Market Matters: Canadian vs. US E-commerce — What Every Retailer Needs to Know

Understanding Market Size and Population Dynamics

The biggest difference between the Canadian and American market is that Canada’s e-commerce market is much smaller as Canada’s population is about 1/10th of the size of the population in the United States. While the US market offers a significantly larger customer base, it’s essential to recognize the potential for targeted growth and niche market penetration in Canada due to its smaller population.

Canada statistics

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USA Statistics

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There is a general rule of thumb that if your product needs a standard or a certification in the US, it will probably require a Canadian version of that standard or certification in Canada. For example, if your product requires a UL certification in the US it will probably require a CUL certification in Canada. However, there are some key differences in regulations too. For example, Canada’s exemption value limit is CAN $20. In the United States it’s a much more generous US $800. An ‘exemption limit’ is the maximum value of goods that can be imported duty-free or tax-free.

Canada does also differentiate itself when it comes to data privacy, advertising content, and industry-specific regulations. Canada’s stringent regulations, especially in sectors like healthcare and alcohol, require careful compliance considerations for e-commerce retailers. On the other hand, the regulatory landscape in the US is diverse, with varying regulations across different industries.

⚠️ New May 2024 Canada Import Regulation ⚠️

A new digital initiative known as the CBSA Assessment and Revenue Management (CARM) is set to come into effect on May 13 2024. CARM will become the official Canadian system of record that importers and other trade chain partners will use to pay duties and taxes. The implementation of CARM will affect all goods imported into Canada. CARM will drastically impact the way importers interface with the CBSA.

Key Features:

• Modern interface for importing into Canada
• Self-service access to importer information
• Improved consistency of compliance with trade rules

By staying informed about CARM and ensuring compliance with its requirements, you’ll be able to navigate the evolving regulatory landscape in Canada effectively and establish a strong foothold in the market.

E-commerce Market Dynamics

Canada’s e-commerce market, although smaller, offers opportunities for local brand loyalty and niche market expansion. Taxation and import duties incentivize domestic manufacturing in Canada, leading to the creation of unique homegrown brands across various sectors, from gas stations to life insurance and high-fashion outerwear tailored for cold climates. Iconic Canadian brands like Hudson’s Bay, Lululemon, and Herschel exemplify this trend, fostering a strong sense of local brand loyalty among Canadian consumers.

In contrast, the US market’s larger population and diverse demographics provide a broader pool of potential customers for e-commerce businesses but also increased competition between brands looking for a foothold in the market.

Logistics and Infrastructure

The United States has a well-developed transportation and logistics network, facilitating efficient distribution and delivery of products to customers. However, higher competition and shipping costs within the US market can pose challenges for e-commerce retailers, particularly those located in remote areas. In contrast, Canada’s logistics landscape may present challenges due to its vast geography and dispersed population, but localizing strategies can help mitigate these obstacles.

Tailoring Strategies for Success

Expanding into the Canadian and US e-commerce markets requires a nuanced understanding of the unique dynamics and challenges of each region. While the US offers a larger customer base and favorable business environment, Canada presents opportunities for targeted growth and brand loyalty. By navigating regulatory differences, cultural considerations, and logistics challenges, e-commerce retailers can develop tailored strategies to succeed in both markets and unlock their full potential for growth and expansion.

Want to chat to a logistics partner who can help optimize your supply chain costs so you can tap into global markets, why not get in touch with Borderless360 today? Contact us.