Before jumping into the Canadian market, global brands and retailers should do their research on the rules and regulations in this market. Complying with the Consumer Protection Act requires cross-border e-commerce brands to be clear and transparent with Canadian shoppers about applicable taxes and duties at the time of purchase.
Canada is a strong market for cross-border e-commerce merchants to enter. Many domestic U.S. e-commerce retailers look to Canada as their first international destination on their journey to becoming a global brand. That’s because a majority of Canadians speak English and shoppers there have already embraced online retail. They’re also warming up to cross-border e-commerce brands. According to a recent report by The Paypers, 45% of Canada’s e-commerce spend is through international websites. eMarketer revealed that goods from the U.S. are in the highest demand with Canadian consumers: 53% of Canadian cross-border shoppers buy from American retailers. Our own research revealed that 83% of apparel shoppers in Canada have made a cross-border purchase.
But as is the case in any foreign market, it’s important to know, in advance, about the requirements of any consumer protection legislation that applies to goods being sold online in Canada. Each province has its own consumer protection law, such as Ontario’s Consumer Protection Act.
According to our research on the Candian market, almost a third of Canadian cross-border shoppers are deterred from placing an order on an international site due to uncertainty around the final duty and tax amount they will pay. Furthermore, our research shows that almost 80% of Canadian consumers who make cross-border purchases prefer to pay for applicable taxes and duties at the time of purchase, rather than upon delivery. Surprising Canadian customers with additional fees later is not going to go over well with this audience. But displaying clear duties and taxes to Canadian shoppers is about more than customer preference. The laws protecting consumers require that e-commerce brands selling to Canadian consumers describe additional costs, such as duties that are associated with purchases.
For cross-border e-commerce retailers who are considering entering the Canadian market, it’s important to know that not all e-commerce platforms are designed to take country-specific consumer protection laws into consideration. Additionally, landed costs aren’t always factored into pricing display capabilities of cross-border e-commerce platforms. As retailers know too well, tariffs and regulations are changing all the time and it can be difficult to keep track of them. Brands selling into multiple markets across localized e-commerce websites face even greater challenges.
Technology can help, but brands must evaluate their vendor partners carefully to ensure they have the capability to support local legal requirements and regulations. There’s a lot at stake if your localized website can’t be customized to meet the preferences of customers in each market as well as adhering to the local rules. Retailers selling into Canada that fail to properly identify applicable taxes and duties upfront could be subject to a lawsuit for consumer deceit. It’s important for e-commerce merchants to know that Canada’s legal system, like the U.S., allows for class-action lawsuits that can be very expensive for companies found to be in violation of this law.
Find out more about the ins and outs of selling to Canada by downloading our free ebook. For e-commerce merchants who are in the evaluation phase of cross-border e-commerce technology partners, check out our RFP template.