Why Online Retailers Should Be Heading North of the Border
To offset shoppers' concerns about tariffs, most U.S. retailers offer free shipping or duty-free shopping to Canada. It's well worth the added investment to attract sales as Canadians have come to expect fast, free delivery and lower prices from U.S. brands.
It's worth pointing out that Canadians’ average order value across the Borderfree network in 2014 was $134, which is lower than in other similar markets where Borderfree sells, like Australia ($201) and the U.K. ($187). This doesn't mean Canadians aren't shopping; it speaks to their shopping preferences. Consumers in Canada shop more for everyday items that are easy to ship rather than luxury items. Cosmetics, party supplies and shirts/tops are the top three purchases, according to Borderfree data.
Looking ahead, winning over Canadian shoppers may become more challenging. Oil is Canada's No. 1 export and drives its economic growth, but our neighbors to the north have been feeling the effects of lower oil prices over the last few months. Additionally, The Bank of Canada also recently cut interest rates, hurting the Canadian dollar, which is trading at around 80 cents to the U.S. dollar. However, these short-term headwinds don't detract from the long-term opportunity for American retailers in Canada.
Retailers expanding into Canada would do well to focus on the customer experience. Offer superior merchandise that shoppers can't get at home and sweeten the pot with free shipping, especially during U.S. and Canadian holidays. With those investments, and an eye towards long-term growth, the road to the north will most certainly lead to checkout.
Kris Green is the chief strategy officer at Borderfree, a provider of global e-commerce solutions, from international logistics and fulfillment to marketing partnerships and strategies.