How the CETA Will Impact eCommerce Relationships Between Canada and Europe

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Valentine Maire

After years of negotiation and a last minute challenge by the Walloons, Canada and the European Union have finally signed the CETA (Canada European Union Comprehensive Economic and Trade Agreement) on October 30th, 2016 in Brussels, Belgium. The deal is supposed to remove tariffs between Canada and the 28 European states, expecting to generate an increase in trade worth $12 billion a year.

You might think that as an online consumer or an online retailer the CETA doesn’t directly concern you. You might want to revisit this thought. In this article, we discuss how much the CETA will impact eCommerce relationship between Canada and Europe.

The Current State of the Canadian and European eCommerce Markets

Canadian eCommerce

The Canadian eCommerce market is booming. In 2015, 78% of Canadians made a purchase online. In the same year, the eCommerce market in Canada has grown by over 15%. While the numbers are still forthcoming, there are indicators that the growth trend is continuing upwards.

European eCommerce

Same growth trend is seen in the EU, with online sales growing by more than 13.3% in 2015, which represents €455.3 billion. Mobile commerce, also called Mcommerce, keeps increasing as more and more Europeans are using their mobile devices to buy online. European eCommerce companies are also investing a lot in supply chain innovations and solutions to improve the customer experience and reduce operating costs.

The impacts of the CETA on the eCommerce market

The CETA has a small but distinct article for online commerce, recognizing "the growing importance of electronic commerce (e-commerce) in the global economy" and agreeing "to promote the development of electronic commerce between them". The provisions include:

Customs duties on electronic deliveries: As part of the elimination of 98% of the tariffs between the EU and Canada, a permanent moratorium is placed on customs duties, fees or charges for digital products transmitted electronically between Canada and the EU. Trust and confidence in electronic commerce: Acknowledging that eCommerce is only possible if consumers are confident that they can transact in a secure manner, laws, regulations and administrative measures for the protection of personal information of users engaged in electronic commerce must be put in place. Dialogue on electronic commerce: Canada and the EU have agreed to maintain a dialogue on challenges raised by electronic commerce. Related issues include the recognition of online identities and electronic signatures; the liability of intermediary suppliers with respect to the transmission or storage of information; the treatment of unsolicited electronic commercial communications (spam), and; the protection of consumers and businesses from online fraud. The potential of eCommerce as a social and economic development tool: This last provision sets the tone for the collaboration between the various countries using terms such as "clarity, transparency and predictability", "interoperability, innovation and competition in facilitating electronic commerce", and " facilitating the use of electronic commerce by small and medium sized enterprises".

Other important aspects include:

Developing international business: The Canadian government and the European Union institutions will support the development of international businesses and help businesses to get the right information and proper tools needed by businesses to expand internationally. eCommerce cross-border opportunities: Canadian online retailers now have access to 28 new countries, which represents up to 400 million potential new clients. In 2015, online sales in Canada represented $28.77 billion. The CETA is a promise of great business opportunities for both Canadian and European online retailers. It also means a larger selection of products and best prices for consumers.

How to successfully plan a cross-border strategy?

A good cross-border strategy presents a huge opportunity for online merchants, but knowing what that entails can be a bit daunting. The following points are ones you need to keep in mind before entering the European or the Canadian market:

Mobile optimization: Over 54% of Europeans are making purchases through mobile devices as well as searching for products. Europe is still the continent with the highest mobile penetration rate, which also happens to be trending in Canada where 16.2% of all Canadian eCommerce purchases in 2015 came from a mobile device. You must have an optimized mobile version of your online store. Multiple languages: With 23 official languages in Europe, your online store will need to be multilingual. EU languages include, but not limited to French, English, Spanish, Italian, and German. If you’re planning to enter the Canadian market, don’t forget that Canada has 2 official languages, French and English. You might need to update your packaging to respect both European and Canadian regulations. Single currency: Good news on this front: even if Canadian retailers can now access 28 new countries, there is a single common currency in the European Union, the euro (€). In Canada, the official currency is the Canadian dollar ($CAD). Shipping transparency: On both sides of the Atlantic Ocean, every shopper deeply care about timely shipping. Indeed, 88% of Germans have said they want to receive comprehensive and transparent information not only during the order process but also afterwards. And 51% of Canadian online shoppers would shop more frequently if shipping were faster. Making sure you have the best shipping partner at your side is imperative for success. European & Canadian online shopping days: It’s time to update your marketing calendar! Black Friday is not the only big online shopping day in Europe. And if the Mother's Day date in Canada is on the second Sunday of May, in France for example, it’s usually on the last Sunday, whereas in Spain, it’s on the first one. So be prepared for several busy seasons! Explore & address cultural differences: Every consumer has specific cultural preferences and expectations when buying online. If French and English online shoppers prefer to pay directly with their credits card, Netherlanders, Germans and Swedish favour money transfers. In Poland, consumers would rather pay in cash or by credit card on delivery. In Canada, shopping behaviors vary by provinces. According to FedEx Express Canada, 75% of Manitobans will shop online for the holiday season, the highest rate in Canada. In comparison, only 22% of Quebecers are planning on shopping online.

Are you planning to enter the European market or the Canadian market? Did you make any change on your online store? Are you afraid of the competition? Share your thoughts and best practices for a successful cross-border strategy implementation.