E-commerce has become a truly global phenomenon. If your U.S.-based e-commerce brand is already conquering the domestic market, you’ll almost certainly want to jump into the global arena. But to succeed you’ll need a strategic and measured approach, and selecting the right countries to start with is key. Recently, we talked about the benefits of choosing the U.K. as your first international market. For many U.S.-based online retailers, selling in Canada is a solid alternative (or a great next step).

There are a lot of practical reasons to choose Canada early. First of all, there is only one border to cross when shipping from the U.S. Second, a similarity in cultures means what’s selling well in the U.S. is likely to sell just as well in Canada. And third, both countries are experiencing growing markets for e-commerce and online retail.

Just the Facts

Canadians, like their U.S. counterparts, do quite a bit of shopping on the interwebs. Here are a few facts to consider when introducing your brand to them:

  • 79% of Canadians who shop online say they usually compare prices before making a major purchase.
  • 38% of Canadians prefer shopping online to in-store.
  • Canadian consumers have healthy disposable income levels. According to a report from Environics Analytics, the average Canadian spends an estimated $2,748 per year buying goods online.
  • As of 2018, ecommerce retail trade sales in Canada amounted to almost 1.6 billion Canadian dollars.
  • Revenue generated within the retail ecommerce market is expected to surpass 55 billion Canadian dollars by 2023, up from 40 billion in 2018.
  • During 2018, most Canadian shoppers made their online purchases through both domestic and international websites, while about 37% were devoted solely to domestic sites.

Why Selling In Canada is the Right Choice

Canadians love the internet. A lot. In fact, one study ranks the things Canadians would give up in order to keep their internet access. Fast food topped the list at 46%, with alcohol at 34%. Only 1% of Canadians said they’d give up showering to keep their internet access (thank goodness)!

Although Canada isn’t one of the top ten markets for online sales, its e-commerce market is extremely strong. Statista estimates there to be 22.5 million digital buyers in the country as of 2018. Not too shabby!

Vous savez que nous parlons français aussi, n’est-ce pas?

That’s right. Canada is a bi-lingual country, with both French and English considered official languages. It is therefore a legal requirement for online sellers to list their products in both languages. This regulation applies if you’re selling through an online marketplace such as Amazon. If you’re just extending your shipping from your existing website to include Canada, no such requirement exists.

What do Canadians like to purchase online?

Pretty much all the things. This chart by Statista shows Canada’s most popular categories for online shopping as of March 2018:

Canada sales chartDuties and taxes when selling in Canada

Taxes on retail goods in the U.S. and Canada are similar, but there are differences you’ll need to be aware of. E-commerce companies, with some exceptions, must register to collect sales tax from Canadian buyers. Visit this website to determine which Tax Service Office you must register with based on the location (state or country) of your business.

Each province has its own tax laws. For example, some provinces have HST (Harmonized Sales Tax), while other provinces impose additional provincial sales taxes like PST (Provincial Sales Tax). Alberta does not impose any additional provincial sales taxes at all. The province in which the purchase is made will affect what taxes apply to the sale.

Many items mailed to Canada are subject to a 5% Goods and Services Tax (GST). However, GST does not apply to:

  • Products worth 20.00 CAD or less
  • Gifts worth 60.00 CAD or less from family or friends who live abroad.

Duty rates vary according to the type of goods you are importing and the country from which they came. Depending on the goods or their value, some other taxes may apply, such as excise duty or luxury items tax. The Canadian Border Service Agency calculates duties owed based on the value of the goods in Canadian dollars. You can get an estimate by using the duty and tax estimation tool  provided on the CBSA website.

Conclusion

Expanding your business to the Canadian market is something every U.S.-based e-commerce brand should consider, but it’s not something to be taken lightly. Although the close trade relationship between the two countries helps make things easier, there are still rules and regulations to be aware of. Knowing the ins and outs in advance can save you a boatload of trouble down the road!

Need help getting started? We suggest you choose an order fulfillment partner with multiple U.S. fulfillment centers to keep shipping costs low and delivery times fast. With its bi-coastal warehouses, Simple Global could be the perfect choice. Contact us today to see how we can help.

DISCLAIMER: This is for informational purposes only and is not to be interpreted as legal advice. Please consult independent legal advice for information specific to your circumstances.