-free returns policy.
It’s critical to partner with a global shipping provider that has operations, tracking and flexible services to balance speed and costs. Expertise in customs is also important to seamlessly ship deliveries across the border on time and in compliance with Canadian import regulations.
Don’t be left behind
Online shoppers in Canada are helping drive double-digit global e-commerce growth that far outpaces traditional retail sales. In fact, 60 percent of Canadian shoppers are already making purchases from U.S. online retailers.
There are logistics and business challenges associated with targeting consumers in Canada, but the payoff far outweighs the hurdles. The good news is that retailers don’t have to navigate these challenges alone. Find a partner that understands the Canadian shopper’s delivery preferences and create a positive experience for these shoppers. The company should know the ins and outs of the Canadian market, excel in customs clearance, and help you master shipping and returns. It’s all about having a localized cross-border e-commerce program.
Don’t miss out on an opportunity that is so close and yet—without that localized cross-border e-commerce program—so far away.
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