The most active groups of Canadians who have the highest response to catalogers are between the ages of 35 and 55. They like to purchase men’s apparel, women’s casual shoes, and home d?cor, according to a recent research project Canada Post did with NPD Group titled, “What Canadians Want û A study into direct buying behaviour, July 2007.”
In 2006, retailers in Canada sold $391.4 billion worth of goods, up 6.4 percent from 2005 û the highest in nine years.
“The best way to attract Canadians’ attention and convert them is really no secret to any savvy direct marketer û figure out what your opportunity looks like in Canada, target your audience and offer them products and services that are relevant to them,” advised Paulina Sazon, direct retail strategist in the direct marketing department of the Canada Post. “The key here is really to leverage what you have in terms of infrastructure and marketing tools and just tailor them to your new audience.”
The most active online shoppers are 25 to 34 and buy small electronics, men’s clothing and skincare products.
Consumers were asked, “What US retailers would you like online access to?” Across the categories of apparel, footwear, health and beauty, and home d?cor, the top retailers that came back were Target, Clarks, Bath & Body Works, and Bed, Bath & Beyond.
The categories that hold the most potential for US mailers are women’s apparel, home d?cor driven by small appliances and electronics, and skincare products.
There are over 32 million Canadians and 80 percent of them live within 60 miles of the US border, so the potential to sell in this market is great.
One of the leading misconceptions that US mailers have of Canada is that they can enter the market with the same message, the same marketing tools and expect the same type of response they would receive from an American consumer.
“It is true that Canadians and Americans are alike – we consume the same media you do and we want access to the same brands,” said Sazon. “However, in order to convert more Canadian shoppers, US retailers have to offer a local shopping experience in order to achieve a higher response rate. This includes pricing in Canadian dollars, no CODs at the door and use of Canadian English.”
US mailers’ misconceptions
US retailers should think back to when they first launched their businesses in the US. This would be a similar approach to Canada, or any international market.
“You are introducing a new brand to a market and it therefore takes time to build that trust factor with new customers,” Sazon said. “In Canada, a typical response rate to a mail campaign would be over four weeks. It would not be uncommon to mail to a prospect three times before conversion. But when you do convert a Canadian shopper, our average order value tends to be higher û [on average] 20 percent more than American purchasers.”
Canada has a higher Internet penetration rate than the US. Internet shopping is still a growing segment of retail there.
“The good news is that we are picking up steam; our e-commerce spend is set to double to $16B by 2009; Canadian online shoppers spend between 23 and 83 percent more than average Canadian shoppers; and with the rise of the Canadian dollar, the border is blurring between US and Canada and many Canadian shoppers are looking southbound to make their purchases,” Sazon said.
Challenges American marketers may face
With all the US retailers that Canada Post consults, prospecting is the number one challenge, Sozan confirmed.
“Finding Canadian direct buyers who match their customer profile, lack of list availability and cost of list rentals and mailing are the main concerns,” she said. Understanding how to assess duty and taxes, collect it, and ensure timely delivery to the Canadian consumer goes hand in hand with prospecting.
“In addition, most US Web sites cannot accept a foreign address, never mind foreign currency,” she continued. “US retailers who look to Canada as the first step in international expansion have to compete with other domestic initiatives for IT resources.”
Steps to take when mailing to Canada
Research is key. It is important to do some research and determine your market size. Speak to other US mailers already in Canada or consult with a list broker like Abacus Canada or Cornerstone.
“Manage your customer experience,” Sazon said.
Ensure that your marketing message is relevant to your target audience, that the product you are selling is available to Canadian consumers and that your customer is not paying COD at the door.
It is important to consider timing, as it takes longer to move things across the border.
“US retailers should think of Canada as an investment,” Sazon urged. “If your first mailing produces less than stellar results, don’t take that as a market indicator. It can take more time to convert a Canadian, but higher AOVs and frequency of purchases can potentially offset those investments.”
Borderfree û Borderfree is a service provided by Canada Post that enables US retailers to accept payment in Canadian dollars as well as quotes of duties and taxes at the time of purchase. Through a white-labeled payment portal, Borderfree does customs brokerage and clearance leveraging Canada Post’s postal network, delivering to over 14 million addresses across Canada.
Canada Post recently introduced Canada’s first customer modeling tool specifically for the catalog market. The Snapshot segmentation system segments 12.5 million households into five major buying groups and over 150 subgroups to assist US mailers in determining market size, customer profile and circulation plans.
Canada Post also recently launched a co-marketing catalog, The Lookbook Catalog, that offers US mailers an opportunity to message more than 1 million Canadians. This catalog is targeted to participating mailers’ profiles and offers English and French circulation both in print and on the Web. Past participants include Eddie Bauer, Hammacher Schlemmer, Brookstone, LUSH, Cabelas, and Naturalizer.