Expanding into new territories (especially internationally) is a demanding endeavor for brands. But if you’re a US company looking to grow internationally, we know a good place to start – Canada.
Canada demonstrates similar cultural and market trends to the US making it a strong choice for brands wanting to test the waters of going across borders. With relatively low competition, and an eager consumer, brands that invest in getting over the hump of international distribution see real results.
Looking to go north? In this article, we’ll explain Canada’s true untapped potential while discussing challenges, and strategies to help your brand have a successful launch.
Why Canada?
It’s not just geographical proximity, it’s cultural proximity as well. Canadians have similar buying behaviors as Americans which makes for an easier adjustment.
“The customer is similar to the US customer, they use similar products, have similar demographic segments, so you don't have to totally change up your strategy to service them.”
- Margeaux Oswald, Spreetail’s Director of Marketplace Channels
The Canadian market is growing too. In 2022, there were over 27 million ecommerce users in Canada, accounting for 75% of the Canadian population. This number is expected to grow to 77.6% in 2025. Since Canada only as a population of 40 million, that’s telling of just how much of a relatively small, but mighty, impact these customers can have.
Benefits
- Sales: The Canadian market is 10% the size of the US, raising the value of your product and creating a 10% incremental GMV (Gross Merchandise Volume).
- Ecommerce Adoption: Canadian consumers have embraced ecommerce. Ecommerce represented 3.9% of retail sales in 2021 and rose to 6.2% in 2022.
- Agreements: Canada has an established framework that promotes a stable and predictable business environment. This expands into trade agreements that encourage international trade, reducing barriers for businesses.
Challenges
- Shipping: Canada is a bit bigger than the US with a smaller population spread out across just a few metro regions. Reaching customers can get expensive and include longer shipping times.
- Regulations: Canada has import and testing regulations just like the US does, but often require different certifications. This can be challenging for brands who are unfamiliar with import/export (US made goods) and expensive.
- Fees: Brands can recoup fees paid at the border on imports. This sounds like a benefit but can be complicated for those unfamiliar with trade. For example, brands pay HST (harmonized sales tax) or GST (goods and services tax) at the border but pay it again when the product sells so you can recoup what you paid at the border.
“Brands should do their due diligence on what is required to import their goods and give themselves ample time to get compliant before their selling season begins. Getting all these nuts and bolts right can save a lot of costs but it can be a high barrier to entry for those unfamiliar with import/export logistics.” - Margeaux Oswald
Strategies for Expanding into Canada
Even though Canada and the US may be similar, not every product is guaranteed to work. To create a successful transition, here are some strategies to keep in mind:
- Understand the Market: Again, ‘similar’ doesn’t mean ‘same.’ There are certain products that do really well in Canada in relation to the weather and seasonality. Shorter summers and longer winters mean quick seasonal spikes and an emphasis on winter sports, camping, fishing, etc.
- Partnerships and Distribution: Canada is BIG, and customers are SPARSE. Explore partnerships with Canadian distributors, wholesalers, or fulfillment centers to streamline logistics and distribution. You may even consider leveraging local expertise to navigate the Canadian market more effectively.
- Customer Experience: No matter where you are in the world one thing remains the same – customers want a fast, reliable, and trustworthy experience. Especially in a new market, focus on delivering exceptional customer service to build loyalty.
- Continuous Optimization: Even the best products in the best environment aren’t always successful the first time around. Monitor and analyze your ecommerce performance while identifying areas for improvement based on feedback, market trends, and competitive analysis.
“For many brands, Canada is a ‘nice to have.’ It’s already hard enough to be successful selling online in the US. Although the customer buys similarly, the strategy must be different. This often creates too high of a barrier of entry for most brands within their existing business model. But that also means there’s a huge opportunity if you can figure it out.” - Margeaux Oswald
Finding a Partner for Success
Ecommerce marketplace expansion is a daunting task for even the most seasoned brands. The time, money, and people it takes to tackle international expansion is often too high of a barrier for manufactures who are already spread thin.
This is where a core value prop of working with an ecommerce accelerator comes in.
It's the job of an accelerator to grow and push your business to new heights and take on risk and challenges in service of brand partners.
“The Canadian market has untapped potential. There is extended seasonality and over indexing for outdoor recreation. We have seen a lot of success with bringing winter products into Canada, displaying more than the 10% growth that you usually see during the summer.
The Canadian customer isn’t used to being serviced. They want reasonable pricing while being spoiled with fast and free shipping. Spreetail lists products with free, one-to-two-day shipping with duties included. We are really trying to push that Amazon-Level prime service into Canada, which can be hard for customers to find.” - Margeaux Oswald
Canadian Market in Action - KSports
Last year, Spreetail launched kSports into the Canadian market. Since doing so, they’ve added +18% to their sales in 2023. Canada is now over 20% of their total sales through Spreetail.
The reason for this outpaced success? A large white space in the treadmills and fitness equipment category. These are bulky items that are expensive to ship through FBA/NARF (Fulfilled by Amazon/ North America Remote Fulfillment) or WFS (Walmart Fulfillment Services). As a result, their listings are competitively priced and quickly converted on the pent-up demand for this product type.
At Spreetail, expanding your market share is our entire mission. And we do it all without adding additional costs or hidden fees that disrupt your bottom line. If you’re ready to grow get in contact with one of our buyers.
Digital Marketer
