Canadian e‑commerce revenue hit $59.2 billion CAD in 2025, but growth slowed to just 2.8 percent — a steep drop from 27.7 percent the year before. Meanwhile, global e‑commerce grew at roughly 7 percent, and China’s sales jumped nearly 11 percent. Canada’s share of the $8.86 trillion CAD global market now sits at about 0.67 percent. That gap tells you something about the specific pressures facing Canadian online sellers right now.
Disclosure: Some links on this page are affiliate links. If you make a purchase through them, Britwealth may earn a commission at no extra cost to you. We only include products and services that are relevant to the topic.
This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
These numbers aren’t random. They point to three interconnected problems: a sudden loss of export momentum, aging technology that can’t keep up, and supply chains that buckle under pressure. Canadian e‑commerce businesses lost almost all the momentum the rest of the industry has continued. If you run an online store in Canada, the challenges aren’t just about selling more — they’re about staying operational while the ground shifts beneath you. Here’s what you actually need to know.
What This Article Covers: Key Takeaways and the Core Problem
The central issue here is competitive erosion — the slow but measurable loss of market position, operational capacity, and business confidence.
What I tend to notice is that many business owners focus on marketing and customer acquisition while the operational side quietly falls behind. That imbalance is what makes the numbers above so hard to reverse. For a deeper look at how broader economic pressures are reshaping the landscape, you can read about how inflation affects small businesses in Canada.
What Changes When These Challenges Hit
The most immediate impact of the U.S. trade policy shift was a surge in costs and duties. Packages that previously crossed the border duty‑free now faced tariffs of up to 35 percent. That alone would be painful, but the real disruption is in the paperwork. The removal of the de minimis exemption turned a two‑minute packing process into a roughly 20‑minute documentation procedure per item. You now need certificates of origin, CUSMA compliance checks, and customs broker involvement for every single package.
For a concrete example: a Toronto‑based manufacturer reduced staff from 17 to 13 and lost nearly 30 percent of sales within six months of the policy change. Vancouver‑based clothing brand Free Label stopped shipping to the U.S. altogether. Fewer than 40 percent of SMEs now view the U.S. as a reliable trading partner, and roughly half of those engaged in U.S. trade are actively looking to diversify toward other markets.
On the technology side, legacy systems cause decreased efficiency and increased error rates. They lack real‑time inventory management, cross‑channel integration, and modern API connectivity. A Toronto‑based retailer called Northern Crown cut order processing time by 30 percent after replacing their 12‑year‑old inventory management system — a clear sign of what’s possible when you address the tech gap. But 45 percent of SMEs are still running systems over seven years old, which means nearly half the market is operating with a built‑in disadvantage.
Where Businesses Get This Wrong
Treating the U.S. Market as a Reliable Default
Many Canadian e‑commerce businesses built their export strategy around the assumption that the U.S. border would remain friction‑free. The removal of the de minimis exemption proved otherwise. What I’d do differently is treat every export market as conditional — have a backup plan for at least one non‑U.S. market before you need it. The businesses that diversified early are the ones still shipping. Those that didn’t are scrambling.
Ignoring the Cost of Legacy Systems
Running a 12‑year‑old inventory system might feel like saving money, but the hidden costs add up. Decreased efficiency, higher error rates, and poor mobile compatibility mean you’re losing orders you don’t even know about. The 45 percent of SMEs still on old systems are effectively subsidising their technology savings with lost revenue. A modern platform like Shopify can handle real‑time inventory, multichannel sales, and payment integration without requiring a full IT overhaul.
Underestimating Last‑Mile Delivery Costs
Canada’s geography creates a unique problem. Urban centres face congestion, while rural routes are long and seasonal weather disrupts schedules. 68 percent of small businesses identify last‑mile delivery costs as a significant concern, yet many treat shipping as a fixed cost rather than a variable one that needs constant optimisation. Walmart Canada’s response — urban micro‑fulfillment centres — shows what a deliberate strategy looks like.
Overlooking Compliance Complexity
Canada’s Anti‑Spam Law (CASL) limits commercial electronic messages. Senders must have express or implied permission, provide identifying information valid for 60 days, and include an obvious unsubscribe mechanism. Many U.S.‑focused businesses overlook this when marketing to Canadian customers. The same applies to PIPEDA compliance for data privacy. A single compliance failure can trigger penalties that wipe out months of profit.
How to Navigate the Current Landscape
Rebuilding Your Export Strategy
The first step is accepting that the U.S. market is no longer a friction‑free zone. If you export to the U.S., you need a customs broker, proper documentation for every shipment, and a pricing model that accounts for tariffs of up to 35 percent. The alternative is to diversify. Roughly half of Canadian businesses engaged in U.S. trade are actively looking for other markets. That shift takes time — start with one new market, research its customs requirements, and test with a small batch before scaling.
Modernising Your Technology Stack
If your inventory system is over seven years old, it’s costing you money. The fix doesn’t have to be expensive. Look for platforms that offer real‑time inventory updates, cross‑channel integration, and API connectivity. The goal is to reduce order processing time and error rates. Northern Crown cut processing time by 30 percent after upgrading — that’s the kind of improvement that pays for the new system within months. For businesses that need help with legal or compliance questions around contracts and vendor agreements, JustAnswer Business Law connects you with qualified lawyers who can review your setup.
Optimising Your Supply Chain
67 percent of Canadian e‑commerce businesses experienced significant supply chain disruptions in the past year. The fix isn’t one thing — it’s a combination of flexible inventory systems, strong relationships with multiple suppliers, and real‑time tracking. Automated reordering systems can help you avoid stockouts during peak seasons. If you’re in a major urban centre, look into micro‑fulfillment options that reduce last‑mile delivery times.
Preparing for Emerging Compliance Requirements
The Competition Bureau’s 2025‑2026 annual plan signals increased enforcement in digital markets, including online marketing and artificial intelligence. That means more scrutiny on pricing practices, data handling, and advertising claims. If you use AI for dynamic pricing or personalised marketing, make sure your practices are documented and defensible. The Bureau is also updating enforcement guidelines to align with new legislation, so staying current matters more than ever.
→ Scroll right to see all columns
| Challenge | Impact | Practical Response |
|---|---|---|
| U.S. trade barriers | Up to 35% tariffs; 20‑minute documentation per item | Diversify export markets; use a customs broker |
| Legacy technology | 45% of SMEs on systems over 7 years old | Upgrade to modern platform with real‑time inventory |
| Supply chain disruptions | 67% affected; 38% longer fulfillment times | Multi‑supplier strategy; automated reordering |
| Last‑mile delivery costs | 68% of small businesses cite as major concern | Micro‑fulfillment centres; negotiate carrier rates |
Frequently Asked Questions
Do I need a separate .ca domain to sell to Canadian customers? ▾
What happens if I don’t comply with Canada’s Anti‑Spam Law? ▾
How do I handle customs documentation for U.S. exports now? ▾
What’s the best way to reduce last‑mile delivery costs in Canada? ▾
Is it worth upgrading my inventory system if it’s still working? ▾
What sectors in Canada use e‑commerce the most? ▾
The Real Cost of Waiting
The businesses that will survive this period aren’t necessarily the biggest — they’re the ones that treat operational resilience as a core function, not an afterthought. The 45 percent of SMEs still on legacy systems are losing ground every month they delay an upgrade. The ones that lost 30 percent of sales after the trade policy shift didn’t see it coming because they hadn’t diversified. The Competition Bureau’s increased focus on digital enforcement means compliance isn’t optional anymore. If this was useful, you might also want to read staying ahead: navigating business tech challenges in Canada.
Remember: this article is general information only. For advice on your specific situation, speak to a qualified professional.
Sources and Further Reading
Ineffective trade policies hinder Canada’s business growth — Explores how trade policy uncertainty affects business planning and investment decisions across Canadian industries.
The future of retail in Canada: surviving and thriving in a digital world — Looks at how Canadian retailers are adapting their digital strategies to compete in a rapidly changing market.
Competition Bureau Canada (2025). 2025‑2026 Annual Plan: Strengthening Competition in a Changing Economy. 🔗
Canadian Federation of Independent Business (2025). Small Business Technology and Supply Chain Survey. 🔗
International Trade Administration (2025). Canada Country Commercial Guide: E‑Commerce. 🔗
