Everything You Need to Know about Selling in Canada

E-commerce is nothing new for Canadian consumers. The internet penetration is among the highest in the world and more than half of the population has embraced online shopping. Not being an especially populous country, the market is still relatively small at just over USD 20 billion, but cross-border e-commerce dominates the industry, with eMarketer reporting that 7 out of 10 online purchases in Canada are made to international merchants.

Canada’s culture of e-commerce and cross-border shopping is firmly established, so there’s no race to catch the wave. The growth will be slow and steady – instead of the excitement of cashing in on a new trend, the market offers a solid, low-risk, long-term investment. In this article we’re going to take a look at some of the reasons why Canada is the first choice for so many merchants selling across borders, and how to decide if it is the right market for you.

canada

In the “Everything You Need to Know” series, we take a look at a specific e-commerce market to help you decide whether you should expand online sales across borders. As a provider of comprehensive payment processing services, we at DalPay specialise in cross-border commerce and have first-hand experience facilitating business in over one hundred markets worldwide.

Unless otherwise noted, figures in this article are sourced from:

When deciding whether to expand your business across borders, you need to consider which countries you are targeting and what each one can uniquely offer you. If you’re selling a niche product or service and your target audience is very specific, you need to identify which markets have a demand for what you provide. But in terms of sheer growth, Canada is an obvious first choice for international expansion.

Canada is in fact the single most popular market for cross-border merchants around the world by a significant margin. According to Multichannel Merchant’s MCM Outlook 2014, 84% of international merchants said they sell into Canada, well above the runner-up, Australia, at 54%. This fact is a double-edged sword, since it both represents the reality that Canada is a very attractive market for cross-border e-commerce and suggests that the market may be flooded and highly competitive.

Quick Figures

  • Total population: 35.1 million
  • Internet penetration: 87% (29.8 million)
  • Mobile penetration: 78.9%
  • Online shoppers: 18.5 million
  • E-commerce sales: USD 20.6 billion
  • M-commerce sales: USD 1.3 billion
  • E-commerce annual growth rate: 15.5%

The widespread popularity of cross-border commerce in Canada can be traced back to the country’s geography. Canada was not settled in the same way as the US – it never had a frontier. Instead, Canada was settled primarily by boat, through the St. Lawrence Seaway and the Great Lakes, which is where the border between Canada and the US was drawn, the world’s longest continuous border between two countries.

As a result, the vast majority of the country’s population lives within a short drive of the American border, and throughout the 20th century cross-border shopping was a very popular weekend activity among Canadians of all demographics. By the time e-commerce came along in the 21st century, most Canadians were already highly accustomed to buying from international merchants, and once that was no longer limited to the US, they embraced it even further.

What You Need to Know

Industry Trends

Media products – books, music, film and TV – dominate the Canadian online retail market, accounting for a value 21.4 billion USD, nearly triple the next most popular category, apparel and footware. One third of total e-commerce spending goes to American merchants, with Amazon.com being the most popular.

There are three main drivers for cross-border purchases among Canadian consumers. 41% cite lower prices as their primary reason for buying from international merchants and 23% cite better selection. Free or discounted shipping is also a key motivator, with merchants offering free shipping seeing a 69% increase in their conversion rates.

Preferred Payment Methods

As with most of the world’s e-commerce markets, credit cards are the most popular method of online payment, with MasterCard being the most popular scheme in Canada. E-wallets account for nearly one-fifth of online transactions and prepaid cards for 11% of the total.

Canada also has one of the most mature national debit card networks in the world, the Interac network. Debit cards have contributed significantly to decreasing the country’s dependence on credit cards at the point-of-sale, and the more recent development of Interac Online has received widespread adoption in the e-commerce sphere, representing 9.1% of the market after only its first two years. The increased security and lack of debt concerns associated with debit and prepaid cards has encouraged the growth of Canadian e-commerce.

M-Commerce

Similarly, Canadian consumers have been more ready to embrace new m-commerce technologies than Americans and Europeans. More than a third of the populations uses mobile banking and over 5 million Canadians shop online using their smartphones.

The eagerness for emerging technologies among Canadians is clear: the average Canadian spends nearly twice as much time on the internet as the worldwide average (23 hours per month); almost half have said they are ready to embrace m-commerce on wearable devices; and 47% have said they want retailers to provide more secure mobile payment options. All this has contributed to Canada scoring #2 on the Mobile Payments Readiness Index (MPRI).

Fraud Report

Partly because debit card use in Canada is among the world’s highest, payment card fraud in Canada is relatively high. When the major credit card schemes began migrating to EMV chip and PIN systems, Interac was slow to catch on since debit cards were always perceived to be more secure. However, fraudsters caught on to this and began targeting debit cards.

After the rollout of EMV, online fraud grew from 31% of the total in 2008 to over 64% today. In Canada, 3D Secure is mandated to counteract online payment card fraud, but international merchants in particular need to be careful when accepting payments from Canadian-issued cards since they are one of the most commonly targeted by fraudsters.

Canadian E-Commerce in Brief

Pros:

  • The most popular e-commerce market for international merchants
  • Canadians, on average, spend the most time on the internet
  • More than two-thirds of online purchases are cross-border
  • High mobile penetration and m-commerce acceptance

Cons:

  • Relatively low growth rate
  • Highly competitive market for international merchants
  • High payment card fraud rates

The interesting thing about Canadian consumers is how readily they will purchase from an international merchant. Lower prices and better selection will always trump most Canadians’ desire to purchase from a domestic retailer. Canadian consumers even buy from Amazon.com 2.5 times more often than they do from Amazon.ca, the company’s Canadian arm.

One of the world’s largest countries with a highly mature online retail sector, Canada is a seller’s market wherever you may be located. Though it is competitive, it’s relatively easy to begin selling into the country and, with its strong economy and steady e-commerce growth, Canada could serve as a low-risk, long-term investment with a steady return to help you fund future international expansions.

Expanding into a new international market is a risky venture but a very rewarding one if done right. For the latest information about how you can build and maintain a strong e-commerce enterprise and keep it compatible with legislation and buying habits at home and abroad, subscribe to the DalPay Blog and follow us on Facebook, Twitter and LinkedIn for the latest industry news.

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Everything You Need to Know about Selling in Turkey

With one foot in Europe and the other in Asia, Turkey is at the crossroads of the world and has historically been a beacon of commerce. That fact now extends into e-commerce, with young people in Turkey today being the first generation to grow up primarily in cities and with regular access to computers and mobile devices.

As the Turkish population grows and becomes more technologically literate, the e-commerce sector is expected to grow by 107 percent and smartphone penetration by 124.4 percent by 2017. For those of you thinking about taking part in this growth, we’re going to take a closer look at e-commerce in Turkey and how you can benefit from it.

 

Turkey

In the Everything You Need to Know series, we take a look at a specific e-commerce market to help you decide whether you should expand online sales across borders. As a provider of comprehensive payment processing services, we at DalPay specialise in cross-border commerce and have first-hand experience facilitating business in over one hundred markets worldwide.

Unless otherwise noted, figures in this article are sourced from:

Turkey has always been one of the great trading centres of the world. At the boundary between Europe and Asia, Turkey’s largest city, Istanbul, has historically been revered as a global centre of commerce. It’s interesting to note that, of the two primary sources for this article, one (The Paypers) categorises Turkey in Asia/Pacific and the other (Ecommerce News) considers it a part of Europe – the reality being that both are true.

Today, Turkey has one of the fastest growing e-commerce sectors in the world. There are three main factors encouraging this growth: the high credit and debit card penetration, the popularity of social networks (Turkey has the fourth-largest Facebook population in the world) and the maturity of the country’s infrastructure, particularly in comparison to its neighbours in Eastern Europe and MENA.

Quick Figures

  • Total population: 75.5 million
  • Internet penetration: 48.9% (37 million)
  • Mobile penetration: 93%
  • Online shoppers: 10 million (18% of population over 14)
  • E-commerce sales: TRY 35 billion (EUR 12.5 billion)
  • M-commerce sales: TRY 2.1 billion (6% of total online sales)
  • E-commerce annual growth rate: 31.5%

While e-commerce in Turkey remains in its infancy, currently only accounting for 0.8 percent of retail sales and still dominated by domestic merchants, there are some promising local conditions which make it an attractive market for international investment. With a low returns rate, high payment card penetration and strong physical infrastructure, the value of cross-border transactions surpassed EUR 1 billion in 2013 and continues to grow by a third year-over-year as international merchants begin to see the growth potential of selling in Turkey.

What You Need to Know

The effects of internet penetration

Turkey’s e-commerce market has grown in proportion with its internet penetration level. As of 2013, just shy of half of the population was online, placing Turkey among the top 20 countries by total internet users, making it one of the emerging markets with the highest e-commerce potential. With an e-commerce penetration of 15% and internet penetration growing rapidly, there is still a wide gap to be filled by new market entrants in online retail.

Much of the growth in online shopping can be credited to the high level of mobile penetration. In Turkey’s payment landscape, mobile is seen as a major channel for online retail and customer interaction and, according to a report from ING, Turkey is the leading European country in terms of mobile banking adoption, with 49% of internet users doing their banking on their phones.

Top e-commerce categories

According to the Turkish Statistical Institute, 24.8% of all internet users aged 16-74 in Turkey bought goods and services online, with almost half of those people having purchased clothes and sporting goods. In terms of total sales, Turkey’s e-commerce market is still dominated by items whose quality and content are easy to determine, such as books and media products. Other leading product categories include consumer electronics and houseware, and home furnishings.

Among the top e-commerce companies in Turkey are Markafoni.com and Trendyol.com, both of which represent the growing popularity of the new trend of private shopping. Investors, both local and foreign, have taken a strong interest in this new local shopping habit, where consumers purchase a membership for an e-commerce site which gives them exclusive access to that store.

Preferred payment methods

In the majority of countries, credit cards remain the most popular method of online payment, but this is doubly true in Turkey where they account for 90% of all e-commerce transactions, with the small remainder shared by cash-on-delivery, e-wallets and bank transfers. Therefore it’s crucial for merchants looking to expand their online business into Turkey to be able to accept credit card payments from local shoppers.

Merchants also need to be prepared to provide rapid delivery, as Turkish consumers have a low tolerance for shipping times, in many cases expecting their packages to arrive within 4 days of purchase, faster than the European average of 6-7 days.

Legality

International merchants planning to expand their e-commerce operations into Turkey will have to familiarise themselves with local legislation. For example, a special license is required to import mobile phones into Turkey, and certain cosmetic products, including perfumes, powders and toiletries, are on the Turkish no-import list.

Additionally, as of May 2015, e-commerce in Turkey falls under the Law on Electronic Commerce or ECL, which aims to both protect consumers and encourage the acceptance of e-commerce. Many of the provisions should be taken into account when deciding whether to do business in Turkey, such as the consumer’s right to withdraw from any electronic transaction without a face-to-face component within 14 days, with no penalty and no reason necessary.

Turkish E-Commerce in Brief

Pros:

  • Among the fastest-growing e-commerce markets in the world
  • Very high credit card penetration
  • Large social media population
  • Mature physical infrastructure

Cons:

  • Cross-border e-commerce represents a small fraction of the whole
  • Low alternative payments penetration
  • Low tolerance for lengthy delivery times

Turkey is both the bridge between the eastern and western worlds and a powerful commercial hub of its own. Particularly compared to its nearest neighbours in Eastern Europe and MENA, Turkey has a vastly more developed foundation for a strong e-commerce market on which to build, with its high internet and mobile penetration, widespread acceptance of credit cards and mature physical infrastructure.

It can also act as a key launching point into the smaller, more fragmented e-commerce markets in the surrounding areas, as legislative and logistical partnerships can be used to your advantage. Both for the sheer size and growth potential of the market and for the strategic advantage of establishing operations there, Turkey has earned its reputation as a wise investment and one of the most promising emerging e-commerce markets in the world.

Expanding into a new international market is a risky venture but a very rewarding one if done right. For the latest information about how you can build and maintain a strong e-commerce enterprise and keep it compatible with legislation and buying habits at home and abroad, subscribe to the DalPay Blog and follow us on Facebook and Twitter for the latest industry news.

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