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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.
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