When it comes to eCommerce, Canada is a sleeping giant that’s waking up. It has a population of 35.8 million, and a GDP that’s comparable to the UK’s. Almost 90% of households are connected to the internet, but online retail hasn’t traditionally been a big thing. In 2013, eCommerce accounted for only 4.5% of retail sales. But that figure is growing rapidly, and it’s expected to rise to 8.2% by 2018.
With that rapid growth, the fact that 70% of eCommerce is cross-border, and the cultural familiarity of the country, Canada should seem like a very attractive prospect for an overseas retailer.
That said, it’s not without its challenges. For example, there’s sheer geography. Though the majority of people live on the east, west, or near the US border, the spread of people represents real logistical challenges.
And then there are aspects like language. There are well over eight million people in Quebec, for whom the right to be addressed in French is enshrined in law (Charter of the French Language 1977). For all its familiarity, Canada requires some adaptations. If you are thinking of trading into the country, here are some considerations.
Logistics
Canada stretches for 9,306 km from east to west. In order to offer credible and competitive delivery promises, retailers need to use one of the larger and established logistics providers like Fedex, UPS, and DHL. Domestically, Canada Post dominates, with 62% of the market’s volume share for parcels. It offers 1-, 3-, and 7-day delivery options for most locations. Retailers can access Canada Post through local UK carriers like Royal Mail.
Bear in mind that the delivery promises you can reasonably make will be affected in a big way by the destination. To reach Toronto is a very different task from delivering to somewhere in the inhospitable north.
Online shoppers are accustomed to delivery times of up to seven days with a standard delivery option. It’s also typical of local retailers to offer free standard delivery. While it’s sometimes unrealistic to offer free international shipping, investment in logistics allows UK retailers to compete on delivery times. Many UK sites that currently sell into Canada can offer standard delivery in around 10 days.
When it comes to returns, few UK retailers have established local returns addresses. Doing so could go some way to providing extra reassurance to shoppers, and thus something of a competitive advantage.
Legal framework
Those adhering to best practice in the UK or other European best practice are unlikely to find too many challenges in the Canadian legal system. There are just some small details of which to be aware.
Firstly, the Canadian Anti-Spam law (CASL) is particularly stringent, and should you violate it you will face significant fines. Not only must you obtain the consent of other shoppers, but you must also distinguish in your database those who given their consent implicitly, and those who have done so explicitly.
The law in Quebec doesn’t vary hugely from the rest of the provinces, but remember that the Charter of the French Language requires sellers to include a French translation of any inscription on every product, its container, associated document, or object supplied with it.
Regulations and consumer protection laws are typically set by the provinces. For example, Quebec and British Colombia require a seven-day cooling-off period, in which the customer has a right to cancel their order. Establish what your obligations are in each selling destination.
Payments
There is another opportunity to compete with other retailers in offering desired payment methods. For instance, Canadian shoppers express a preference for PayPal, though a surprising number of online retailers don’t accept it. Otherwise, payments are very straightforward. The ‘standard’ methods like Visa and MasterCard are widely used.
The issue most likely to cause complication or difficulty is sales tax. There are four main types, and they vary by province. They are:
- GST – national sales tax, currently 5%.
- PST – provincial sales taxes, varying by province.
- HST – harmonised sales tax, which combines the previous two into a single sale tax.
- QST – Quebec has its own version of PST, which it classifies as harmonised, even though it isn’t.
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This article was written by Graeme Howe, MD of IMRG and MD of eCommerce Worldwide. To find out more about the Canadian eCommerce market, download your free copy of the 'Canada Cross-Border Trading Report 2016', published in association with Landmark Global.