Direct-to-consumer brands dip their toes in Canada as a testing ground before expanding abroad to Europe and Asia.

WHAT HAPPENED: Digitally-native brands including Allbirds, SmileDirectClub and Thinx began their international expansion in Canada, where they can glean valuable insights before entering less familiar foreign markets.

Why it matters

  • Both the saturation of digitally-native brands and the inherent limitations of selling online only continue to push consumer brands to locate new avenues for growth. For many, this means striking a multi-channel strategy that combines ecommerce, wholesale and owned retail—but increasingly, U.S. brands are also looking to foreign markets. Founded in 2014, SmileDirectClub has since entered 206 stores through wholesale deals—in 2018, it opened its first owned stores (SmileShops) in Canada, with plans to grow this footprint to 20 by May 2019 and then expand to two more foreign countries by the end of the year. Thinx will debut its second international wholesale partnership with Drake General store in Canada in February 2019, and Allbirds opened a pop-up in Toronto in 2018, with plans to establish permanent owned retail in the country.
  • Canada is a relatively safe testing ground for international expansion, which makes sense for brands just starting to move beyond the U.S., but can also somewhat limiting to their international development. Establishing logistics and brand resonance in a new place is culture-specific, and Canada’s similarities to the U.S. as a largely English-speaking market located directly next door make it an easier market than most. Still, while directly expanding to Europe or Asia might have a steeper learning curve, starting with Canada can give brands a sense of what they need to prepare for in the future, whether in terms of fulfillment needs, consumer makeup, retail culture or national tax laws. This can be a big hurdle for companies, regardless of their age—Levi Strauss & Co., which announced last week that it plans to go public, is on the quest to become a “global lifestyle brand” and has its sights set on the Chinese market, which accounted for a mere 3% of 2018 sales. Casper, on the other hand, began selling in Canada in 2014—the same year it launched—which it said helped its expansion to Germany, Austria, Switzerland and the UK in 2016.