The New Frontier for U.S. E-Tailers: Canada
By Jane Bergos
High international shipping costs and the complexity of shipping to a foreign country have previously prohibited many U.S.-based retailers and e-commerce merchants from expanding into Canada. However, American retailers and brands are paying more attention than ever to their northern neighbor, and with good reason: bolstered by a strong economy, Canadians have more purchasing power than ever, and they're eager to buy U.S. goods online.
A Ripe, Untapped Market
82% of Canadians reported having shopped online by October 2011
, and the rate at which Canadians click to buy is rising rapidly – Canadians spent $16 billion in online sales in 2010, and this is expected to double to $30 billion by 2015
. 83% of online shoppers purchased goods through Canadian e-commerce merchants, while only 60%
reported they purchased from U.S.-based retailers or brands. The time is right for U.S.-based companies to tackle international shipping to Canada.
As U.S. companies move into Canada, there are several principles to keep in mind:
Keep deliveries timely and cost effective.
Canada is massive, but fortunately for U.S.-based retailers, 75% of Canadians
live within 100 miles of the U.S.-Canada border. As a result, Canadians across the country expect competitive transit times for U.S. goods at cost-effective rates. Target delivery times should be within 3-7 days to all Canadian provinces and territories.
Simplify the returns process. One of the biggest hassles for online shoppers is when they decide a purchase must be returned for any number of reasons. This negative experience – a shirt that doesn't fit, or a lamp that arrives broken – is a critical moment for an e-commerce merchant. These inconveniences can be reduced by simplifying the returns process. Make returns easy and create the opportunity to build loyalty by providing your Canadian consumers with a prepaid return shipping label, available in the delivery package or online, to be attached to the order and returned via any Canada Post location.
Minimize customs headaches. International shipping is complicated by the customs process, which includes taxes and duties and the reclamation of taxes and duties on returns, currency exchange, and product import restrictions. Eliminate paperwork problems and accelerate the process by providing documentation to customs before the shipment reaches the border.
Don't leave money on the table. When an international customer returns a purchase, duties and taxes paid at customs may be refunded. If the merchant or customer does not proactively reclaim these duties and taxes – usually 10% or more of the sales – they will not be refunded. Know the refund process and rules and don't leave this money on the table.
Use transit time to build customer loyalty. One of the best times to contact a customer is just after a purchase is made – marketing messages made during this window of opportunity have a very successful open rate. Look for opportunities that can build loyalty and drive repeat purchaseswith branded marketing messages and customer websites that help merchants reach customers in new ways. A shipper's tracking visibility system offers merchants the insight to know where a customer's order stands and to send personalized messages to consumers based on specific actions. For example, if a consumer made a return, the merchant could send her a coupon for a future purchase to try to recapture the sale when the tracking system receives notice the package has been sent for return.
Choose your shipping partner carefully. Once the decision has been made to expand into Canada, the single most important relationship to build is that with the shipper. Choose carefully, as a shipper can and should do more than move boxes. A shipper has the power to influence customer satisfaction and drive sales, and can uncover inefficiencies in the supply chain that hurt the bottom line.
Jane Bergos is vice president of marketing for Newgistics, a shipping company dealing in the management of small parcel delivery and returns services.