Being from Canada, I know that the country holds ample e-commerce opportunity for American businesses. Directly on our northern border, Canada is uniquely positioned to be a very profitable market for American e-commerce goods and services.
Boasting an established and reliable Internet infrastructure, English-speaking population, and comparable culture to the U.S., selling in Canada appears to be a simple proposition—until you step into the land of the Canucks. After all, your goods have been shipped internationally even if it was delivered only two hours away from your warehouse in Michigan. As with all cross-border commerce, doing business in Canada requires a serious, focused approach along with a strategic plan to attract and retain customers.
With more than 36 million residents, Canada’s developed economy is classified as a high-income nation, according to the World Bank’s latest figures. An Ease of Doing Business score of 79.26, out of 100 puts Canada in 22nd place worldwide. It counts itself among the G8 and is listed as a Top 10 world economy nation based on gross domestic product.
The Organization for Economic Cooperation and Development (OECD) puts Canada’s gross domestic product at $48,107 per capita, with an annual projected growth of 2%. Disposable income per household is growing 3.6% per year, and compensation per hour worked has risen to 2.5%. Multiple strong, developed industries employ skilled workers and keep them on a positive, wage-growth trend.
Combined, these strong economic markers reflect ample opportunities for a business like yours that is seeking an opportunity to expand globally into key strategic markets.
In recent years, the Canadian economy has become increasingly service-driven; more than two-thirds of employed Canadians are providing services instead of manufacturing products or engaging in agriculture.
The other top fields of employment in Canada include transportation, banking, communications, construction, retail, tourism, and the public sector. The manufacturing sector of the Canadian economy produces high-tech equipment, paper, cars, aerospace technology, machinery, food, and clothing. The remaining segment of the Canadian economy revolves around its plentiful natural resources which include forestry, fishing, agriculture, mining, and energy production.
The goods, services, and materials produced by these industries are often sold across borders as part of Canada’s robust export operations. As its main trading partner, American employees working at these companies comprise your target market for e-commerce goods–a fact you’ll appreciate as you begin doing business in Canada.
Canada’s population is spread across a vast area that experiences long winters and cool summers. People stay connected through the cold, dark winters by going online–a lot. In fact, the U.S. Department of Commerce (DOC) stated that Canada’s 89.9% Internet penetration is one of the highest in the world. As of 2018, 33.2 million people in the country had Internet, ensuring a sizable potential customer base for your international e-commerce offerings.
While e-commerce in Canada is thriving, traditional business models are challenged by the penetration of e-commerce merchandisers eager to reach their targeted shoppers. The DOC noted that there is fierce competition in the Canadian marketplace between large-scale international retailers and local companies marketing online. Why? Because the challenge is the same for both types of companies: Sellers scramble to reach geographically dispersed consumers who are better served by digital storefronts than by brick-and-mortar outlets.
Despite tough competition, the similarities between the U.S. and Canada make doing business in Canada much simpler than in other nations. For example, as an international e-commerce seller eyeing the Canadian market, you’ll be pleased to know that 59% percent of consumers use credit cards to buy online, according to the DOC. The other 20% of shoppers use PayPal (another seamless payment method for U.S. companies); together these payment methods are used by nearly 80% of Canadian buyers.
The existing U.S.-Canada trade relationship is strong and enduring. More than 60% of Canadians’ disposable income goes to buying products and services from the States, that makes our two nations one another’s largest trading partners. In total, the two countries share a $1.4 trillion trade relationship.
Due to the renegotiation of the North American Free Trade Agreement (NAFTA), reevaluating the future of the current trade relationship is prudent. However, the replacement legislation known as the United States-Mexico-Canada Agreement (USMCA) contains many of the same provisions; meanwhile NAFTA remains in effect while the details of the latest agreement are worked out.
With 15% of U.S. exports going to Canada and a population that, according to the DOC is “receptive, open, and transparent” when purchasing American products and services, doing business in Canada should be your business’ number one international e-commerce priority.
Canada can be a key stepping stone for your company’s international expansion, but remember Canada is still a foreign market. Goods will have to pass through Customs, which means currency conversion is a part of every transaction. Assuage customer confusion by converting currencies on your website and be transparent about any fees that may be incurred during the transaction. The best way to smooth your entry into the northern market may be through a mutually advantageous business partnership.
Doing Business in Canada
The good news about doing business in Canada is that it’s very similar to doing business in the U.S. For example, meetings with international partners are typically handled in English, despite the fact that Canada’s second official language is French. Reaching shoppers in the Francophone regions requires localized and translated content.
When planning to partner with a Canadian business and deciding which markets to target, remember to think “local.” According to the DOC, Canadian companies tend to strongly identify with the provinces in which they are based. Conduct some market research before setting up a meeting. Business leaders in the French-speaking province of Quebec, for instance, might be displeased if you don’t know anything about the region’s distinct role in Canadian culture.
Canada can be a key stepping stone for your international e-commerce growth, but the Canadian market must be approached differently despite its similarities to the U.S.
Partnering with DHL
Whether you’re approaching a new e-commerce market halfway around the globe or marketing in a neighboring country, partnering with the world’s largest logistics company also makes good business sense. With extensive resources in Canada and logistics knowledge that is second to none, choosing DHL as your e-commerce business partner is a no-brainer.
If you’re ready to get started, read our Canada country guide to learn more about how you can expand your international e-commerce footprint across our northern border.