06/08/2016 11:03 EDT | Updated 06/09/2017 05:12 EDT

The Economic Tide Makes It Right For Canadian SMBs To Venture Online

In Canada, less than 20 per cent of small and medium businesses (SMBs) have an online retail presence. The reality is that many SMBs are so busy working to keep their businesses running that they have only ever given a brief thought to going online. It's a "nice-to-have," but not a "must-have."


This week Statistics Canada released a report that showed exports were the largest contributor to real GDP growth in Canada in the first quarter of 2016. This signals that businesses are taking advantage of global markets while our economy fluctuates. While small business owners might feel at a disadvantage when it comes to accessing international markets, they can take comfort in knowing that technology and innovation have made it quite simple to expand beyond existing customer bases. The international e-commerce opportunity is one that Canadian small businesses should be taking full advantage of, particularly in order to reach new markets and kick-start growth at a time when sales at home might be lagging.

In Canada, less than 20 per cent of small and medium businesses (SMBs) have an online retail presence. The reality is that many SMBs are so busy working to keep their businesses running that they have only ever given a brief thought to going online. It's a "nice-to-have," but not a "must-have." However, with an economy at home that is soft, and as borders disappear and tech-savvy millennials become more influential, online retail is quickly becoming a business necessity. Industry experts project global e-commerce sales will surpass $3.5 trillion within the next five years. Now is the time to take advantage of technology to reach new customers.

The motivation for SMBs to get online and look past country borders can be seen in the data. An American Express report notes that over the last 12 months, the retail sector in Canada nearly doubled their international presence. They attributed this to an increase in online shopping (45 per cent in 2016 vs. 27 per cent in 2015). And, we know that specific spending by U.S. shoppers using PayPal on Canadian websites jumped 20 per cent in 2015.

PayPal's global consumer research also tells us that 28 per cent of Americans claim to have cross-border shopped online. Canada trails only China as the most prominent destinations for American online shoppers. The top three reasons Americans cite for cross-border shopping are: better prices, the ability to discover new and interesting products, and access to items not available in the U.S. With the Canadian economy continuing to struggle, there is huge potential to make the best of this situation by making products available online to global customers, and specifically, to our neighbours to the south.

Currently, Canadian SMBs are losing revenue to competing markets because they are simply not present in the channels where today's consumers are -- online and on mobile. Our data shows that, among U.S. millennials, 25 per cent claim that their cross-border transactions are made via their mobile smartphone, with another 12 per cent made via a tablet and six per cent made via another device. Clearly, Canadian merchants looking to attract this increasingly influential demographic should both ensure that e-commerce is a priority, and that retail websites are optimized for mobile use.

The good news is that setting up a website or using an online marketplace is relatively easy, and, as many Canadian business owners have discovered, the investment in getting online is often quickly offset by the increase in sales.

When planning an e-commerce experience, Canadian retailers should consider the particular assurances U.S. customers with spending power are looking for when they purchase online -- such as the clarity of all shipping and duty charges, a clear return policy, the ability to pay in U.S. dollars, and that products being sold are authentically made in Canada. Being "Made in Canada" should not be undervalued, as many Americans have a high regard for the reliability and quality of Canadian products.

Another aspect of e-commerce to consider when setting up an online shop is that customers are still wary of the perceived risks of online transactions. Among the top 10 barriers to e-commerce listed by American shoppers, several could be resolved by engaging a secure global partner who can guarantee the ease of use and protection for both the seller and the buyer (concerns about identity theft/fraud, insufficient support and security of financial or personal details, and the lack of buyer protection/insurance).

Overall, the motivations to get online are clear, and the solutions and support are readily available. In April, the threshold level for Americans paying duty on imported goods was raised from USD200 to USD800. This increase, and the present dip in our economy, should be a call to action for Canadian small businesses to look beyond their borders. They simply cannot afford to overlook the potential rewards of selling online and internationally, especially when the solution is so simple. Getting online to reach new global customers could be just the lift Canadian SMBs need, and it's just a few clicks away.

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