Canada by the Numbers: Top Reasons to Expand Your Customer Base North

Looking to increase your customer base? Expanding to new markets and even new countries is a common plan. As a US based business, Canada is an obvious place to look, because of its close proximity and the many cultural similarities we share.  In addition, here are a few facts to keep in mind as you consider whether or not Canada might be a logical source for new customers:

32 million potential customers: The population of Canada is roughly 32 million people, about 90 percent of who live within 160 miles of the U.S. border.

E-Commerce has taken Canada by storm. Internet shopping was slow to hit Canada, but once it did, it took off with a vengeance.  According to Statistics Canada, Canadians placed more than 95 million online orders during 2009, which marked a 32 percent increase over 2007 levels.  The study also found that the average value per order during 2009 was $158.

Comparative strength of Canadian economy. Canada was able to avoid the direct recessionary hit that slammed other nations, including the U.S.  As a result, the Canadian economy avoided the dramatic drop in employment, output and corporate profitability that the U.S. experienced.  Although the Conference Board of Canada has raised flags about the pace of Canada’s post-recession recovery, the country has recovered much of its financial footing.

Canadians have an Affinity for U.S. Goods: Canadian consumers have long been drawn to the wide selections and desirable status of U.S. brands.  In fact, when the Canadian dollar – referred to as the loonie – hit parity with its U.S. counterpart in 2007, the result was a surge in cross border sales by Canadian residents hungry for U.S. goods.  By one estimate, U.S. goods and services account for 60 percent of purchases in Canada.

Ease of Doing Business in Canada: According to an analysis by the World Bank, Canada ranks number Seven (out of 183 nations surveyed) with regard to “ease of doing business.  Criteria included in arriving at that ranking include:  Starting a Business, Trading across Borders, Enforcing Contracts and Paying Taxes.

More than $1 billion in Goods Cross the Border Every Day: Prior to the recession, the flow of goods between the U.S. and Canada averaged about $580 billion per year – roughly $1.6 billion every day.  The recession saw a drop in trade levels by about 30 percent.  However, trade is rebounding strongly, and is on course to return to pre-recession levels in the coming months.

Reduced Corporate Tax Rate Invites Business Expansion: The corporate tax rate in Canada fell from 18 percent to 16.5 percent in January of this year, marking the fourth time that the tax has been cut in as many years.  The tax is scheduled to drop again next year to 15 percent.  When provincial taxes are factored in, the average rate will be 25 percent.  Contrast this to the United States, where the average rate is a world-leading 40 percent (35 percent federal rate plus average 5 percent state rate).

Other U.S. Retailers have Already Taken the Plunge:  Several U.S. retailers including Victoria’s Secret, Crate and Barrel, Anthropologie, Bath and Body Works, Brooks Brothers and Loews have already opened stores in Canada.  Other stores have announced plans to head north, including Target, J. Crew and Marshall’s.