Our Intelligence Report: Omnichannel Retail | Canada found Canadian retailers’ e-commerce efforts to lag behind those in the U.K and U.S. Part of that can be attributed to an expensive postal system making it difficult for brands to provide timely shipping at a reasonable cost. Canada’s postal service has been described as a ribbon running from Halifax to Vancouver. The further the shipping destination from the ribbon, the higher the cost. In contrast, the U.S. postal system has several hubs that serve as a base for nearby areas.
The hurdle is large enough that retailers have adopted a strategy of focusing on major cities, or those close to the ribbon. For example, many Canadian zipcodes are ineligible for two-day shipping from Amazon Prime. Amazon has expanded the feature since its entry in Canada, when it offered the service to select population centers. And although Sephora ships to Canada, it does not offer Flash (unlimited two-day delivery for $25 per year) to the region.
All of that might change soon, as foreign and domestic retailers compete for Canadians’ loonies. Already, Lowe’s is offering free shipping for items eligible for parcel post. Amazon will especially make a mark in Canadian e-commerce; if it expands its fulfillment offerings in Canada, others will need to do so as well.