Intro Canada
Canada is a lucrative and high-spending e-commerce market. Localisation is crucial to success, particularly in the French-speaking areas. Merchants entering the market should also factor in increased carrier costs when serving remoter and rural communities.
Canada’s economy is forecast to grow by 3.9% in 2022 and 2.85 in 2023 [1]. The average Canadian earns US$43,450 a year, 27% more than the average EU citizen [2]. By the second quarter of 2022, unemployment was 5.3% [3], high by current standards in the developed world but low by recent Canadian standards.
In the first quarter of 2022, the volume of Canadian retail sales rose by 8.5% in comparison to the same time last year [4]. This trend may not hold in the face of an uncertain international and economic situation.
Canada’s e-commerce market
Canadians are less likely than their American neighbours to shop online. Only 8% of Canadian retail sales are made online, compared to 15% in the US [5]. The most popular online purchase categories are travel (27%), electrical goods (20%) and beauty products (18%) [5].
The total Canadian e-commerce market is worth $80 billion and is growing at a rate of 17% a year [5]. As well as being less likely to shop online than Americans, Canadians are also less likely to shop using a mobile device. Just 36% of online purchases were completed on a tablet or smartphone [5].
Around 30% of Canadians now do their grocery shopping online, double the figure from before lockdown [6]. Talking to eMarketer, Toronto-based retail analyst Marina Strauss predicted that the pandemic will permanently alter Canadian’s shopping habits: bad news for brick-and-mortar stores but good news for e-commerce merchants [7].
Payment methods in Canada
The Canadian market for payment methods is dominated, though not overwhelmingly, by cards. Canadians are even more fond of credit cards than Americans. 66% of all online purchases are paid for by card [5]. But that doesn’t mean that payment alternatives aren’t significant in Canada. Canadians pay for 23% of online purchase using an e-wallets, 7% by bank transfer, 1% with cash, and 3% by various other payment means [5]. Looking specifically at the card market: Visa has a 40% market share, local schemes 32%, Mastercard 25%, and American Express 1% [5].
Enabling and limiting factors in Canadian e-commerce
One hundred percent of Canadians now have a bank account [5]. High rates of inclusion hold broadly true across the social spectrum, with 99.8% bank-account penetration even among the poorest 40% of the population [8]. Where financial exclusion does exist, it mainly impacts very low-income Canadians, including poorer ethnic-minority and First Nations communities. The organisation Prosper Canada reports that only 20% of Canadians with an income of less than $20,000 have opened a tax-free savings account [9].
94% of Canadians have a fixed-line broadband connection [5]. Rates in rural areas are much lower, with 27% of rural households having access to the Internet via wireless services, but not fibre, cable, or DSL [10]. But as over 80% of the population lives in urban areas, the absolute number of rural households without a fixed connection is still small [11]. And the Canadian government has pledged to increase broadband speed to 10Mbps for wireless services and unlimited for broadband [12].
Canada ranks 20th out of 160 countries in the World Bank’s Global Logistical Performance Index [13]. Parcel numbers handled by Canada Post increased by 22% in 2020, the result of a lockdown-fuelled increased in e-commerce volumes [14].
Footnotes:
- https://www.imf.org/en/Countries/CAN
- https://data.worldbank.org/indicator/NY.GNP.PCAP.CD?end=2020&locations=CA-EU&start=2010
- https://www150.statcan.gc.ca/n1/daily-quotidien/220408/dq220408a-eng.htm
- https://retail-insider.com/retail-insider/2022/03/mixed-trends-in-canadian-retail-sales-in-spring-2022-strapagiel
- Original PPRO research.
- https://www.cbc.ca/news/business/grocery-delivery-pandemic-1.5869903
- https://www.emarketer.com/content/canada-ecommerce-will-continue-boosted-by-necessity
- https://datatopics.worldbank.org/g20fidata/country/canada
- Investor Brief: Promoting Financial Inclusion in Canada’s Financial Services Sector, October 2013, Shannon Rohan, SHARE.
- https://crtc.gc.ca/eng/publications/reports/policyMonitoring/2020/cmr4.htm
- https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1710011801
- https://crtc.gc.ca/eng/internet/internet.htm
- https://lpi.worldbank.org/international/global
- https://www.statista.com/statistics/734804/parcel-volume-of-canada-post
