How to Navigate the Canadian Marketplace as a US Company — Advice from DCL Logistics’ Partner Company, Go Direct
Go Direct is a close partner of DCL Logistics. Both 3PLs work together to leverage each other’s expertise in order to facilitate fulfillment options for our clients on either side of the Canada/US border. We spoke with President of Go Direct, Kellie Lefavie about the Canadian market. She gave great advice for companies looking to move into international distribution from the US to Canada.
Navigating the Canadian Market
Canada has two official languages—and there are many rules and regulations that correspond. Especially in Quebec, a brand or manufacturer needs to be compliant in packaging for both languages. Kellie mentioned “We actually have a language police believe it or not, in Quebec. So brands need to know the rules in order to uphold them and get on shelves in that province.”
Finding product fit can be different. Our culture is similar to the US in that it is a very multicultural country. Kellie adds, “We really embrace and promote multiculturalism. We’re not the great melting pot though. We are a country built on immigration, so there is high diversity among products that reflects the variance of ethnicities and a very diverse population.” Based on that, many companies are potentially going to be marketing their products to a more specific, possibly small group of customers.
Delivery and distribution requires a knowledgeable strategy. Managing transportation is a challenge in Canada. It’s physically a very large country, in terms of distance and size, but the population is sparse in between it’s larger metropolitan areas. Kellie explains, “A lot of our customers struggle with delivery timelines. Because of our population clusters there are two main pockets where products are distributed and not a lot in between. In the US, you still have a significant population within the central US where it would make sense to actually have a facility, or house product. In Canada there are big populations on both coasts and not a lot in between. It forces us to do a lot of understanding true costs, and strategizing points of distribution. It can be a moving target to maximize time efficiencies and mitigate cost.”
There are also extreme weather conditions, mostly in winter. With these layers of physical factors, moving things around is a unique complexity that is best managed by regional experts.
Benefits of Working with a Canadian 3PL
There are many aspects of international distribution that need special attention—and when done correctly, lead to smoother operations and ultimately greater customer satisfaction.
One is timing. If you can work with a 3PL that has regional distribution, you will be better able to meet customer demand in a relatively timely manner. The same simplicity and timeliness can be applied to returns management.
Cost is a big factor. Taxes and duties are very important and sometimes hard to understand. Transportation costs can also grow exponentially, when moving products a long distance, or across the border. Kellie says, “I have to say it’s never fun receiving the bill from FedEx a month later with an extra $30 or $50 in incremental charges. So from a brand experience or a customer experience we can help avoid that.”
Knowing the rules is imperative. It’s daunting to understand the appropriate government regulations and requirements for any number of products. Kellie says, “For example, if you have a nutraceutical product and you’re shipping into Canada out of the US, it is required to ship it into a nutraceutical licensed facility. That is something Go Direct does. Some products need a specific landing point here in Canada before they can be pushed out into the Canadian marketplace.”
And very importantly, exchange rates for customers. From a cost and pricing strategy standpoint, companies need to know how their product is received in the Canadian marketplace based on the exchange rate. Kellie says, “We did a small focus group for a client, and asked what are the barriers for you buying products out of the US—one of the biggest was conversion to the US dollar. Oftentimes the perception for Canadians is that it is expensive to buy directly from the US because of the exchange rate.” The best practice is to have a transparent exchange or conversion for your customers to see what your product is in Canadian dollars. If you can’t have a Canadian website, at least give your customers a clear picture of what they are paying when they are buying your product.
Steps to Know You’re Ready to Ship into Canada
Know Your Market
Get clear on your priorities and your focus. Be specific about how you set up your supply chain, where your investment dollars are being spent, and what marketing efforts you’re putting time into. Often startups are operating on very lean and limited resources. Knowing your market is the first step to maximizing the effectiveness of your team and capacity.
When you begin looking to expand distribution to a new country, look closely at your growth pattern to better understand where there’s market penetration and revenue streams within those markets. Are you clear that this is the right market? Is it a profitable market?
Kellie says, “When you really know your market, you should have clarity on which channels you’ll get the biggest bang for your buck. Is it direct-to-consumer first and retail next, or a combination of the two, or vice versa? Do you have a solid understanding of who your biggest retailers are going to be? Make sure you truly understand who’s buying your product, and then determine the best vehicle to reach those consumers.”
Understand the Requirements
It’s important to understand how feasible it is for your company to facilitate execution of the product in a new market. Kellie explains, “Understanding the requirements needed to engage with your consumer means everything from having a solid marketing plan, to having a good handle on government regulations for that product within that vertical.”
Plan for the ways you may need to change your product, or packaging. Customers have different needs in different regions and countries. Do you need to update the language on your packaging, or instructions? Is your product a cultural fit in this new region? You want to make adjustments before you run into problems—anticipating changes that need to be made will save you a lot of effort.
Figure out if your supply chain is set up to easily execute and sustain distribution into a new region. It’s common for startups to start out successfully, but then quickly sell out leaving a huge lag in the marketplace as they replenish their stock. This causes a loss of momentum and a customer who likely experiences unreliable engagement.
Moving products across the border is another set of requirements to research. Thorough due diligence is important, and a regional 3PL can help make sure you don’t miss any requirements needed, and provide cost effective and timely solutions. “For example,” Kellie says, “we had a company who needed a DIN number (Director Identification Number) but didn’t realize until it was too late. It’s great that they did their homework and they know they have a captivated audience that we believe is right for our product, but they had a lag in getting into the market because of regulations.”
Define Scalability
If you have a solid business you will more easily be able to see where and how your company can scale. To really understand the potential growth of your product and your company, is to understand where you’re going to need support, what shape that support needs to take. After you get clarity on the qualifying questions around the market and execution, the next step is finding a level of support that will drive your success forward.
“Picking the appropriate partner who can facilitate scalability is going to be a differentiator. I think that choice has to do with industry knowledge—you need regional market knowledge, knowledge within the vertical, and ultimately quality and accuracy. You need a partner with all the proper accreditation to satisfy the regulation and requirements, who has the proven track record of being able to understand how to expedite the fulfillment piece, or the logistics piece, or the shipment piece, to satisfy your customer expectation. And last, pick a partner who can add value back on insights and analytics, so that you become more efficient and effective within that space.”
About Working with Go Direct and DCL
Go Direct and DCL offer very similar and complementary services. We share a common set of values and viewpoints on how we operate. Both organizations believe in a forward-thinking, client-first approach that is driven by industry knowledge and leadership, while maintaining focus on quality culture and sustainability.
If you are a company working with DCL to manage your fulfillment and logistics, your DCL account manager can help create a seamless introduction into the Canadian marketplace, by leveraging our partnership with Go Direct. It can be set up so that Go Direct is an invisible Canadian entity for DCL clients who want to distribute into Canada. Your business will still be fully managed by DCL, but Go Direct facilitates the Canadian fulfillment and logistics piece on your behalf. From your perspective there’s almost no difference, ultimately Go Direct becomes another extension, or another warehouse.
To learn more about DCL Logistics’ services we’d love to hear from you. The DCL team has a robust network of resources and partner companies to help your business scale and grow.
Tags: International Shipping Articles, What is a 3PL?
