Canada's reliance on the American ecommerce market

If you’re a Canadian brand looking to grow, selling into the U.S. is the obvious next step - perhaps one you’ve already taken. While you’ve planned for all the common challenges of establishing a business presence in the U.S., there’s likely one part of the customer experience that you haven’t thought about yet: cross-border returns. We’ll use this post to explain why solving painful international returns is key to succeeding in the U.S. market.

Why Canadian brands need to tap into the U.S. ecommerce market

It’s no secret that the U.S. is one of the most important ecommerce markets to break into for several reasons:

• The U.S. has one of the world’s strongest economies, with the largest gross domestic product (GDP) at US$19.4 trillion in 2017.

• The U.S. is the largest consumer market in the world and the second-largest e-commerce market.

• The U.S. population is increasing, and disposable income per capita is expected to grow, suggesting that America will generally remain an attractive market in the coming years.

Canada’s ecommerce market is growing rapidly. In late 2019, ecommerce retail trade sales amounted to almost 1.85 billion CAD, and approximately 28.1 million Canadians made purchases online. And these numbers are on the rise.

But the truth is that Canadian ecommerce businesses need an international presence to compete on a global scale. Canadian brands recognize this, which is why Canada is in the top three markets where cross-border shopping is highest. 

Being a neighbor to the U.S., Canada has direct access to one of the most valuable ecommerce markets. But this comes with its own challenges. Namely, how can Canadian brands compete with domestic U.S. brands for the attention of American shoppers? The answer lies in creating a seamless end-to-end customer experience.

Cross-border returns: The missing piece in your U.S. strategy

There’s already a ton of information out there about how Candian brands can sell into the U.S. when it comes to marketing, shipping, and other aspects of ecommerce. But one area that’s not talked about as much is the returns experience.

Cross-border returns are generally challenging, as we learned from our conversations with multiple Candian shoppers. The same challenges apply to Canadian brands trying to penetrate the U.S. market. 

You have to fill out customs forms, generate international return labels, and deal with longer return shipping times - not to mention there’s also increased perceived risk by customers any time they make an international purchase. Unfortunately, most brands aren’t set up to address these obstacles.

Why does this matter? 67% of shoppers check a return policy before making a purchase - a percentage that’s likely even higher when customers make international purchases. This means that your return policy can influence whether or not a customer decides to shop with you. So if Canadian brands want to capture American consumers, they need to provide a top-notch experience from end-to-end - including returns.

To understand this better, put yourself in your customer’s shoes. Let’s say you live in the U.S. but want to purchase something from a Canadian brand. But when you look at their international return policy, you discover that you have to fill out your own custom form, reach out to the support team to access your return label, and can’t even request an exchange. This hassle isn’t worth it, so you just look for a U.S. brand to order from instead.

Making Canadian cross-border returns easy with Loop

That’s why it’s so important to reduce the perceived risk of returns by making the return process as convenient as possible. Some brands try to accomplish this by setting up U.S. warehouses. But this is a temporary solution. These warehouses won’t scale as quickly as you want to grow, are costly for your business, and ultimately don’t provide the best customer experience. 

Instead, Canadian brands need a sustainable, long-term solution if they want to establish an ecommerce presence in America. That’s where Loop comes in. With our new Cross-Border Returns functionality, you’ll be able to generate return labels and customs forms to receive cross-border returns easily. This, in turn, will let your customers ship effortlessly across international borders to drive loyalty, repeat purchases, and create a competitive advantage over your competition.

The returns experience is the last missing piece in your strategy to successfully expand to the U.S. We’re thrilled to be able to support international returns on our platform now. If you’re a Canadian brand wanting to sell into the U.S., sign up for early access to Loop’s Cross-Border Returns functionality.