Describes what a company needs to know to take advantage of e-commerce in the local market and covers prominent B2B websites.
As one of the world’s heaviest users of the Internet, Canadians have embraced electronic commerce amid a major disruption in retail channels. In 2021 there were over 27 million eCommerce users in Canada, accounting for 72.5% of the Canadian population and is expected to grow to 77.6% in 2025. Increased online shoppers means that retail eCommerce sales in Canada continues to climb, both in real terms and as a proportion of total retail. According to Statistics Canada, eCommerce retail trade sales in Canada amounted to an all-time high of US$3.82 billion in December 2020, surpassing the boost recorded in May 2020 (US$3.2 billion) due to the coronavirus pandemic lockdown measures. In the first five months of 2021, retail eCommerce sales accounted for US $15.1 billion. It is estimated that retail eCommerce sales will total US$40.3 billion by 2025. Retailers are investing in digital platforms to reach consumers dispersed over a vast land mass while responding to competition from global e-tailors such as Amazon Canada. Fashion is currently the leading product category, followed by Electronics and Media. 59% of Canadian shoppers use credit cards when shopping online and a further 20% use PayPal. Ewallets are steadily increasing and estimated to account for 27% of online payments by 2025.
Canadian consumers increasingly rely upon the Internet to place orders. For the past decade, Internet consumer sales have risen at a far higher rate than traditional retail sales. Most Canadian retail firms have adopted wireless technologies and internet-based systems to improve business-to-business and business-to-consumer relations. Manufacturing firms and government organizations are also increasingly likely to use the Internet for purchases, especially for small routine orders. Although approximately 88.5% of all Canadians have access to stable internet service, the users primarily live in the more urban areas of the country. Internet access provides a crucial link to the rest of the world for residents in remote communities in Canada’s north, but delivering high-speed services remains costly and difficult.
Canada’s eCommerce infrastructure is highly developed and closely integrated with that of the United States. Broadband internet access is offered throughout Canada using much of the same equipment as in the United States. Information flows freely across the border, and without difficulty. U.S. companies do not need to set up a separate website. Many U.S. companies have integrated Canadian transactions into their current websites. Others maintain a distinct “.ca” domain. U.S. companies selling to Canadian business and consumers over the Internet should have procedures in place to meet Canadian customs requirements and pricing in Canadian dollars. More than 200 languages are spoken in Canada. English and French are official languages. This linguistic duality can present an obstacle for retailers, sometimes requiring multilingual customer care and sites to be successful.
The Canadian eCommerce market closely resembles that of the United States and therefore shares some of the trends in the retailers to the south. Trends shaping the Canadian e commerce market include:
· Hybrid purchases/ “Click and Collect” – so-called “omnichannel” consumers order goods online and pick them up in a brick-and-mortar store.
· Marketing through social media – return on investment for using social media is constantly improving; retailers increasingly spend marketing dollars on social media ads.
· Cybersecurity – fraud is a growing concern for Canadian retailers. Tools that help companies detect and deter cybercriminals are becoming more easily available and affordable, with integration often built into a company’s strategic planning.
· Migration to mobile payments “mPOS (mobile Point-Of-Sale)” – continues to increase in Canada using technologies like Apple Pay, Android Pay, and Google Pay.
Domestic eCommerce (B2C)
The growth of eCommerce is due not only to the volume of purchases, but also to the breadth of goods and services Canadians purchase. The products that Canadians are buying from U.S. based merchants are apparel and accessories, followed by books, music, and videos; consumer electronics; toys, hobbies, and games; health and beauty products; footwear; jewelry; household goods; sporting goods, DIY and garden supplies and groceries.
Although Canadians prefer to support Canadian online business, a sizable proportion of the nation’s eCommerce spending goes to non-Canadian websites. A 2017 report from eTail Canada says that close to half of Canadian consumers’ online purchases are made at foreign retail sites. Canada has many small and medium-sized enterprises (SMEs), but the companies have been slow to enter the e commerce industry. Canadians cite lower prices and better selection as some reasons for shopping outside the country.
Due to Canada’s strong economy and proximity to the United States, retailers aspire to tap into the growing eCommerce market in Canada. For U.S. retailers who are selling beyond their borders for the first time, Canada offers an easy cross-border opportunity with similar taxes, fees, and shipping safety. How-to websites, such as CrossBorderShopping.ca, have also been created for the sole purpose of aiding Canadian consumers through the process, providing price comparison tools and outlining areas such as return policies, taxes, and restrictions.
Virtually all Canadian small business owners report making online purchases. Large numbers of business owners are opting to purchase their travel online and are more likely to access government services or office supplies online.
As of January 2021, 53% of Canadians made online retail purchases with their mobile devices and this trend is growing. Millennial consumers (ages 18-34) lead the trend, with 41% of these shoppers purchasing via digital devices at least once a week.
Rules & Regulations
U.S. companies need to comply with Canada’s federal data privacy laws, including the Privacy Act and the Personal Information Protection and Electronic Documents Act (PIPEDA), as well as provincial privacy laws. A main requirement of PIPEDA requires persons or firms that collect personal information during commercial activities to inform the subject of all possible uses of the data and to obtain consent for the use.
Canada’s Anti-Spam Law (CASL) took effect on July 1, 2014. CASL significantly limits the way companies send Commercial Electronic Messages (CEM). A CEM is defined as any electronic message intended to encourage participation in a commercial activity. An electronic message includes email, text messages, VoIP phones, digital radio, digital TV, and some aspects of social media. Under CASL, the sender of a CEM must have express or implied permission before sending the recipient a CEM. Although CASL does not ban sending CEMs, the law requires that senders obtain prior consent before sending the CEM. Senders must also provide identifying information in all CEMs. This information must be valid for 60 days after the message is sent. All CEMs must also include an obvious unsubscribe mechanism.
Popular eCommerce Sites
Major online retailers in Canada include Amazon, Wal-Mart, Canadian Tire, Costco, Best Buy, Hudson’s Bay, and Etsy.
There are several methods online vendors can use to collect payment in Canada, the most popular being credit card-based – Interac Online, MasterPass, and PayPal — but some vendors also offer the option for prepaid card or prepaid voucher. MasterCard is the preferred credit card in Canada, with 53.6% share of the market; Visa closely follows with 41.3% and American Express with 5.1%. According to a survey in 2020, Canadian consumers were interested in Buy Now, Pay Later (BNPL) payment for their online purchases, with the highest interest of 65.4% in the group ages 35-44 and least popular for consumers from 65 and older (47%).
Given the increasing access to and dominant presence of younger consumers on social media sites, digital ads have more consistently targeted social media rather than the traditional online news and information portals or information sources. Currently, 36% of digital ads are placed on social media, 18% on entertainment sites, and 12% on portals. The remaining ads are placed on news and information sites and directories, among others.
In terms of consumer preferences, young consumers have shown a greater trend toward mobile purchases and are more responsive to mobile ads. Another preference in Canada is for video advertising: according to Com Score, mobile commerce (m-commerce) is on the rise, given increasing mobile connectivity of smartphones and tablets. Digital advertising now has surpassed TV advertising revenues and is poised to become the favorite advertising venue in Canada.
Major Buying Holidays
The major consumer “buying holidays” are like those in the United States:
- Valentine’s Day (February 14)
- Easter (March/April)
- Mother’s Day (May)
- Father’s Day (June)
- Back-to-School (August)
- Halloween (October 31)
- Christmas (December 25)
- Boxing Day (December 26)
Canada also sees a rise in sales around the fourth quarter holidays, most notably Cyber Week, the buying period that begins on the United States Thanksgiving holiday, including Black Friday and Cyber Monday.
Social network user numbers are on the rise in Canada and in 2021 amounts to an estimated 33.7 million users. Recent data from Statista showed that market leader Facebook accounted for 57.52% of all social media visits in May 2021, followed by Pinterest with 17.88%. Twitter ranked third with 13.75% visits.
Canadian millennials use social media differently from other age groups. Their focus is YouTube, Netflix, Facebook, and Instagram. Social media usage among women is growing steadily across all networks, and growth among Canadian men is slower by comparison. Women are using visual social networks more, with Instagram and Pinterest seeing more growth. LinkedIn growth among Canadian males is almost double the usage of women on that network. Knowing what life stage your target audience are in, and how they spend their time, can ensure more effective campaigns.
For more information on eCommerce in Canada please contact Commercial Assistant Cat Le at email@example.com.