Due to its proximity to the U.S., Canada is a natural choice for direct selling companies looking to begin their international expansion journey. The idea of doing business in Canada is attractive for many executives, and for a good reason. On the surface, operating in Canada is not dramatically different than doing business in the United States. Canadian demographics are comparable to the United States’. They share very close statistics to America in terms of religions and ethnicities. English is also one of the country’s official languages, along with French.
The profile of the Canadian shopper is also similar to the American shopper; many Canadian consumers are familiar and even follow American brands — making it easier for businesses to build relationships, connect with consumers and generate buzz. An important Canadian consumers are deal-driven and very price sensitive to price gaps with the United States.
While there are many similarities between doing business in America and Canada, there are also some subtle but critical differences between the two cultures and business environments. These differences include business models, tax structures, cultural diversity, consumer preferences, and logistics (due to the enormity of the country itself). Canada holds the title of being the second-largest nation by landmass and is home to only 36 million people — less than the population of California.
Canada is currently the 10th largest economy in the world.
Five Tips for Canadian Expansion:
1. Set up a Reserve Fund
Expanding to Canada may be more expensive than you think. From finding partners to marketing to logistics, it’s crucial to prepare realistic financial estimates for Canadian expansion. Having a reserve fund that is not earmarked for a specific purpose will enable you to deal with unexpected expenses as well as take advantage of unforeseen opportunities.
2. Localize
Localization is the adaptation of a product or service to meet the needs of a particular language, culture, or desired population’s “look-and-feel.” It is essential to create a shopping experience that is designed for the Canadian shopper. For example, prices should be displayed in Canadian dollars, and include any required duties or taxes. The product display should be filtered by country to reflect only the items that are available to ship to Canada. Localization also applies to the management team. It is beneficial to hire and manage locally with in-country leadership that can bring the “insider” insight into the cultural nuances of the business.
3. Supply Chain
The supply chain in Canada may be less responsive than the US due to the country’s large size and low population density. If you are considering leveraging your existing supply chain assets from the US, you will want to do a careful review of Canadian business fees and taxation to ensure you are making the best possible decisions.
4. Differentiate
Product differentiation enables you to focus consumers’ attention on one or more critical benefits of your brand and products that make it better than other choices. Canadian shoppers do not want your product to be different just for the sake of being different. Instead, consider what matters most to your Canadian customers and let that drive your decisions on how to differentiate. Your product differentiation should arise after carefully researching the competition and should be part of a broader Canadian marketing strategy.
5. Understand the Canadian Consumer
Canadian consumers don’t think and shop in the same ways as their American counterparts. One of the fundamental differences between Canadian and American shoppers is the fact that Canadians tend to be value shoppers, looking for the lowest price or the best deal as opposed to a particular brand. That’s not to imply that American shoppers aren’t searching for the best sale; Canadian consumers have different approaches to finding value. For example, Canadians tend to make an extra effort when it comes to finding the best deals: 87% will stock up on their favorite products when the products are on sale, and 57% go to multiple stores to get the best prices on different items.
International expansion into Canada is sometimes not successful because a business did not understand how to market to consumers who are motivated by different purchasing values. While e-commerce sales are growing significantly, Canadians are still “touch-and-feel” shoppers, finding importance in the face-to-face relationships that go with purchasing a product or service. Canada remains a significant growth opportunity. By understanding the landscape and who your Canadian customers are, you can expand with confidence.
Direct Selling in Canada
Direct selling has a long history of both substantially contributing to the economy, with 1.2 million Canadians involved on the selling side and over 14 million involved as consumers.
CANADIAN DIRECT SELLING STATISTICS
- 200+ companies utilizing a direct selling model in Canada
- 1.2 million independent sales Representatives
- $3.5 billion in annual sales
- $1.21 billion in annual personal revenue to Representatives
- $1.31 billion in national and local taxes paid out annually:
- $886 million in direct tax revenue
- $424 million in indirect and induced tax revenues.
- $7.3 billion total economic impact (direct & indirect benefits)
- Canada is one of 24 countries with sales exceeding one billion US dollars in 2018
- Canada ranks fourteenth globally in direct selling sales in 2018
INDEPENDENT SALES REPRESENTATIVES
- 1.2 million across Canada
- Gender: 82% female; 18% male
- Geographic Split:
- 31% rural
- 36% urban
- 33% suburban
- Age Ranges:
- 18-34 = 29%
- 35-54 = 34%
- 55-64 = 17%
- 65+ = 11%
- Primary Language:
- English is the primary language for 70%
- French for 24%
- Other primary languages include Mandarin, Cantonese, Hindi, Spanish, Italian, German, Punjabi, Arabic, and Portuguese
- Marital Status:
- 70% married/cohabiting
- 19% never married
- 9% are divorced or separated
- 3% widowed
- Charity: 91% of Representives give to charity (compared to a national average of 85%.)
- Education:
- 7% of Representives have graduate or professional degrees
- 25% have undergraduate degrees
- 46% have completed some post-secondary education
- 18% have graduated from high school
- 3% have not graduated from high school
- 95% of Representives would recommend becoming a Representives to others
- 23% have been an Representives for more than 10 years
- Percentage of Representives household income from direct selling:
- 81% derive less than 10%
- 16% derive 10%-49%
- 3% derive 50%+
CUSTOMERS
- Geographic Split:
- Rural (23%)
- Urban (45%)
- Suburban (32%)
- Age Ranges:
- 18-34 = 29%
- 35-49 = 35%
- 50-64 = 26%
- 65+ = 10%
- Top Reasons for Utilizing Direct Selling:
- Product Quality (87%)
- Relationship with Representative (86%)
- Customer Service (67%)
- Brand (54%)
- Convenience (47%)
- Value (53%)
*Statistical information comes from multiple sources including the 2019 Socio-Economic Impact of Direct Selling in Canada.