The Power of Cross-Border Shopping from Canada

With the rise of e-commerce and online shopping, US consumers have had increasing access to Canadian retailers, which was never previously possible, but with this increase in cross-border shopping comes unique situations that need to be solved.

The United States and Canada may share borders, but Canadian retailers provide unique goods, a wide range of products, and sometimes significant savings that many Americans can’t find in the States. No matter where business is happening, having a robust and strategic affiliate marketing program can be the determining factor in catching the attention, and the wallet, of the American consumer.

In September of 2023, we ran a survey of 1,000 American consumers to see how they were shopping across the border from Canada.  Of the 1,000 surveyed, 86% of those shoppers were satisfied with their online Canadian shopping experience. However, as with any global shopping experience, we discovered unique challenges that come with making purchases across the border.

The appeal of Canadian online retailers 

There are many reasons why an American shopper might turn to a Canadian retailer, but one of the primary reasons is the favorable exchange rate between the US dollar (USD) and the Canadian dollar (CAD). Whether it be perception or reality, consumers enjoy seeing the lower price on their bank statement post-checkout, giving them a sense of a great deal or, in the case of products being less expensive in Canada, genuine cost-savings.

• 90% of consumers listed exchange rates and shipping costs each play a factor when deciding to shop from a Canadian store.

Another key reason why some Americans choose to shop with Canadian online retailers is that they often carry products that may not be readily available in the United States. This includes Canadian-specific brands, cultural items, and even products from other parts of the world that are easier to find in Canada.

Making the most of cross-border shopping

American consumers are making the most of cross-border shopping, across verticals and industries. Data from the Rakuten Advertising Canada network shows that our Canadian affiliate programs are getting a higher percentage of traffic and orders from the United States year-over-year.

The pandemic reduced the amount of cross-border shopping overall, but 2021 saw a boost due to the pent-up demand for Canadian goods, leading to a significantly higher rate of Canadian goods flowing into the US. The time is now to invest in Canadian affiliate programs and capture this growth opportunity.

Cross-border shopping was up from 2020 when under 6% of total sales were from outside of Canada. Since the borders reopened, we’ve seen cross-border shopping reduce, but not back to pre-pandemic levels. This leads us to believe shoppers missed their Canadian products in 2020, leading them to over-purchase them in 2021, and are now settling into a new normal of purchasing items from up North. 

Top cross-border shopping challenges (and how to remedy them!)

Shipping costs and delays:

While the appeal of Canadian online shopping is strong, American consumers often face challenges related to shipping costs and delays. Shipping fees can sometimes be substantial, and customs procedures may lead to longer delivery times. To combat this, consider partnering with a content or reward site to offset shipping costs and boost incentives to shop on your site. 

Customs, duties, and taxes:

When shopping from Canadian online stores, Americans need to be aware of potential customs, duties, and taxes. Some items may incur additional charges when crossing the border, which can vary depending on the item’s value and type. Researching potential costs beforehand can help avoid surprises. If you’re a retailer, be upfront about extra fees before letting your consumers get to the cart screen. Nothing turns off consumers like unexpected prices at the payment screen due to fees, taxes, and other added costs.

Returns and exchanges: 

While returns and exchanges can be cumbersome no matter the region, it’s arguably more complicated when shopping cross-border. Of our surveyed consumers, 26% said they have never tried to return something to Canada, but of those that have returned items, only 21% rated the experience as Exceptional. (Keep in mind, when asked the same questions about returns handled in the U.S., only 25% rated that experience as Exceptional.) Regardless of where consumers are shopping, there is still some work that can be done to improve the return and exchange process.

Improving cross-border shopping: from the shopping experts

Current cross-border consumers suggested a few ways Canadian companies can help make the purchasing process easier:

• If you have products that appeal to American consumers, promote them! Add affiliate marketing into your existing strategy by partnering with content sites. Partner with sites that feature Canadian brands to bring increased attention, boost brand awareness, and generate sales.
• Show the prices in both American and Canadian dollars, especially if their IP address shows that they are shopping from the US.
• Ensure you’re being clear with exchange rates and shipping. Help your shoppers out by listing extra fees before getting to the cart. Help them make their purchase (and earn your share) by helping them avoid unexpected prices at the payment screen due to fees, taxes, etc.
• Consider partnering with a cashback or coupon site to give shoppers the extra incentive to check out, especially if your product has a high shipping cost or incurs duties.
• Consider having free shipping or discounted shipping as an option, even if it is at a spend threshold.
• Crucially, be sure to have a clear and easy return policy for U.S. shoppers. They’ll be more likely to shop, and recommend your brand, if they feel like shopping with your company is a breeze.

Cross-border shopping from online stores in Canada has become a popular option for American consumers, offering a diverse range of products and potential cost savings. However, it’s essential to be aware of the challenges, such as shipping costs, customs duties, and return policies. With careful planning and research, and the help of affiliate marketing, American shoppers can make the most of their cross-border shopping experiences and enjoy the unique offerings of Canadian online retailers.