Partnering In Canada: Why choose a 3PL?
August 28, 2019
It’s easy to assume that ecommerce trends in Canada would be similar to the U.S. due to proximity and consumer profiles, but Canada has key a difference that becomes immediately obvious as soon as you glance at a map. It’s geography is vast and the distribution of its population is scattered and small (in relation to land size). This is unusual for one of the world’s top 10 economies, which is also home to a well-educated population and boasts 89.9% Internet penetration. Despite the physical spread of it’s populous, economic traits make Canada a lucrative market for ecommerce and it’s estimated that ecommerce sales will total $55.78 billion (CAD) by 2020. If you’re thinking about entering the Canadian ecommerce market, here are some things you should know.
Canadian Consumer HabitsAccording to the Canadian Internet Factbook, around 73% of Canadians spend three to four hours online each day. Moreover, approximately 12.5% of Canadians report being online for more than eight hours a day. They spend their time using social media, getting up-to-date on news and current events, checking or sending emails, banking and shopping. It follows that they increasingly relying on the Internet to place orders and purchase goods and services, too. Most shop using a computer (78%), but mobile phones and tablets also account for a good number of devices (46% and 25%, respectively). Interestingly, the growth in Canadian ecommerce is not attributed to the volume of purchases. Rather, it’s a result of the variety of goods and services purchased. Canadians are buying the following goods and services online:
While proud to shop local and support their own economy, a sizeable portion of Canadians purchase from non-Canadian websites. The majority of their cross-border ecommerce purchases support U.S.-based companies, which — consumers say — offer better product selections and lower prices. Brands looking to win Canadian shoppers should consider these factors in their sales strategies.
Ecommerce Logistics in CanadaSo, you want to enter the ecommerce market in Canada? How are you going to reach shoppers? Distribution & Shipping (Forward Logistics): After coming up with your business plan, consider how you’re going to fulfill your orders — in other words, do you know how to get products into your customers’ hands? A forward logistics partner may be the answer. Due to Canada’s geographically scattered population, it is important to define what markets you do and don’t want to serve. Most of the Canadian population is spread across four provinces: Ontario, Quebec, Vancouver and Alberta, so it would be wise to pick a partner who can access these areas and the rest of Canada. Furthermore, you should consider delivery times and know that Amazon has raised customer delivery expectations. Many shoppers are accustomed to 1- or 2-day deliveries, and it’s important to consider how long your consumers are willing to wait for your product. When picking a distribution/shipping partner, shipping speed and costs should be considered alongside reach.
Warehousing & Inventory Management: Where you’re going to store your product and how you plan to manage inventory are the next things to consider. With an ecommerce business, the cost of inventory storage varies based on your growth and the amount of inventory you hold. Finding an effective solution to store and manage your inventory is vital to your profit margin. Returns Management & Reverse Logistics: After deciding how you’ll manage inventory and ship your product, consider returns. One of the most overlooked aspects of ecommerce is returns, and the volume of returns you can expect depends heavily on the product you plan to sell. However, ignoring returns because you expect low return volumes could be detrimental to your business. An easy return policy = happy customers = return customers. Shoppers are more likely to abandon shopping carts if the returns process is difficult. It’s also important to note that reverse logistics is not just about receiving returns; returns management is also part of the equation. Returns management takes into consideration returned products and what to do with them. Do they need refurbishment? Can they be remarketed? Ultimately, having an affordable solution for receiving and managing returns is vital to your business. 3PL Partner: After reading the above, it might sound intimidating to launch an ecommerce business in Canada. However, finding the right partner can ease the process significantly. Check out their storage options, forward logistics, reverse logistics, and inventory management, and keep the following variables in mind:
- Warehousing costs
- Inventory management solution
- Delivery/shipping accuracy
Hesham MubarakHesham is a Marketing Associate at IMCLS Canada. He comes with experience coordinating and building marketing campaigns for companies such as Monarch House, HSBC, Dyson, P&G, GSK, University of New Brunswick and York University. He also brings a background in logistics (Livingston International), production and creative development. He is passionate about marketing and helping businesses succeed through appropriate and effective communications/advertising programs. He is also a big gear-head and when he is not helping businesses with their marketing needs he likes to cook and BBQ.
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Hesham Mubarak 2019-08-28