With the faltering US economy and the resulting drop in consumer spending, many American based online merchants are now scrambling to find new markets to replace income lost as Americans curb their online personal spending. These Web based businesses are looking for new markets that have a “wired” Internet savvy population, with an economy in relatively better shape than the United States and one with a fairly close proximity to the US to keep fuel dependent shipping costs low.
This search for the new world in Internet markets is a relatively new one so where would you start? Well, overwhelmingly online merchants are looking north to Canada for new shoppers hungry for the wide selection and competitive pricing for which US online merchants have become famous.
These Internet merchants don’t have very far to look to find a barely tapped market right on their northern border. Thanks in part to Government funded projects, Canada is one of the most widely Internet connected nations on the planet. The Canadian economy, for the most part, has not been as effected by the recent sub-prime fiasco and Wall Street corporate bail-outs that have dried-up consumer spending in the United States. Canadians are online and spending. The large majority of Canada’s population lives within a few hundred miles of the US-Canada border. Toronto (Canada’s largest city) is only 480 miles from New York City!
Some Canadian Facts:
- Population of Canada: 33,000,000
- Language: English (primarily) and French
- Political System: Stable Parliamentary Democracy
- Currency: Canadian Dollar (currently roughly at par with the US dollar)
According to Statistics Canada recent data:
- 64.2% of all households had internet access
- Total Canadian electronic commerce spending per year is C$3,034,000,000
- Total online spending in Canada per year is C$2,093,000,000
- Total online spending in all other countries per year is C$941,000,000
- Average household online expenditures per year is C$956
- Average online expenditure per order is C$144
Look at these facts. Canadian do twice as much online shopping inside of Canada then they do for all other countries combined! Why is this so when they are so close to the United States? Simply stated, it is ignorance and apathy on the part of American online merchants. Typically merchants either consider Canada a fifty-first state or a completely foreign country. This is no way to treat a customer who is trying to buy what you sell. There are obviously hidden hurdles that keep Canadians online shoppers out of American online stores.
Hurdles to Canadian cross border shopping
Four things keep Canadians nervous about shopping online in American online stores: Shipping fees, brokerage fees, foreign credit cards and duty.
Shipping and shipping fees: As stated earlier, it is closer to ship an item from New York to Toronto then it is to ship the same item from New York City to Dallas! Why would a merchant in New York offer free shipping to a customer in Dallas but not to the a client in Toronto? Canadians shopping online are frustrated because they run into this problem all the time. Many merchants flatly refuse to ship to Canada for a variety of weak and poorly thought-out reasons…