The economic downturn has a lot of businesses worried about this Christmas season.  Americans simply can’t, or won’t spend as much this year as they typically would.

In order to protect your online business from the current state of the economy, it’s essential to tap into different markets.  Look up, it’s easier than you think… literally, look up… to your neighbors to the North.

Canada, like the rest of the world is feeling the effects of the current global economic crisis…  but not nearly as much as the rest of the world.  In fact, Canada is likely to escape the recession altogether and simply experience slower than normal economic growth due to a heavily regulated (and much more stable banking system than any other country in the world), and a massive surplus.

Canadians are likely to be a bit more cautious with their spending this year, but they do have money to spend, and they will spend it.

Canada is a very easy market for American businesses to tap into, and yet many still don’t.  In fact, most don’t.  In spite of the fact that it’s so easy to sell to Canadians, US-based online retailers who ship to Canada are still the exception, not the rule…  and that means a huge opportunity for anyone willing to make a very modest effort and a few minor changes.

Here’s a few pieces of information you absolutely need to know in order to point you in the right direction.

First, you need to determine whether or not you are allowed to ship your products to Canada.  Due to NAFTA, the answer is almost always going to be yes.  But for a few items that are heavily regulated on both sides of the border such as food products, medications, etc.  which would require special permits, inspections and so on…  the answer is almost always going to be yes.

Of course, you need to be sure so get in touch with the company you ship with.  UPS, Fedex, or the United States Postal service should be able to tell you whether or not there’s any restrictions on the export of the type of goods you sell into Canada.  For greater certainty, you can get in touch with the Canada Border Services Agency http://www.cbsa-asfc.gc.ca and US Customs and Border Protection http://www.cbp.gov (yes, check with the US government too…  with some products, there may be no import restrictions imposed by the country you’re shipping to but there may be some export restrictions imposed by the country of origin).

Once you’ve determined you’re allowed to export your product to Canada, the next step is to determine your shipping costs.  Again, it’s simply a matter of getting in touch with the company you already ship with for a quote.  UPS, Fedex, and the United States Postal Service all ship to Canada.  The only differences between shipping to a US destination and a Canadian destination are the price which will be a bit higher, and a bit more paperwork…  in most cases one additional form (very simple and straight forward, not even a full 8.5 x 11 sheet) to declare package contents and value for customs.  Other than that, shipping should be business as usual.

Your shipper will import the goods into Canada, and collect any taxes or duties owing directly from the recipient, so there’s absolutely nothing you need to concern yourself with so far as customs clearance goes…  other than the declaration form mentioned above.

That takes care of the logistics…  you now know you can ship your products to Canada, and what the costs will be.

As far as selling to Canadians…  it’s not all that different than selling to Americans.  Canada and the United States are true siblings.  We share a similar history, and a similar culture.  Of course there are differences…  but we are much more the same than we are different, and someone from Los Angeles would probably find it more of a culture shock to be in Dallas than Vancouver or Toronto.  The same sales copy and marketing materials that are effective with Americans will likely resonate with Canadians.

The main thing you need to be aware of is why Canadians will look south of the border to make purchases.

1. Canada has a population of about 34,000,000 people.  Roughly 10% the size of the United States.  It’s a smaller market so new products are often made available in Canada much later than they become available in the US. But, Canadians are aware of these products since a great deal of advertising that targets Americans will spill over the border into Canada.  Canadians receive broadcasts from all the major US networks and cable channels, and they also have access to all the same newspapers and magazines.  Then of course there’s the dominance of US websites filling their Google search results pages.  Canadians know what’s available in the US, and they want it for Christmas THIS year.
    
2. In spite of the above, Canada is a mature and lucrative market so there are relatively few products that aren’t available to them domestically (except very new ones), but even when it comes to common items, Americans seem to have a greater variety of brands to choose from since their market is large enough to support more players in any given industry.  Canadians like choice every bit as much as Americans do, and they’ll shop across the border to acquire something just a little bit different or possibly more suitable to their individual needs than what may be available at home.
    
3.  Saving money.  In spite of the fact the Canadian dollar is worth less than the US Greenback, even after the currency exchange and shipping, the same items are often less expensive in the US than they are in Canada.  If you want to know if this is applicable to the class of goods you deal in, just visit http://www.walmart.ca, pick the same type of product you sell (consumer electronics, cookware, whatever), look at the price, and then apply the current exchange rate to convert it to US dollars.  Then go to http://www.walmart.com, find the same item, and compare prices.  Given the state of the world’s economy, this is a huge advantage for US retailers.  Remember, Canadians still have plenty of money to spend but they are going to be more cautious this year…  and even when times are good, saving money is never a bad thing.

Those are your selling points…  availability, variety, and buying power.  As far as reaching out to Canadians goes, you probably already are, and don’t even realize it.

It’s every bit as likely for a Canadian to find your site as it is for an American.  If you check your log files, you’ll probably see a fairly significant number of visits originating from Canada, but if you don’t ship to Canada you’re probably seeing a lot of bounces from your order page or shopping cart as they can’t complete the order due to a Canadian postal code being rejected as an invalid zip code when they get to the point where they enter shipping details.  This, in fact is the most frustrating part of online shopping for Canadians…  finding something they want to buy, adding it to the shopping cart, going through the whole process only to be told “sorry, you can’t have it.”

Just add support for shipping to Canada, then make it clear on your website that Canadian orders are welcome and you’ll quickly see more orders.  If you want to put an actual value on that, then just go through those log files to count up the number of Canadian visitors and apply your known conversion rate for US visitors.  If you want more visits from Canada, then turn on Geo Targeting in your Adwords campaign and specify Canada as your target.  You’ll get more clicks, and pay less for them as it’s cheaper to advertise to a market that’s 90% smaller.

The one last thing to address is currency and payment processing.  Don’t change a thing.  Canadians would certainly appreciate pricing in Canadian dollars, but the fluctuation in the exchange rate will make it impractical for you to accept payment in Canadian dollars.  It doesn’t matter though, Canadians know precisely what their dollar is worth at any given moment in time, and they’re accustomed to paying for things in US dollars when they buy from US based businesses.  Your existing merchant accounts should be able to accept payment made with a Canadian Mastercard or Visa in exactly the same way a US card is charged…  in US dollars.  The only difference is to the customer.  Their card issuer will handle the currency exchange and bill them in Canadian funds.  Again, Canadians are aware of this, expect it, and are comfortable with it.

This Christmas season, expand your reach by tapping into a market that many of your competitors are too short-sighted or lazy to bother with.  The Canadian market may be 10% the size of the US but a population of 34,000,000 is still a very significant market and if 90% of your competitors aren’t there, then as far as you’re concerned…  you’ve just doubled the size of your target market.  Canadians are still buying, make sure you’re selling.  If it works out well, then you might begin to contemplate tapping into some of the hundreds of other lucrative markets that exist outside US borders…  Mexico to begin with, is also a member of NAFTA and very easy for the US to access.

Remember, you make your money by doing the things your competition doesn’t do, and when times are tough you need to do all you can…  reaching outside your domestic market is something anyone can do in this day and age, so long as they have the will to learn how to do it.  I hope this post points you in the right direction and helps your business weather the looming recession.

Have questions, contact us…  or better yet, host your site with us…  eh.