Shipping to Canada: A Cross Border E-Commerce Merchant’s Guide
Canada is the natural first stop for U.S.-based e-commerce retailers to begin their international expansion efforts. When it comes to cross-border e-commerce growth, there’s a significant opportunity for U.S. online retailers in Canada. Our research shows that Canada is in the top three markets where cross-border shopping is highest. One reason behind the rise of Canadian cross border e-commerce shopping is the hesitance of local retail brands to cannibalize their local brick-and-mortar presence. This has left a gap that is being filled by foreign e-commerce brands. Today, Canada is the third most popular global market for cross-border e-commerce transactions, behind Brazil and Australia.
Top 5 countries for highest incidence of cross-border shoppers
Success in this market requires brands to offer low-cost shipping to Canada, along with transparent duty, tax and customs costs that are either listed or included in the total price. Our research shows that almost 80% of Canadian consumers who shop cross border prefer to pay for applicable taxes and duties at the time of purchase, not when the item arrives at their doorstep. Two of the biggest barriers for Canadian shoppers are the cost of shipping and any potential delays in receiving their goods from cross border merchants. These are areas you’ll need to master before you enter the market. It all starts with the understanding that shipping from the U.S. (or anywhere) to Canada will require dealing with a different set of rules and regulations.
Why Canada for Cross Border?
As one of the world’s heaviest users of the internet, Canadians have embraced e-commerce. Export.gov notes that 18.5 million consumers in Canada have shopped online and expects an additional 5.21 million users shopping online by 2021. U.S. and EU-based e-commerce merchants who expand their reach into Canada can reap big rewards. U.S.-based retailers in particular can find the expansion into Canada one of the least complicated market entry experiences, since the nation is literally joined to the U.S. geographically. For EU brands who are already shipping cross-border to the U.S., shipping to Canada is a natural extension of what they’re already doing, with a few exceptions. Before entering the Canadian market, brands and retailers should take time to learn about the logistical pitfalls. Because Canada is peppered with remote regions, it can make shipping more expensive and complicated. Retailers and brands must consider Canada’s cross-border trade policies, customs and duties and local shipping options so that they can provide the best customer experience possible. It’s also important to understand the cultural sensitivities of the country. For example, Canadians are particularly savvy deal shoppers who make purchase decisions based on the lowest price or the best deal as opposed to brand loyalty. Consumers also expect to see prices in Canadian dollars, and in Quebec, they expect your website to be both in both French and English, as mandated by law.
Canadian Online Shoppers Expectations for Shipping
Based on recent research, Canadian shoppers expect to have several shipping options available to them when shopping online. While standard shipping is expected by two-thirds of respondents, almost 90% of shoppers expect to see free shipping offered. This isn’t surprising given that free shipping is becoming increasingly popular and expected by online shoppers in many top markets (our research indicated an average of 84% of online shoppers in 11 top markets expect Free Shipping).
Canadian Shoppers Expectations for Shipping Options
Considerations for U.S. companies shipping to Canada
There are a few changes U.S. companies should be aware of when shipping to Canada, including the raised de minimis threshold. Canada’s de minimis threshold – within which goods may be imported free of duty – was raised from $20 to $40, and the threshold for duty-free shipments is increased to $150. The changes stemming from USMCA will help to lower costs for shipping small- and medium-sized e-commerce order cross-border to Canada.
Considerations for EU companies shipping to Canada
Similarly, EU-based e-commerce merchants need to be aware of a trade agreement between Canada and Europe. The EU-Canada Comprehensive Economic and Trade Agreement, known as CETA, went into effect in 2017 and was designed to “cuts tariffs and makes it easier to export goods and services, benefitting people and businesses in both the EU and Canada.” Essentially, Canada and the EU have agreed to reduce or in some cases eliminate tariffs on certain categories of cross border merchandise. The agreement only applies to items that were manufactured in EU member nations or in Canada, however. So far, the agreement has been successful in increasing EU exports into the country. Top categories being exported into Canada from the EU include furniture, perfumes and cosmetics and footwear/apparel. Regardless of country of origin, brands and retailers must be sure to properly classify all goods entering Canada to avoid any cross border delays.
Don’t Go it Alone.
Flow’s solution has helped cross border online retailers succeed in hundreds of countries around the globe. Our expertise on shipping to the Canadian market has saved brands time and money — while building significant new revenue streams and brand loyalty.
Flow can help to make shipping to Canada easier by assisting with the following: