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The Canada E-Commerce Cross Border Whitepaper is produced and maintained by Spring Global

Delivery Solutions.

These guidelines are designed to operate as comprehensive guides for cross border

e-trading, exclusively focusing on the B2C markets in their subject territories.

Please note that no rights can be derived from this whitepaper.

Overview ............................................................................................................................... 5

Cross Border Purchases ...................................................................................................... 11

Domestic vs. Cross Border Product Categories ................................................................... 13

Cross Border Market Places ................................................................................................ 13

Payment methods ................................................................................................................ 15

Customer preferences ......................................................................................................... 15

About Spring ........................................................................................................................ 16

References .......................................................................................................................... 17

For online retailers it can be complex to select the right delivery partner. Sometimes it might be best to

work with the national postal provider. Other times it might be better to partner up with a local carrier. It

all depends on the size, value of the package and the service level you want to provide to your

customers. This whitepaper gives you local insights to make your business a success in Canada, and

gives you a detailed overview of the local delivery and return options.

This report is all about helping you as an online retailer to provide a seamless customer experience for

your customers.

We wish you happy reading!

Capital: Ottawa Language: English, French

Currency: Canadian dollar (CAD) Domain: .ca

Population: 35.9 million Online shoppers: 18 million

Online GDP: €32.7 billion Online GDP in %: 2.3%

E-commerce growth rate: 21.8% E-commerce rank: 11th*

* AT Kearny 2015 Global Retail Ecommerce Index

Age structure

Country statistical profiles: Key tables from OECD - ISSN 2075-2288 - © OECD 2017

2012 2013 2014 2015

Production and income

GDP per capita USD current PPPs 42,144 44,150 45,128 44,258

Gross national income (GNI) per capita USD current PPPs 41,602 43,424 44,229 ..

Household disposable income Annual growth % 2.2 2.4 0.9 2.2

Economic growth

Real GDP growth Annual growth % 1.7 2.5 2.6 0.9

Taxes

Taxes on the average worker % of labour cost 30.8 31.0 31.6 31.6

Trade

Imports of goods and services % of GDP 32.2 31.8 32.6 34.0

Exports of goods and services % of GDP 30.2 30.2 31.6 31.6

Prices and interest rates

Inflation rate: all items Annual growth % 1.5 0.9 1.9 1.1

Inflation rate: all items non food non energy Annual growth % 1.4 0.8 1.6 2.3

Long-term interest rates % 1.87 2.26 2.23 1.52

Purchasing power and exchange rates

Purchasing power parities AUD per USD 1.24 1.22 1.24 1.25

Exchange rates AUD per USD 1.00 1.03 1.11 1.28

Population

Total population '000 persons 34,880 | 35,154 35,540 35,900

Population growth rates % 1.1 | 0.8 1.1 ..

Last updated: 17 January 2017; disclaimer: http://oe.cd/disclaimer

.. Not available

| Break in series

e Estimated value

Source: OECD Data (data.oecd.org). For explanatory notes, see OECD Factbook 2015-2016

(DOI: 10.1787/factbook-2015-en).

0-14

15-24

25-54

55-64

65+

Canada is ranked 11th in AT Kearny’s 2015 Global Retail E-Commerce Index. The index is based on the

online market size, consumer behaviour, growth potential and infrastructure. The online market size has

a growth potential of 23.6%, and with a market that is far from saturated Canada offers many

opportunities for cross border

e-tailers.

In the global e-commerce market Canada has a market share of 1.6%. However, due to its size of the

population it is still ranked 7th in the top 10 countries share of global B2C e-commerce market as

published by the European E-Commerce foundation.

Canadians have a higher online spend than average. With an average spend of €1,817 it’s ranked 4th in

average spending per online shopper. According to Forrester the online spend will increase to €35.8

billion in 2019, which equals 9.5% of all purchases made in Canada.

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1 +2 US 100.0 83.2 22.0 91.5 79.3

2 -1 China 100.0 59.4 86.1 43.6 77.8

3 +1 UK 87.9 98.6 11.3 86.4 74.4

4 -2 Japan 77.6 87.8 10.1 97.7 70.1

5 +1 Germany 63.9 92.6 29.5 83.1 66.6

6 +1 France 51.9 89.5 21.0 82.1 59.3

7 -2 South Korea 44.9 98.4 11.3 95.0 58.9

8 +5 Russia 29.6 66.4 51.8 66.2 48.7

9 +15 Belgium 8.3 82.0 48.3 81.1 45.6

10 -1 Australia 11.9 80.8 28.6 84.8 43.6

11 -1 Canada 10.6 81.4 23.6 88.9 43.1

12 +2 Hong Kong 2.3 93.6 13.0 100.0 42.2

13 +6 Netherlands 8.9 98.8 8.1 84.6 41.8

14 -3 Singapore 1.3 89.4 15.7 100.0 41.5

15 +13 Denmark 8.1 100.0 15.1 75.5 41.4

Figure 1: Global E-commerce Index Source: AT Kearny 2015

Statistics per 100 people 2012 2013 2014 2015

Internet users 83.0 85.8 87.1 88.5

Fixed broadband subscriptions 33.6 34.4 35.4 36.4

Fixed telephone subscriptions 50.9 48.1 46.2 44.3

Mobile cellular subscription 79.6 80.6 81.0 81.9

According to testmy.net the average download speed in Canada is 35.4 Mbps. It means that consumers

have access to a good Internet connection, and allow you to make use of rich media services such as

video content on your website.

Source: testmy.net

Canadians rank number 1 worldwide when it comes to the average time they spend online per month.

According to comScore, Canadians spend on average 36.7 hours online per month.

Laptop/ Computer Smartphone/ Mobile Television Tablet

66% 21% 1% 12% Source: CIRA

Internet is accessed most via the desktop (66%). Canadians in the age group 18-34 favour accessing

the Internet via their smartphone. According to comScore 81% of mobile telephones are now

smartphones., and mainly used for sending messages (81%) and playing games (80%).

68%

61%

60%

58%

57%

31%

20%

14%

32%

39%

40%

42%

43%

69%

80%

86%

Rank City Download speed in Mbps Upload speed in Mbps

1 Withbey, ON 114.3 6.2

2 Quispamsis, NB 84.6 13.3

3 Saint-pamphile, QC 83 25.6

4 Blacks Harbour, NB 75.7 10.4

5 Sutton West, ON 66.1 3.5

1. Amazon.ca

4. eBay.ca

3. Amazon.com

2. Kijiji.ca

5. Craigslist.ca

In Canada Google is the leading search engine with a market share of more than 60% followed by Bing.

Rank Search engine Market share in %

1 Google 60.77

2 Bing 28.73

3 Ask 7.73

4 Yahoo 1.1

5 AOL 0.01

6 Other 1.66

Laptop/ Computer Smartphone/ Mobile Television Tablet

95% 14% 3% 17% Source: CIRA

The majority of Canadians not only access the Internet via their desktop, it is also the main device

through which online purchases are made (95%). However, there is a clear difference in age groups

and their preferences. While 14% of all Canadians make online purchases via their smartphone, it’s

mainly dominated by the age group 18-34 (22%). It’s therefore advisable to have a mobile version of

your online shop as well to appeal to this age group.

According to Similarweb.com, the top five online retailers by site traffic in Canada are mostly localised

websites from international merchants. Kijiji.ca is the only local website in this list whereas amazon.com

the only foreign one.

The five online retailers with the highest traffic are all market places. This provides valuable insight in

how Canadians search or and buy products online.

62% of Canadians prefer to buy products from Canadian website. Therefore it advisable to localise your

online shop with a .ca extension, as many of the international market places have also done.

Developing a market presence in any international market can be a challenge. Especially, if brand

awareness is low or when products offered don’t differentiate from the local products. With an unique

product or own brand it can be easier to seize market share.

In 2016, almost 40% of the total advertising spend (€8.6 billion) was spend on digital advertising. More

specifically, €386.35 million was spent on Social Media advertising. €1.55 billion of the total online

revenue has been gained through search advertising.

According to Statista, mobile phones and tablets are the most important devices for online advertising.

An online survey conducted by Insights West shows that Facebook dominates the Canadian Social

Media market. Also YouTube is very popular. Tumblr, Reddit and Snapchat are mostly used by the

younger demographic.

71% 49% 27% 23%

21% 20% 12% 5%

.

A simple and effective way to set-up your international Customer Service is by using your Social Channels as a platform for this.

As a foreign e-tailer gaining insight in the preferences of Canadian online shoppers is key to your

success. Like many online shoppers, Canadians like their online experience to be local. This means

that your online shop should be available in the local languages (English & French) and that prices

should be mentioned in Canadian dollars. Another reason why Canadians prefer a local online

experience is because they want to avoid additional custom charges.

Although, Canadians prefer a local online experience, 67% of online shoppers buy cross border. The

main reasons for buying from a foreign online shop is to benefit from better prices (41%) and a better

assortment (23%).

The Canadian e-commerce market isn’t mature yet, which means there are plenty of opportunities for

foreign e-tailers to seize the market. Only 46.2% of Canadian businesses have a website. This is also

caused by a large number of small businesses which don’t have a website at all.

The majority of cross border purchase are made in the USA (67%) followed by China (21%) and the UK

(5%). Canadians tend to buy from online shops in their local language which is reflected in the fact that

4 out of the top 6 countries share the same mother tongue as Canada, being English or French. China

is mostly popular for its low value goods.

USA China UK Australia France Germany 67% 21% 5% 1% 1% 1%

One of the key reasons why Canadian prefer to buy from American online shops is because of the

North American Free Trade Agreement (NAFTA). This multilateral agreement between Mexico, the USA

and Canada allows Canadians to buy foreign products against lower import tariffs, or in some instances

are redeemed from import duties. All US products below CAD 20 are free of taxes and import duties,

making it attractive for Canadians to make purchases from American online shops.

The Comprehensive Economic and Trade Agreement (CETA is currently being finalised), and will

ensure that businesses from European member states have the same rights and opportunities as

Canadian businesses. One of the key advantages of this trade agreement will be that customs

procedures will be simplified. Import duties will be reduced, and in some instances even omitted.

Barriers for buying cross border are the fear of high delivery costs and long delivery times. 23% of

Canadians simply don’t trust foreign online shops, and therefore are not likely to buy cross border.

To remove these barriers, and to gain trust of Canadian consumers it can be useful to join local trade

association such as Local Commerce Canada (www.localcommercecanada.com).

Tips on how to increase your online success (in Canada)

Provide strong business information For instance by providing a “meet the team” page to show potential buyers who the people are behind your online shop. Provide contact details For example by listing details such as your company address, telephone number and e-mail address. It provides a sense of trust, and allows (potential) customers to contact you if they have any questions. Include product reviews and ratings Online buyers often look at online product reviews and ratings before actually purchasing the product. By including product reviews and ratings in your online shop, potential buyers can quickly see how others like your product. Provide a secure online shopping experience Being careful with your customer data, and ensuring that they have a safe online experience is key for your success in any market. For instance by using a SSL (secure socket layer) to ensure all data between the browser and web server is encrypted. Also it is recommended to display your security on your online shop for instance by placing a SSL certificate in the footer of your website. Include multiple languages A local shopping experience increases the likeliness for foreign consumers to buy from your online shop. Make sure that your website is available in the appropriate languages. We recommend that content to be translated by a professional native speaker and/or agency. Although, online translation engines are good to quickly try to make sense of a foreign text, it quite often still remains a literal translation. Be clear Make sure to clearly indicate the prices, delivery costs, delivery times and return policy. Not being clear about any additional costs or fees, or only showing them upon check out often leads to abandoned carts.

Source: IPC

In Canada, 31% of all cross border online purchases are made in the category clothing and footwear,

followed by computers (20%). Books, music and media account for 14% of all online purchases. Please

note that this category also includes e-books, and music bought online through parties such as iTunes.

Source: Ecommerce Europe

Interestingly is that also in respect to domestic purchases, 31% are made in the category clothing and

footwear. This is followed by media & entertainment (12%). Information technology (IT) account for 11%

of the domestic purchases. Information technology contains products such as hardware. It is also

interestingly to see that products belonging to the category home & garden are bought more often from

a domestic e-tailer than a foreign one.

According to the International Postal Corporation (IPC) Canadians tend to mostly buy low value goods

from foreign retailers. Almost half of all cross border purchases have an average order value of CAD

35.- The IPC report also shows that for high value goods, Canadians expect that import taxes and

duties are being paid for by the seller.

According to Royal Mail 72% of Canadian online purchases are made from market places. If you want

to enter the Canadian market then you might consider to sell your products via a market place as well.

Amazon is the most popular market place (49%) due to its large selection of products, and often

competitive prices. EBay (20%) is the second most used market place, and Alibaba (Aliexpress)

accounts for 3% of the cross border purchases.

Market places offer a relatively easy way to enter a new market. Below we have listed some

advantages and disadvantages of using market places.

Advantages of using market places

Market places like Amazon have a large customer database and generate a lot of traffic. This means that you can instantly boost your sales.

You don’t have to set-up your own shop, you can make use of the infrastructure of the market place. This also applies to the delivery of the products, you can benefit from their corporate delivery rates, or even have the market place take care of the handling and shipping for you.

Market places already established a strong brand reputation and trust within their markets. By selling your products via a market place you can benefit from this reputation, and easily reach new customers.

Clothing and footwear

31%

Consumer electronics

19%

Books, music & media

18%

Health & Beauty 11%

Home & Garden 7%

Computers 7%

Clothing and footwear

31%

Media & entertainment

12%

IT 11%

Home & Garden 9%

Telecom 7%

Household electronics

5%

In many instances, the market place also takes care of the Customer Service in the specific countries. Making it easy for you to set-up shop.

Disadvantages of using market places

Market places don’t come for free. If you want to sell your products via a market place you need to take into account that you in general pay a fee per sold item. This fee can go up to 25% depending on the market place

There are many sellers on market places, and it can be difficult to differentiate yourself from the competition. Check out what is already being offered in your product category to determine if you can be competitive.

It can be difficult to establish brand awareness as consumers buy from the market place, and not from you directly. It is therefore key to take this into consideration before selling on any market place

In general, market places are offering different options for fulfilment and shipping. It is recommended to

ensure that you know what your options are, and what the costs involved are before you start selling via

any market place. Below we have listed 4 general fulfilment options that most market places offer.

In this scenario the market place buys your product. The ownership of your products is transferred to

the market place, and the market place will take care of the product placement, fulfilment and delivery.

If a consumer orders your product from the market place, you will get a notification, and will have to fulfil

and ship the order to the consumer yourself. It’s imperative that you act within the market place service

level.

The market place offers you storage in its warehouse. Delivery is outsourced to the market place. The

difference to wholesale is that with this option all products remain yours until sold, and there is minimal

risk for the market place.

This option is similar to drop shipment with the main difference that you send the ordered product to the

market place, and not the consumer.

Canadians prefer paying by credit card (53%) with Visa being the most popular card (60%) followed by

MasterCard (25%). The second preferred payment method is PayPal by 36%.

Interac Direct Payment (IDP) is the national debit card in Canada. Via Interac Online online payments

can be made with IDP. This is considered more safe than credit cards, as it does not share any

personal financial information. Providing this payment method is appreciated, but is not considered to

be necessary to be successful in Canada.

Delivery is key for any online retailer. In many cases, it’s the first time your customers comes into actual

contact with your product. Providing an excellent and local delivery experience will differentiate you

from other cross border e-tailers.

In Canada, home delivery is the preferred option. 83% of Canadian online shoppers prefer home

delivery over any other delivery option. Only 8% prefer a pick-up option. The delivery preference is

influenced by where one lives.

According to IPC report, Canadians living in rural areas prefer to pick-up online deliveries at a local post

office, whereas people living in urban areas prefer home delivery. Where neighbour delivery is widely

accepted in countries such as the Netherlands and the UK, almost none of the Canadian respondents

in the IPC Shopper Survey have an interest for this option.

Reliability in delivery is key for Canadian online shoppers. You should deliver within the specified time

frame, and you should clearly communicate this upfront. Unlike other online shoppers, Canadians show

little interest for delivery on weekends or being able to select a predefined date or time.

Free delivery isn’t expected as much as in other countries. 91% of Canadian online shoppers expect

free delivery over a certain amount. For items up to CAD 30.- 28% expects free delivery, for items up to

CAD 150.- this increases to 35% and for items above CAD 450.- 43% expects free delivery.

However, Canadians do favour tracked delivery more than others. They are also more open to pay for

this service. According to the IPC, only 35% would expect free delivery for tracked items within 3 to 4

business days.

Offering a tracking option is key for Canadian online shoppers. On average 88% of online consumers

use parcel tracking services, while the average in Canada is 91%. Canadians expect full tracking

information, and regularly check the status of their shipment. 91% find “Parcel will be delivered

today/specific date” the most important tracking notification.

Tracking information is mostly checked via the website of the delivery company, followed by e-mail

notifications. Only 39% of the tracking is directly done via the website on the online retailer.

Whereas signature on delivery is near the standard in some countries, it’s less common in Canada.

Only 29% of Canadian online customer have to sign for their goods upon delivery, compared to 52% on

a global scale. However, the level of delivery satisfaction is 8% higher when one has to sign for its

delivery.

With an average return percentage of 4% the number of returns is very low compared to other

countries. Key reason for the low number of returns is because 94% of Canadian online shoppers

indicate that they are very satisfied with their order.

When one isn’t satisfied with the product a free return and easy return process are key. It is therefore

recommended that you clearly indicate the return policy on your online shop. The better the return

experience, the more likely customers are to re-order. Spring offer a wide range of international return

solutions.

As an autonomous broker Spring Global Delivery Solutions handle international deliveries

across the most reliable networks.

With 13 offices worldwide, it connect 3 continents and cover 190 countries. Spring have the knowledge

and experience in getting your mail, packets and parcels to your customers. And back, if necessary.

In 2001, Spring was brought to life by founding father PostNL, Singapore Post and Royal Mail. Since

2013, Spring are fully part of the PostNL Group. PostNL are the national mail and parcel services

provider of the Netherlands. It operate in the largest mail and distribution network in the Benelux

(Belgium, the Netherland and Luxembourg) region. In addition, PostNL have built a strong local foothold

in Germany (Postcon) and Italy (Nexive). Together we deliver over 1.1 million items to 190 countries.

Every day.

Spring are the exclusive sales agent for PostNL outside the Benelux, and can, therefore, offer you

direct and unparalleled access to approximately 7 million households in the Netherlands.

Spring are the exclusive sales agent for PostNL outside the Benelux, and can, therefore, offer you

direct and unparalleled access to approximately 7 million households in the Netherlands.

Spring offer a wide range of cross border delivery solutions to business worldwide from mail, packets,

parcels to returns. Below you will find an overview of our packet & parcels solutions and international

returns solutions.

Spring Packet is our no-frill solution for small, international parcels up to 2kg. This solution comes

without additional services such as track & trace or insurance and can, therefore, be offered at a

competitive rate.

Spring Packet Plus is a solution for small, international parcels up to 2kg. Your customer has to sign for

delivery, ensuring you that your shipment has been delivered. With an unique barcode, all shipments

can be tracked to most international destinations.

Spring Parcel is our solution for international parcels up to 10kg. Full tracking information is available

from door to door. Spring Parcel also includes a standard maximum compensation of CAD 160.-, in

case of loss or damage.

Our solution for urgent shipments or heavy parcels up to 30kg. Spring express contains full Track &

Trace and compensation in case of loss and damage are included.

With Spring Extra we offer you a tailor made solution for special deliveries that don’t fit our standard

services. We’re happy to discuss your personal requirements.

Untracked Returns is our no-frill return solution. Your customers simply add a return label on the packet

or parcel, and hand it over at a local drop off point free of charge.

Spring offer a wide range of tracked solutions to fit your needs. Our tracked solutions offer faster transit

times, and compensation if needed. Via our intelligent IT platform you and your customers can stay fully

informed on the whereabouts of the returns.

Our IT Platform

Our IT Platform has been built with your business requirements in mind. Benefit from our intelligent

interfaces to connect easily with your own systems. It enables your customers to easily download return

labels for free via your website. Or have them purchase a return label with Sender Pays to share the

costs. We can even integrate a label-in-the-box solutions for you. For complete control of your global

returns, you can access your own returns portal or select customised reporting.

Each year we conduct a global customer survey to monitor how our customers experience our service.

This survey is conducted by an independent research agency named IPSOS.

In 2016, our customers rewarded us with an Net Promoter Score (NPS) of 82 when we asked them if

Spring meet their needs. We got a NPS of 80 in respect to our liability.

We are proud at this result as it shows that we are the reliable partner in cross border deliveries, and

understand your business needs. Our customers are more than enthusiastic about our services, and we

hope, you will be too!

Please feel free to contact us for more information.

For this whitepaper we consulted a number of resources including, but not limited to, Ecommerce Wiki,

The World Factbook, The Dutch Consumer Barometer, CIRA, JLL, Europa.eu, The World Bank,

PSFweb, RVO, Statista, They Paypers, Interac, Socialbakers, OECD and IPC.

Disclaimer

This whitepaper is provided for general information purposes, and does not constitute legal investment, or other professional

advice on any individual matter. Whereas every effort has been made to ensure the information given in this document is

accurate, Spring doesn’t accept any liability for any errors, omissions or misleading statements. No warranty is given or

responsibility is accepted as to the standing of any individual firm, company or other organisation mentioned. Publication as

well as commercial and non commercial transmission to a third party is prohibited unless prior consent is obtained from Spring.

The views expressed in this publication do not necessarily reflect the views of Spring.