Canada’s trade relationship with the U.S. positions it well to support international logistics for Europe, North America and Asia, and its strong infrastructure is encouraging growth. Even if Canada is not a direct part of your growth strategy, with its proximity to the U.S. and as a key global market it should be considered as part of the wider economic picture.
After reading this guide you will understand the opportunities presented by Canada and how to take make the most of them, as well as have a general understanding of Canada’s place in the global balance of powers and why this affects businesses.
2 Expanding business to Canada
When planning how to grow your business abroad, it’s important to consider the current climate of the market that you’re planning to enter.
Canadian e-commerce has lagged behind similar economies like the US and UK due to some unique challenges; while large pockets of the population are concentrated in major cities, a significant number of people also live in rural areas with challenging climates. Strong water ports, expansive railway systems, top-quality highways and road infrastructures are key to Canada catching up with more mature e-commerce markets. Despite being slower to develop, it is now growing by 15% annually, and is projected to reach $50 billion by 2019.1
Canada’s trade relationship with the US positions it well to support international logistics for Europe, North America and Asia. Additionally, the Canadian government’s commitments and investments are attracting new distribution centers, including those of Amazon, Carquest, UPS, Wal-Mart and others. Creating an efficient supply chain, reducing operating costs and increasing the ability to service 'just in time' orders are some of the key drivers of this growth.
3 Quick facts and advantages of doing business in Canada
45% of ecommerce purchases originating in Canada are done on non-Canadian websites. A third of the total is spent on U.S. sites, and the remainder goes to Asia and Europe
Canadians are driven to shop overseas because of lower prices and better product selection
Canadian customers shopping online prefer a 48 hour delivery window
The top reasons Canadians shop online are home delivery, free returns and the free or low cost shipping
4 Customer trends
It’s crucial to think about customer behavior when expanding in new markets. How does your target customer usually buy products? What’s their preferred method of delivery? The following factors will help you consider how customer trends will affect the way that you go about doing business in Canada.
Canadian shoppers are more likely to purchase when affordable 2-day shipping options or same-day delivery is offered, and are known for having one of the highest shopping basket abandonment habits if shipping cost is high
49% of Canadians spend over $500 annually on e-commerce purchases
More than 4 out of 10 Canadian shoppers abandon their baskets if return shipping is not free
Canadians are less likely to shop on their mobiles, perhaps due to high data usage fees. About 25% of online transactions in Canada are processed on mobile devices
5 Fulfillment models
Cross-Border into Canada
Generally speaking, varying taxes and lead times make intra-Canada fulfillment simpler than cross-border fulfillment. However, the U.S. and Canada both follow the North American Free Trade Agreement (NAFTA), which makes fulfillment between the 2 countries much less complex. The most common method is to fulfill from a northern point in the U.S. and take the product cross-border into Canada.
Canadian consumers do not shop online as often as consumers in other countries do. Research indicates that the top reasons Canadian customers shop online include desire for a quick delivery, low shipping costs and an easy return process. Intra-Canada fulfillment is the most successful fulfillment model when trying to reach Canadian consumers, in terms of cost, service level options, ease of delivery and overall customer experience.
When considering Intra-Canada fulfillment, there are several locations from which to consider storing your products for delivery; which one you choose will depend largely upon where your current customer base is situated. See the map below for locations to consider.
Small parcel carriers
- Deliver 2 out of every 3 e-commerce shipments in Canada
- 6500+ retail locations
- 7000+ delivery truck fleet
- 650+ hubs
*Second largest parcel delivery company in Canada * 1500+ retail locations * 4500+ delivery truck fleet * 123+ hubs
- 900+ retail locations
- 2795+ delivery truck fleet
- 54+ hubs
- 1300+ retail locations
- 1600+ delivery truck fleet
- 56+ hubs
Less-than-truckload (LTL) and truckload (TL) carriers
There are several LTL and TL carriers operating in Canada. Today’s Trucking provides an annual report of the top companies. Here’s a few examples:
- Transforce Inc
- Mullen Group
- Canadian National Transportation
- Day & Ross
- Trimac Transportation
- Bison Transport
7 How to start doing business in Canada
When weighing up your move into the Canadian market, think about the pros and cons of incorporating a company and the type of company structure that might suit you.
Also apply for a Canadian Business Number, Tax File Number, Goods and Services Tax, Pay As You Go tax (if you have employees) and Most Favoured Nations Tariffs. Depending on where your goods are coming from, confirm whether they can be imported and if they need an import declaration. Finally, find a fulfilment centre and carriers that provide coverage in the areas that you’re targeting.
Market Finder contains a breakdown of the World Bank’s Doing Business Index, where you can get a heads-up about the ease of doing business in Canada. It ranks on a scale of 1 – 190 how easy it is for a business to set up and run a local firm in each of the world economies. 10 topics are assessed to gain the score. These include the ease of getting electricity, the ease of getting credit and the potential for cross-border trade.
When trading in a new market, it’s good to know the administrative, regulatory and logistical challenges that may lie ahead. Navigating legal requirements and working out logistics is made a lot easier with Market Finder – find further support and tools including in-depth guides and insights.
Ingram Micro Commerce & Lifecycle Services provides logistics solutions to help businesses connect supply and demand.
The materials provided on the site are for informational purposes only. For financial, tax or legal advice, consult a specialist.