Why Am I Losing My Online Canadian Shoppers?
Americans often affectionately call Canada the 51st state. Population wise, it would be the second largest state after California and the province of Ontario alone would be the fifth largest. U.S. online retailers are flocking to Canada as it was recently identified as an "ideal market" for retailers looking for cross-border e-commerce opportunities.
However, as online shopping and e-commerce explodes on both sides of the border, the number of Canadians shopping on U.S. websites is actually decreasing. According to a recent survey, only 29 percent of Canadians were planning to shop online last year during Cyber Monday compared to 47 percent of Americans. Why is this the case?
Most U.S. online retailers are unaware of the typical shopping experience for their Canadian customers. Let’s say I’m looking for a new case for my cell phone and I come to your website. The front end of the experience is great. Product is laid out nicely, prices clearly stated, efficient shopping cart and then comes the checkout. As soon as I start to enter my address, I hold my breath to see how bad the shipping costs are going to be (if you even offer delivery to Canada). I already know that “Free shipping on orders over $25” won’t apply to me.
Thirty dollars USPS for a $25 case. Yikes. Well, I really love this case and I can’t find it at my local mall, so I bite the bullet. Congrats, you got the sale! Within a few hours the order is picked from your U.S. distribution center, dropped in the mail and my email is added to your marketing database. What happens next is the No. 1 reason you don’t get repeat Canadian business.
I patiently wait a week and lo and behold my package arrives along with an envelope attached from the Canadian Border Services Agency. It’s an invoice for unpaid taxes, duties and brokerage fees. Canada’s Harmonized Sales Tax (HST) applies to all goods sold in Canada, and most Canadians are accustomed to paying it every day. What most don’t know is it gets applied to online purchases as well, and if it wasn’t collected on your website then it gets applied at the border. Next is a 6 percent import duty because the case was made in China, plus $15 brokerage fees and suddenly my $30 case has cost me another $30 in additional fees. That’s the last time I order from your website.
Related story: Why Online Retailers Should Be Heading North of the Border
Marcel Caballero is business development manager for Stalco, a logistics and fulfillment company providing a gateway to the Canadian market. Since 1994 Stalco has been assisting U.S. companies with all of their Canadian logistics needs, including importation, customs clearance, Health Canada compliance, storage, inventory management, pick-and-pack fulfillment services, and shipping. Stalco works to ensure your product gets into the Canadian market in a matter of days while guaranteeing the lowest shipping rates, and without customs delays or surprise charges for duty and taxes.