Canada Cross border | Pitney Bowes

Relations between the US and Canada hit an all-time low in 2020, but there are encouraging signs that the friendship is on the mend. In fact, it’s actually a good time to be a US retailer courting the Canadian market. In our latest BOXpoll cross-border survey of 1,000 Canadians, consumers 18+ years old told us that 41% of their total online purchases are from US retailers.

This is up 11% points vs. pre-pandemic—as consumers’ inability to shop in-store and travel has exacerbated the desire to purchase online, where the sheer number of US ecommerce brands hold an inherent advantage over a smaller cohort of native Canadian online brands.
77% of Canadian consumers have either a positive or neutral perception of US brands, a leading indicator that cross-border purchases will continue to grow. Check out our new post on US brand perceptions & opportunities to see where Canada stacks up versus other key markets.
This trend is bolstered by a strong Canadian dollar at a near 3 year high, meaning Canadian consumers – already predisposed to buy from the US - can buy US goods at an even lower price.

What are Canadian consumers looking for when shopping US brands?

41% of Canadians believe that US-based brands offer better pricing than Canada-based brands (while only 22% disagree).
- In-fact, higher-spending consumers (parents and those with higher incomes) are particularly inclined to think US prices are better.
  - Parents at 48% vs. non-parents at 39%
  - High income ($50k-100k+ CAD) at 43% vs. lower-income (<$50k CAD) at 36%

Nearly one-third of Canadians (29%) in general, perceive US brands to be more desirable (while about the same number, 28%, disagree).

1 in 5 (20%) believe that US product quality is better than Canada-based brands (but nearly twice as many, 38%, disagree).
- Younger Canadians (ages 18-34 and 35-54) are more likely than older Canadians (age 55+) to perceive US brands as being better quality (25% vs. 13%) and more desirable overall (33% average vs. 24%).

43% of Canadians overall believe that Canadians living closer to the US border are more like American consumers—meaning that products, offers, and promotions geared toward Americans are more likely to appeal to those living in Toronto and other metro areas closest to the US.
- That seems to be an unbiased perspective, given all Canadian respondents felt about the same way (proportion of respondents agreeing with the sentiment ranged between 39-45% among geographic areas surveyed).

Don’t pour maple syrup on your apple pie just yet…Canadians also have negative perceptions that pose potential challenges to US brands.

Enviro-woke-skeptics: 42% believe American brands aren't as socially or environmentally conscious as they claim to be and 39% say Canadians are starting to buy more frequently from other countries than the US due to American politics and culture.
Buyers’ remorse: Only 19% say it’s easy to return items purchased from US brands.
USMC-huh? When asked whether the US-Mexico-Canada Agreement (USMCA, the trade agreement replacing NAFTA that raised the minimum threshold—or de minimis—for duties to $150 CAD as of July 2020) made consumers more likely to buy from US brands, only 16% agreed while more than half (54%) had no opinion. This indicates that US retailers should remind shoppers that orders under $150 CAD are duty-free, and that this is a new development for those who may not have purchased from US brands recently, and that prepaid duties (DDP incoterms) carry no risk to the consumer to pay upon delivery.
- If it's any indication that consumers could use a reminder, Google Trends indicates that Canadian searches for “USMCA” have been non-existent since the legislation was drafted in the fall of 2018.

Overall, the Canadian market presents clear opportunities for differentiated and well-marketed US brands that are looking to expand their addressable markets in pragmatic ways. We’ll have more coverage in upcoming posts about how demographic and regional differences in Canada can create opportunities for segmented and targeted approaches.

BOXpollTM by Pitney Bowes, a weekly consumer survey on current events, culture,and ecommerce logistics. Conducted by Pitney Bowes with Morning Consult //2094 US consumers surveyed January 2021.© Copyright Pitney Bowes Inc.