Canadian consumers snag the interest of U.S. retailers
According to the latest report from Borderfree, Canada should be a top target of merchants in the United States. Many Canadian consumers are already familiar with American brands and are accustomed to checking U.S. stores to find the best prices. Additional perks, such as inexpensive cross-border shipping and low import duties, make shopping with American merchants the right choice for Canadian consumers.
“Between the country’s high Internet, mobile and social media penetration and an affluent population ready to spend, U.S. retailers looking to sell online to our neighbors to the north will find a ripe eCommerce marketplace,” says Borderfree CEO Michael DeSimone.
“We’ve also found that targeted marketing efforts in Canada reap big rewards, as evidenced by the most recent holiday shopping season, where U.S. retailers saw significant online demand from Canadian shoppers.”
For many retailers, selling in Canada just makes sense. Not only do they have a foot in the door already simply because of brand recognition, but there are not as many cultural differences between the United States and Canada that would inhibit easy expansion. For instance, there are no significant language barriers or significant localization costs that would come into play, such as having to translate websites.
Targeting Canadians if it makes sense
While Canadian consumers are increasingly shopping with retailers based in the U.S., that does not always mean expanding to the north will work for every merchant. Target, for example, has faced some criticism and has even had to pull out of the country because the merchant misjudged demand. The seller is currently in the process of liquidating inventory, with CBC reporting many customers are flocking to the stores to find some great, last-minute deals. Target’s presence in Canada is expected to be gone by early May after a 10-week liquidation process.
This just goes to show that retailers need to be cautious when making expansionary moves. While the barrier to entry for Canada may be low, that does not mean it is nonexistent, and merchants need to accurately assess their potential gains as they move into the region.
Retailers may even want to consider taking a cautious approach – instead of opening distribution centers in the region immediately, perhaps they want to consider steps such as using local drop shippers to fill orders. This allows merchants to dip their toes in the water, so to speak, and test demand before fully jumping in.