Many Canadians shop at U.S. retailers' e-commerce sites,
and using Canada's most localized shipping vendor can help e-retailers deliver.
E-retailers looking to expand sales internationally frequently make Canada their first stop, and with good reason. The market opportunity is significant.
Canadians placed 114 million online orders and spent approximately $15.02 billion online last year, according to Statistics Canada, Canada's census and economic data agency. Two-thirds of the population is online and more than half (51%) reported buying products or services online last year, according to a Statistics Canada survey. Online shoppers placed an average of 10 orders during the year with a total order value of $1,362. Most notably for U.S. retailers looking north, 60% said they bought from U.S. e-retailers.
There's little reason for e-retailers to hesitate about extending sales to Canadians, says Scott Brunton of Canada Post Corp., Canada's national postal service. "We live close to you, we understand your currency and our e-commerce infrastructure is sophisticated," says Brunton who specializes in helping e-retailers enter the Canadian market.
Canada Post, for example, has multiple entry options for e-retailers that can get packages that originate in the U.S. into the hands of Canadian customers. While e-retailers do need to take additional steps to get packages across the border and cleared by customs, Brunton says Canada Post and vendors it works with have resources that can smooth the way for U.S. web retailers to sell and deliver to Canadian residents.
Proximity is a factor
Brunton says Canada Post, because it is the national postal service, has facilities all over the country and delivers to consumers' homes five days a week. Packages are delivered to consumers' homes by regular mail carriers, and, in instances when no one is home to receive a package after multiple attempts, consumers can opt to pick up their package at a local post office or pick-up facility.
Canada Post has more than 6,600 post offices and retail outlets across Canada. In urban areas post offices are about generally 1.25 miles apart. 81% of Canadians living in rural areas are within about 4.6 miles of a facility where they can pick up packages. Brunton says Canada Post has the deepest and most regular access to Canadian residences among delivery carriers operating in Canada. "It has to do with proximity and access," he says. "Canadians know us and know where their local post office facility is, and it’s nearby."
If e-retailers ship via another carrier and consumers aren't home to receive a package, they may have to cover a much larger distance to pick it up, he says. Canada Post says 80% of Canadian households are empty during the day.
As a U.S.-based e-retailer, chances are that Canadian consumers are considering buying from you. Whether those consumers complete their purchases may hinge on how Canadian-friendly your operations are. According to a report released last year by Visa Inc., 72% of Canadian online shoppers are concerned about not having an accurate total cost when ordering from U.S. retailers, and 82% don’t want to pay extra shipping charges for their package to come across the border.
Purchases made by Canadians from U.S. e-retailers are subject to duties and taxes of roughly 20%. These fees can be paid up front—called delivered duty paid or DDP—by the retailer when purchases cross the border or upon delivery by the recipient, called delivered duty unpaid or DDU. If an e-retailer is set up to charge and collect the applicable taxes from the consumer when it takes the order, the fee is clearly stated at checkout and the e-retailer takes care of remitting entry fees. If an e-retailer doesn't collect up front or make accommodations to absorb the cost itself, however, the fee is charged and collected from the consumer at delivery.
Either arrangement can work, but Brunton advises e-retailers that want to grow their Canadian business choose a delivered-duty paid model where the e-retailer handles the payment to customs. "The point is to try to turn an international move into a domestic one," he says. "It's optimal to have the duties and taxes paid up front so that the consumer feels the buying and delivery process moves as smoothly with the U.S. e-retailer as with a Canadian e-retailer. We can help take the complexity out of this."
Brunton says e-retailers should evaluate the available services based on the volume of packages they plan on shipping to Canadians. A retailer that ships an average of 100 packages a week to Canada will, for example, likely want to work with a local shipping partner recommended by Canada Post to get the packages trucked to Canada and through customs; at that point Canada Post will take possession of the packages and deliver them.
For mid-sized customers that may ship 100 orders per day to Canada, Canada Post will arrange to have packages picked up from the e-retailer's location and have its own customs broker work directly with the e-retailer to arrange for tax and duty collection and payment, and then deliver. It will also work with the e-retailer's operations team to formalize the coding and categorizations for each product that will enter Canada so packages move through the customs process quickly. "People think it is a complex process, but Canada Post moves packages across the border daily. We know how to work with our customers to simplify this," Brunton says.
Brunton says Canada Post is interested in helping support an e-retailer's sales growth in Canada and will continue to recommend the right shipping solution for the retailer as its needs evolve. He says as a mid-sized shipper moves into larger volumes—about 500 packages or more crossing the border daily—Canada Post will recommend that an e-retailer manage its own transportation to the border and help the merchant set up systems to make the customs entry process simple and seamless. At that volume, Brunton says, it's more cost-effective to handle this process internally than through a customs broker. Canada Post takes possession after the packages have cleared customs and deliver them wherever they need to go, urban or rural, across the provinces.
"Canada Post will come into the process at different touch points, based on different shipping needs," Brunton says. "But e-retailers should look to us as a gateway and a resource they can use to help them come into a country where they will have retail success."