Traffick - The Business of Search Engines & Web Portals
Blog Categories (aka Tags) Archive of Traffick Articles Our Internet Marketing Consulting Services Contact the Traffickers Traffick RSS Feed

What will it take to move Canadian retail online?

Posted February 16th, 2012 by Andrew Goodman

At an ecommerce industry event recently, I heard some amazing statistics — and amazing, but all-too-familiar, anecdotes — about the sorry state of Canadian etail.

Let’s be clear: the Canadian consumer is at the forefront of the digital lifestyle. On average, more connected, more into online apps, more into searching, more into Facebook and YouTube, more likely to use online banking and other cloud tools, etc.

But one stat that is floating around is that Canadian ecommerce currently makes up little more than 1% of retail in the country, vs. 7% in the U.S.

Anecdotally, leading consultants in things like logistics will speak of their struggles *a decade ago* to convince large retailers to build ecommerce empires around their existing logistics juggernauts and strong brands. One was Sears (at the time); and in the consultant’s words: “they decided to buy Eaton instead.”

Today, Sears Canada (which has made more serious efforts online in recent years) is under threat from Target, so the great news for consumers is that Sears is slashing prices to meet the threat. Great for consumers: bad for Sears.

When will companies across the board begin to realize that their short-term maneuvers in this often-failing sector are no substitute for grabbing the online opportunity and its superior efficiencies?

There are key bright spots. But should Well.ca really have to carry the entire mantle for the notion of a pure play ecommerce startup in Canada?

Long term, it may not matter. Eventually the large US players will simply turn on their ecommerce functionality in Canada and that will presumably take us most of the way.

For the time being, from the consumer standpoint there are many key barriers, as compared with their US counterparts.

  • Amazon is not “the store” here as it is in the US. The offering is very limited. Even with books, inventories are different and people have to wait more than they should.
  • The development of shopping comparison engines and Google offerings & products (back in the day, “Froogle,” today, a variety of takes on Product Search) has hit many roadblocks. In part that’s because merchants have been slow to get on board. It’s a combination of culture and smaller scale, but the culture must be a big part of that. Still, you would think that Google Canada in partnership with their US parent could at some point have taken some of the bigger players (no, I don’t mean Canadian Tire; mostly, I mean US companies operating in Canada) aside, given them featured billing and support so that they showed up all over the place in the product search offerings, enough to send a wake-up call to the other vendors that their competitors are basically running the table out there because they’re the only ones who have bothered to integrate with Google.
  • The opportunity is about 8-12% the size it is in the US. So if you are generous and say that e-commerce as a proportion of retail gets up to 1/3 where it is in the US, you’re talking about a market size maybe 4% of the US. Despite our market in general being reasonably-sized, having that small economic opportunity all spread out across a nation means rather terrible things for the infrastructure and ecosystem. Agencies, infrastructure builders, content providers, and other professionals and tool developers don’t get enough to eat from anything but the largest accounts. Opportunities aren’t chased with gusto. So the end client can’t execute optimally.
  • Offline shopping is very convenient for many Canadians, and possibly even enjoyable. Contrary to popular belief, Canada is more urbanized on the whole than the US. And across our small number of known urban centres, each has its own quirks (Toronto, Montreal, Vancouver, Calgary, Ottawa, other parts of Ontario, etc.) that need to be taken account of.
  • But with all that being said, many Canadians crave the consumer choice and cost advantage they know Americans have online. Many wish they didn’t have to order from US stores to get exactly what they want, or for that exact piece of furniture they want, order from the only retailer in the country that has it (say, that Vancouver place with the indifferent service, high shipping fees, and outrageous prices).
The problem is rooted in history. For the most part, Canada is an environment that is conducive to products and services — everything from apparel to phones to construction to digital tools — being provided more efficiently with scale, by a smaller number of very large companies. It’s a culture of oligopoly and many Canadians know to choose convenience over choice and price, because it’s less of a headache. Unless the effort is global or North-America-wide, it is not that healthy a place to launch and grow an SMB or a startup, nor that friendly a funding environment to come to the plate with something disruptive. With best wishes to Well.ca.


Comments are closed.


 


Traffick - The Business of Search Engines & Web Portals

 


Home | Categories | Archive | About Us | Internet Marketing Consulting | Contact Us
© 1999 - 2013, Traffick.com. All Rights Reserved