Are you looking to expand your eCommerce business into the Canadian market? It’s an appealing goal since there’s already $1.8 billion worth of trade moving between the US and Canada every day — making it a perfect opportunity for savvy business owners to enter the market with efficient shipping options.
Canada has a GDP of $1.7 trillion, and its e-commerce industry is expected to grow nearly $40 billion in the next few years. Plus, statistics show Canadians tend to shop more abroad — with only 33% of purchases happening domestically. However, shipping from the US to Canada poses its own challenges as well — like maintaining efficient deliveries across the sheer size of the country.
Where Do You Start?
The cities of Toronto, Ottawa, and Waterloo are the hub of an industry that makes up the Technology Triangle of Ontario — the province that generates 37% of Canada’s GDP. This region is the perfect starting point for e-commerce businesses, especially those catering to a cosmopolitan workforce.
What About Fees?
If you’re shipping from the US to Canada, you’ll need to consider taxes, tariffs, and duties that your Canadian buyers will be responsible for paying. For example, any product you sell valued over $20CAD is subject to duty, tax fees, and handling fees. Shipping with UPS or FedEx can also incur additional charges like broker fees and line-item fees.
Canada has three types of duties and taxes for imported items:
- Goods and Services Tax (GST): for items sold to Canadian customers for domestic consumption, a 5% federal tax is applied.
- Harmonized Tax (HST): some provinces have chosen to harmonize their provincial sales tax with the general sales tax -- the total rate is the HST.
- Provincial Sales Tax (PST): the PST rate can range from 5% to nearly 10% because each province not participating in HST imposes their own tax at the local level.
Tariffs are determined based on the country in which products were manufactured. If your goods are made outside the US, Canadian customers will be charged tariffs. However, NAFTA eliminated tariffs on anything manufactured in the US and shipped to Canada. Whatever the fees add up to -- be sure to be upfront with your customers about the additional cost.
Other Things to Consider...
Another challenge to shipping from the US to Canada are the restrictions on imports. Many items aren’t legally allowed to be imported into Canada -- like flammable products, lighters, wine, tobacco, furs, gold coins, and pens (valued over $5) -- so make sure whatever you’re trying to sell isn’t prohibited or restricted.
You will need to include a customs form with your shipment from the US to Canada, in most cases -- unless you’re sending an envelope weighing less than one pound. Don’t forget your forms or this will cause delays in shipping and a headache for you.
Lastly, we recommend that you show your prices in Canadian dollars for your Canadian consumers. Creating an online shopping experience that is tailored to your customer and makes it easy for them to understand what they’re buying and how much they’re spending will help you gain repeat customers.
