Canada, the home of hockey, maple syrup, and moose, right? Well, yes, but that’s not all. Businesses shouldn’t dismiss Canada so easily for its stereotypical offerings, and instead dig a little deeper in the ecommerce market.
Pattern has been a marketplace seller in Canada for over 5 years now, and we’ve seen the corner on the market for success. Canada is often the first market that astute U.S.-based brands look to after they’ve established themselves domestically. But what is it that makes Canada a great opportunity for brands? Well to start, Canada has the following:
- Digital buyer penetration of 75%
- $30.6 billion USD ecommerce market
- Mature ecommerce market that is comparable to the U.S.
- Proximity to U.S. manufacturing or warehouses for convenient logistics
While there is certainly a great opportunity for growth in crossing that border north of us, as with any international expansion, there are regulations that must be met and duties and taxes that must be paid. As an expert Canadian marketplace seller, we provide our analysis here of why we recommend brands expand to Canada and how we help brands get there.
The ecommerce site competitive landscape in Canada is somewhat similar to the way we see it in the U.S. currently: Amazon CA is largely dominant over all other major players, but Walmart Canada comes in as the second largest. Other familiar faces make up the top 10 ecommerce sites in Canada, including eBay, Newegg, Best Buy, and Home Depot.
Amazon CA
Amazon Canada is the #1 ecommerce marketplace in the country, generating nearly $7.5 billion USD in net sales in 2020. Of those billions of dollars in sales, the top categories for Amazon Canada shoppers are:
- Apparel and accessories
- Computers and electronics
- Books
- Footwear
- Beauty
Deciding which products to list in Amazon Canada and which to promote is more complex than just using the same strategy you utilize in the U.S.. Pattern’s marketplace experts help brands determine things like which products can be sold, non-tariff barriers like product labeling and regulatory compliance, and expected taxes and tariffs of this new market.
Pattern recently helped a vitamin and supplements partner get the data they needed for a successful, compliant launch on Amazon CA, resulting in 55% brand growth year over year. And that’s not the only brand we’ve helped launch.
Fulfillment in Canada is best managed using FBA, similar to what is done in the U.S. market. Pattern’s brand partners send their product directly to our Toronto warehouse where we prep them for shipment into FBA, and send them off on their behalf. For products not eligible for FBA, we set those products up in our warehouse and ship them directly to customers, handling fulfillment and logistics across borders.
Walmart CA
Walmart Canada is the second largest ecommerce marketplace in Canada but serves as an excellent expansion opportunity for brands looking to sell there. In 2020 Walmart Canada brought in $3.1 billion USD in ecommerce revenue. Additionally, the company is investing $110m in store renovations to enhance the omnichannel experience, expanding their product assortment, and piloting 10 hybrid locations with fulfillment space within stores.
For brands with products compliant with Canadian labeling and other regulations, products are shipped directly to the customer from a warehouse. While the best customer experience is created by having products in-country before shipping them to the customer, Walmart is running a program called Ship With Walmart. Similar to Amazon’s NARF program, sellers based in the U.S. can make their products available on Walmart Canada and ship them cross-border. However, buyers and sellers should be aware that many products will have additional tariffs and taxes on top of what the customer purchases, and shipping will be 2-8 days.
Success in Canada
Many of Pattern’s brands find great success as they expand to Canada, with most brands seeing revenue around 2-5% of their U.S. Amazon revenue. Success in the Canadian market, however, is directly correlated to how aggressive of a strategy the brand pursues with advertising, catalog breadth, and maintaining their supply chain. Some of the brands taking Canada the most seriously are seeing revenue north of 10% of what they are making on Amazon in the U.S., not bad numbers to see.
Ready to expand into Canada or explore other new market opportunities? Get in touch with Pattern’s marketplace experts and learn the global potential of your brand.