CanadaCanada

A summary of eCommerce related information relating to Canada. This information is from "Preparing Your Business for Global eCommerce" prepared by the U.S. Commercial Service for exporters.

Last Published: 7/12/2016

Statistics

Capital: Ottawa
Population: 35.75 million (est. 2015)
GDP (USD): 1.785 trillion (est. 2014) Currency: Canadian Dollar (CAD) Languages: English, French

Contact

Cindy Biggs
Principal Commercial Officer
cindy.biggs@trade.gov
(403) 265-2116

Summary

Business to business (B2B) online interactions represent the majority of online sales in Canada. The sectors most willing to engage in business e-commerce are manufacturing and wholesale retailing. B2B transactions are generally employed to purchase indirect supplies and direct materials, to sell products and services to new vendors, to leverage an online presence, and to invest in e-procurement solutions.

A survey conducted in 2006 by Statistics Canada indicated that approximately 68 percent of e-commerce transactions were B2B exchanges. The other type of e-commerce transaction, business to consumer (B2C), has a lower volume in Canada, given that physical distribution channels are not as developed as those in the United States because of Canada’s greater distances and lower population densities. Therefore, electronic orders, with the exception of digital delivery (such as airline tickets) are not very cost-effective, and B2C online transactions are not as strong within Canada. The B2C model usually consists of an electronic storefront, such as a website, that sells online to consumers.

In 2010, retail e-commerce in Canada was a USD 15.3 billion market, doubling the 2005 level. The average value of Internet orders per person equaled USD 1,362, and payment by credit card represented the overwhelming majority of electronic orders (89.4 percent). In 2014, online sales made up 5 to 8 percent of Canada’s retail sales total, generating more than USD 20 billion.

Seven out of 10 connected Canadian small and medium-sized enterprises (SMEs) make online purchases, yet only 18 percent make online sales (larger SMEs reported 30 percent). Among Canadian SMEs selling online, 72.5 percent indicated that only 25 percent or less of total sales come from online channels. In a 2011 Canadian Federation of Independent Business survey, Canadian SMEs indicated that the cost of implementing an e-commerce platform was the biggest obstacle to accepting electronic payments.

Market Entry

Popular E-Commerce Sites

The e-commerce sites most used by Canadian consumers are Amazon, eBay, Costco, and Walmart. As the most popular e-commerce site, amazon.ca controls a 7 percent share of the total 21.6 billion e-commerce sales in Canada, followed by eBay, Costco, and Walmart, which together account for close to 10 percent of e-commerce.

Fullfillment Centers

•   amazon.ca
•   integratedfulfillment.com
•   farrow.com
•   shipwire.com
•   directdistribution.ca
•   ebayenterprise.com
•   wiptec.com
•   webgistix.com

Digital Advertising

Given the increasing access to and presence of the youth population 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 percent of digital ads are placed on social media, 18 percent on entertainment sites, and 12 percent on portals. The remaining ads are placed on news and information sites and directories, among others.

In terms of consumer preferences, youth have shown a greater trend toward more mobile purchases and are more responsive to mobile ads. According to the Interactive Advertising Bureau of Canada, in 2013 revenue generated from online ads amounted to USD 3.8 billion from desktop and laptop ads and USD 443 million from mobile ads, showing a growing revenue rate for mobile ads.

Another preference within 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. As mentioned in a 2014 Ernst & Young report, “Retailers should invest in better mobile-enabled technology and

North America Free Trade Agreement

Under the North American Free Trade Agreement (NAFTA), no customs duties or tariffs are levied on qualified U.S.-made products entering Canada. To get duty-free status under the NAFTA rules of origin, a commercial NAFTA import over CAD 1,600 must be accompanied by a NAFTA Certificate of Origin, and a commercial import less than CAD 1,600 requires only a statement of origin from the exporter that the product is U.S.-made. Canada looks at the origins of the component parts of an item and evaluates whether they are transformed in the process of manufacture into another category to determine whether the product is entitled to NAFTA treatment. This process can be quite complex; therefore, U.S. companies are advised to consult the U.S. Department of Commerce’s NAFTA Certificate of Origin Interactive Tool.

Current Market Trends

In terms of preferences, online purchases that have digital delivery, such as travel, remain the items most often purchased online, with 58 percent of Canadians using e-commerce to pay for airline tickets, followed by service purchases such as hotel bookings and car rentals. According to the Canadian Internet Registration Authority, the top five types of goods and services purchased most often online by Canadians are:
•   Travel arrangements (58 percent)
•   Entertainment event tickets (52 percent)
•   Clothing, jewelry, and accessories (42 percent)
•   Books, magazines, and online newspapers (42 percent)
•   Music (35 percent)

In general, commodities that are interchangeable from one retailer to another sell better online than do items unique to a specific store that customers want to see or touch (cars, food, and so on).

Current Demand

In 2012, Canadians spent USD 18.9 billion online for goods and services, up 24 percent from 2010. Demographically, younger Canadians (ages 25 to 34) were more likely to purchase online, and 67 percent of them made web purchases. The number of Canadians over the age of 65 rose from 40 percent in 2010 to 48 percent in 2012, suggesting one potential reason that online purchasing represents only about 4 percent of total retail sales.

Census metropolitan areas with the highest rates of Internet use include Kelowna (93 percent), Regina (90 percent), Victoria, (90 percent) and Calgary (89 percent ).

Services

•   Tourism: tickets, sports equipment, and travel packages
•   Education: books, magazines, and newspapers
•   Financial services: tax software and brokerage accounts
•   Leisure: music, toys, games, and videos
•   Technology: software and hardware

Challenges

Data Collection

Businesses need to be aware of Canadian data-collection restrictions placed for online ads. Essentially similar to U.S. laws, the most important data gathering restrictions in Canada pertain to sensitive data, which include children and sensitive information.
• Children—Sensitive data-gathering restrictions are placed on information collected from minors, meaning that online ads on social media sites on which the company knows that minors will visit (such as Facebook) cannot collect and use data on this group without parental consent. Therefore, web-browsing behaviors for this demographic group are not used automatically to target online advertising.
• Sensitive information—Entities cannot collect sensitive information without explicit consent by the consumer.

Prepared by the International Trade Administration. With its network of 108 offices across the United States and in more than 75 countries, the International Trade Administration of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.