|
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.
Why Canada?
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 bailouts
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...
Brokerage fees: This is the hidden
cost that Canadians have come to fear. Many poor shoppers
have had online purchases from the US arrive at their
doors to discover that the taxes and brokerage fees
were twice the price of the purchase! There are shipping
methods that can minimize these brokerage fee but many
American merchants seem unwilling to adapt their shipping
methods to attract new customers.
Foreign credit cards: Some online
Merchants are rightfully nervous when dealing with credit
cards from foreign countries. Many of these merchants
make it almost impossible for a customer with a Canadian
credit card to complete the checkout process. Other
merchant require foreign card holders to complete the
checkout using PayPal - as if PayPal is impervious to
fraud.
Duty: Under the North American
Free Trade Agreement (NAFTA), any merchandise that is
manufactured in Canada, the United States or Mexico
can be shipped amongst these three countries duty-free.
If a product was made in a non-NAFTA country, the end
consumer must pay the import duty on that product. Many
Canadian online shoppers have seen duty charges inflate
the final price of an item. Again this is a hidden fee
that the consumer usually only sees when they receive
the shipment.
So what can American merchants do
for Canadian online shoppers?
"The first thing American merchants
can do for Canadian shoppers is to just be aware of
the problem that they (Canadians) face in online cross-border
shopping. " Says David Cameron of the Canadian
oriented online shopping site www.CanBuy.ca,
"Most American merchants are well meaning but they
just don't realize the problems that Canadians face
when they try to shop from American Websites. We try
to work with American online merchants to educate them
about what Canadians need to have the confidence to
complete the order process. This usually includes Canadian
specific landing pages, changes to shipping methods,
coupons to compensate for costs and the addition of
a Canadian-only shopping cart. Some merchants are willing
to make the small changes - some are not. In time they
will have to come around or lose market share to merchants
that take the Canadian market seriously. Our Best Practices
for American Merchants page has seen an dramatic increase
in traffic in the past few months."
Many of the larger companies like Amazon,
Sony, HomeDepot and Apple are already onboard. They
have led the way and taken the extra steps of setting
up Canadian online stores and distribution centers to
capture the already ripe Canadian market. Others like
Brookstone, Cooking.com and Sephora use a service by
Canada Post called Border Free. With this service Canadian
shoppers see exactly what all the various fees amount
to in a special Canadian check out area. This is very
reassuring to the Canadian consumer as it removes any
questions about the final cost and allows for easier
online bargain hunting.
"Canadians want to shop online
and they want to shop in American stores", says
David Cameron, "They're just frustrated with being
treated like second class citizens by American merchants
and then having to pay through the nose for the right
to give them their business."
The Canadian online shopping market
is still in it's infancy but with the decline in the
American economy it is only a matter of time until we
see the trickle of large online merchants doing business
in Canada turn into an unstoppable stream. Most of the
changes that merchants need to implement will also benefit
customers from countries other than Canada. The Canadian
online shopping market is an excellent (and safe) opportunity
for American online merchants to expand their reach
and perhaps in the future move on to other markets further
a field.
|
