Logistical Tips for Doing Business in Canada

Canada offers a unique opportunity for American businesses looking to sell products into new and profitable market. Canada, which shares a border with the U.S., that spans 5,525 miles, entered the North American Free Trade Agreement with the U.S. and Mexico on January 1, 1994. Since then, Canada has purchased a significant number of American exports, which has grown significantly. For example, in 2011, Canada purchased $204 billion worth of American goods. According to the Office of the United States Trade Representative, Canada purchased $300.3 billion worth of U.S. exports in 2013.

Canada’s roughly 35 million citizens have a strong need for American products, and they have the purchasing power to satisfy those needs—the after-tax middle-class incomes in Canada are higher than that of U.S. citizens. However, in order to take advantage of this marketing opportunity, it is important for business owners and exporters of finished product to understand the logistics that are involved with entering the Canadian marketplace. Here are a few key logistical tips for American companies that are considering doing in business in Canada:

Understand the market

Before a company decides to market its product in Canada, it’s important for that company to conduct research on the Canadian market. A number of industries currently growing in Canada include health, beauty, automotive, manufacturing, environmental and tech. Canadians are also particularly open to products that benefit the environment.

It is important to understand that a large percentage of the Canadian population lives close to the United States border, so consumers have a strong awareness of American brands and marketing campaigns. However, while Canadians have a strong inclination towards American products, the markets are not identical so their needs will be different. E-commerce is also growing in Canada. In 2010 Canada boasted 27.8 million Internet users, which represented roughly 81.7 percent of the population at that time. If a company can provide a high quality product that is appealing to both the Canadian and American consumers—and it can be purchased via the Web—there is a greater chance that the product will have a significant impact in Canada.

Differences in doing business

Canada is fundamentally different in a number of ways from the United States, and it is important to be aware of these differences before entering the marketplace. The population in Canada is also spread out, so when dealing with Canadians in remote regions, who may have a tendency to buy in bulk, it is effective to offer an incentive such as a free shipping promotion to encourage this behavior. Since portions of the country like Quebec, speak French, many companies must offer customer service and product packaging that appears both in English and French.

Regulations

There are a number of complications that might arise when it comes to shipping products in Canada, and if a company is not informed regarding the nation’s shipping regulations and taxes, their overall marketing strategy might falter. For example, average product delivery times can often exceed two weeks and some companies don’t offer tracking codes. It is important to consider the size of the country, and the fact that the population is spread out. There are significant costs for expedited services, and Canadian customers have to pay additional sales taxes and extra duties on products shipped from the U.S. to Canada. There are also a number of strict regulations that have been enacted when it comes to moving goods across the Canadian border. For example, the U.S. government prohibits the export of particular products outside of the nation (such as GPS devices). Health Canada also has specific regulations when it comes to allowing cross-border shipping. For instance, health and beauty companies are not permitted to ship more than 90 days’ worth of inventory across the border unless the products they are moving are specifically approved by Health Canada. If those regulations are not met, the potential for shipment rejection can run high.

American companies that are looking to stay on top of trends, Canadian regulations, and unique business differences, can do so by partnering with local Canadian firms like Stalco that specialize cross-border delivery logistics. By doing so, American companies can tap into existing Canadian distribution systems, and they can also have a better grasp of Canadian culture, business methods and an overall understanding of the Canadian marketplace.