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.

How do you avoid creating this negative buying experience for your Canadian customers? The key to offering competitive shipping rates and minimizing unexpected fees upon delivery is to partner with a Canadian logistics company. Find one that specializes in cross-border shipments so it can bring your goods into Canada in bulk and have your orders warehoused and picked locally. The logistics provider will broker your inventory across the border to minimize duty and fees and avoid pushing this cost to the customer post-sale.

If you don’t have the volumes yet to justify setting up a Canadian distribution center, you can still ship from the U.S. using a consolidated method of shipping wherein your Canadian fulfillment partner can bring the goods north and ship them domestically. Canada Post rates are significantly lower than international USPS and FedEx, and your local fulfillment partner can set up your online shopping cart with a rate table so that when your customer enters a Canadian address they get a much lower cost. That cellphone case should cost $5 for shipping, not $30.

Give your Canadian customers the peace of mind that the price they see online is the price they'll pay, and they'll keep coming back.