Paul Tessy, Senior Vice President, Purolator International
A July 2019 webinar sponsored by Canada Postrevealed a few interesting statistics about the Canadian e-commerce market: First, that 80 percent of Canadians are online shoppers, and almost 70 percent of those shoppers have made purchases from U.S. retailers. This represents a market of roughly 30 million consumers. And second, Canada’s e-commerce market is growing. A lot. By 2022, online sales are projected to increase by a whopping 87 percent over 2016 levels.
As the webinar leader summarized: “Canadians have money. They like to shop. And they plan to shop more.”
Clearly, there has never been a better time for California businesses to expand e-commerce operations to the Canadian market. But before a business decides to take that potentially lucrative step, it’s vital to recognize that selling to Canada is different from selling within the U.S., and requires careful planning, especially with regard to logistics and delivery.
For one thing, a California business will quickly learn that Canadian consumers have expectations for fast, on-time deliveries that are similar to U.S. shoppers. And that last mile flexibility and efficiency matter as much in Canada as in the United States.
But meeting those expectations can be tricky. Shipments from the U.S. must cross an international border, and are subject to customs fees and tariffs that can drive up the cost of a product. Another unwelcome surprise is that most U.S. transportation providers do not have distribution networks in Canada. Many U.S. retailers have mistakenly assumed their highly-efficient U.S. logistics strategies could simply be replicated in Canada, only to have their time-sensitive e-commerce shipments arrive days later than expected.
A U.S. retailer can meet Canadian consumers’ e-commerce expectations. The key is to partner with a logistics company that not only has the requisite experience and capabilities in Canada, but is a proven innovator in building solutions that address the realities of e-commerce shipping.
Purolator International specializes in providing logistics services for shipments moving between the United States and Canada. This experience affords us unique insight to the needs of U.S. retailers trying to ship e-commerce packages into Canada, the expectations of Canadian consumers, and an understanding of what is possible. The good news, is that the “what is possible” has kept pace with – and even outpaced -- the “what is expected.”
The First Mile
For starters, let’s discuss what we refer to as “the first mile.” This involves the process involved in picking up a shipment and bringing it to the Canadian border. We regularly hear from California businesses, especially those located in southern California, that have been disappointed to learn their shipments would take 4-5 days just to reach the border. Not to clear the border mind you, just to arrive.
This generally occurs because many transportation companies that own their own fleets are locked in to following rigid schedules. Shipments are often picked up and brought to a hub where they are sorted and reloaded onto another truck. Once enroute, the truck will make multiple stops along the way.
A better solution is to enlist a company that does not own its own trucks and instead can pick-and-choose from an array of options. A San Diego retailer, for example, would benefit from having its shipments picked up by a truck moving directly north, rather than a truck that must make stops in Arizona or Nevada.
Inventory management is another consideration in which a non-asset-based provider can be helpful. A retailer must determine its best course for ensuring proper amounts of inventory are readily available to fulfill Canadian orders. With an efficient transit plan in place, this may be accomplished from a U.S-based warehouse. Or, a retailer may wish to store inventory in a Canadian facility, available through its logistics provider.
Shipment consolidation has become an essential component to an e-commerce logistics solution. Through consolidation, several benefits are possible:
· Freight and small package shipments can be picked up at the same time, and travel on the same truck to the border. This important capability saves both time and money.
· Smaller shipments are combined, which often means the larger shipment qualifies for a reduced freight rate.
· Consolidated shipments will clear customs as a single entry. This avoids having to submit separate Canada Border Services Agency (CBSA) paperwork and documentation for each individual unit.
A logistics provider that is able to offer a “best possible” solution, that includes consolidation efficiencies, can usually ensure a shipment’s arrival at the border days faster than a more rigid “best we can do” solution.
Customs Efficiency
Consolidation is one example of how an experienced logistics provider can help facilitate the border clearance process. There are other ways as well. For starters, a logistics provider should have a good understanding of CBSA requirements, and be able to ensure that all required documentation is accurate and thorough. This may sound obvious, but incomplete/missing paperwork is a top reason for shipment delays.
Duty and tax payment is another important consideration. All shipments entering Canada are subject to sales taxes and customs fees, and may be liable for permit licenses and other fees. A California business selling to a Canadian customer will need to determine its best course for collecting those taxes and fees. While most e-commerce customers expect to be charged a landed, all-in cost at time of purchase, the Canadian government places restrictions on parties authorized to collect taxes and serve as “importer of record.”
An experienced provider will offer guidance to ensure full compliance, and will also participate in CBSA’s Courier Low-Value Shipment program. This offers expedited clearance for shipments valued at less than CAN$2,500 entering Canada via an approved courier.
The Last – and most important -- Mile
Once a shipment arrives in Canada, what happens next will make or break the delivery experience. Last mile efficiency is a non-negotiable must-have, even for shipments arriving from the United States. This begins of course, with a seamless distribution plan that ensures fast, on-time delivery.
The problem though, is most carriers simply do not have this capability. Instead, a U.S. carrier will generally transfer shipments to a Canadian carrier. But, since most Canadian carriers offer only regional service, a network of carriers will have to be assembled to ensure coverage throughout the entire country.
Purolator International is able to offer seamless service throughout Canada. This is because Purolator International is the U.S. subsidiary of Purolator Inc., a leading Canadian integrated freight and parcel delivery company. Through this relationship, we have access to a distribution network that reaches every province and territory. And with regard to e-commerce deliveries to residences and businesses, we benefit from Purolator Inc.’s affiliation with Canada Post, that country’s national post office. Afterall, what better entity to ensure access to 100 percent of local addresses than the post office?
With an experienced, innovative logistics provider on its team, a California business can fully meet the expectations of Canadian online customers. For those of us in the business of building logistics solutions, it’s never been a more exciting time. Today it is possible to have shipments arrive in Canada faster, and more efficiently than was previously thought possible. The key though, is having a solid logistics plan in place, and the right partner on your team.