Ryan McKegney at “RedFlagDeals”:http://www.redflagdeals.com/ just added a great reply to Jen Evan’s “Tossing the Ten Percent Rule for Good”:http://www.onedegree.ca/2005/08/18/tossing-the-ten-percent-rule-for-good post and I thought I’d highlight it here:
bq.. There are a half dozen reasons why the Canadian online market is lagging behind, but in my opinion a big reason you don’t see much in the way of online spending is because there are so few retailers in Canada and they tend to be nation wide.
Canadian Tire has perhaps one of the best developed Canadian web presenses. They have nearly everything you can buy in-store online. But you have to pay shipping. Now if I’m a shopper and I see something I want at Canadian Tire online I can pay $8 to have it shipped to me in a week or I can get in my car and drive 5 minutes (seems like they have a CDN Tire every 2 KM now…) and buy it. Which makes more sense?
Now look at HBC. You can’t actually buy anything from The Bay online. HBC.com takes you to “Deals Outlet” which is an independently run HBC store with different products and inventory than any of the HBC retail stores. You can buy something at Deals Outlet and have it shipped to an HBC store (Bay, Zellers, Home Outfitters), but it takes as long as 3 weeks. I’d speculate that HBC isn’t putting any money into seriously developing an ecommerce site because there is an HBC store so close to 90% of the market.
FutureShop.ca seems to be doing well because they offer free shipping on all orders. There are Future Shops nation wide, but without the burden of a shipping cost customers aren’t penalized for buying online for something they could get around the corner.
In the USA because retailers can be very regional, going online can expand their market tenfold. In Canada, the big retailers lack incentive as they already reach the majority of the Canadian market.
If Canadian retailers aren’t providing incentive to their customers to shop online, why will they?
I think the market is ripe for a Canadian online only retailer or for a smaller established retailer to make a major splash online. This is where the growth will come from. Online competition will force a more concerted effort from the big Canadian brands. As they see it, and perhaps rightly so, they have everything to lose online and little to gain.
p. Thank for the input Ryan. It would be great to hear from some online (and non-online) retailers about this.
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Here’s a post I added on my blog related to this exact topic:
How does Canada’s e-commerce infrastructure compare with that of other advanced industrial nations?
Although I haven’t done the research necessary to answer this question completely I can certainly attest to the obvious gap between American and Canadian e-commerce infrastructure at almost every conceivable level. As everyone knows, Canada’s population is about a tenth of our southern neighbours, and by extension much of our infrastructure, including the network of businesses catering to special niches such as e-commerce is significantly smaller. The most glaring example comes in the form of differences between the U.S. postal service and Canada Post. In addition to a complete lack of services, customer support and general understanding of what Canadian e-merchants require, Canada Post’s parcel rates are simply not competitive with that of its southern counter-part. In turn this makes it more difficult for Canadian merchants to be competitive on the open market.
What is holding Canada’s online retail market back?
I don’t think you need to buy the $695 report to figure this one out.
– Canadians are hesitant to buy from abroad because they do not want to incur the more expensive shipping costs and associated duty fees.
– Canadians have very few home-grown online retailers to choose from. Just look at the example of what happened to Chapters.ca – though at one time a viable alternative to Amazon.com for your book buying needs, the merging of Indigo and Chapters spelled doom for their online operation. The last time I checked, the availability of books in their online store didn’t even come close to the number of books available in their retail stores. Isn’t it supposed to be the other way around?
– Canadians are surprisingly patriotic; and that sense of patriotism prompts them to first look for a Canadian alternative. As per my previous point, they often get stuck in a cycle of wanting to buy Canadian but not being able to find a suitable canadian online presence for a particular product and abandon their online effort in favor of strolling down to their local mall / store.
– Canadian companies are hesitant to go online with their offerings because there is an underlying fear that Americans will not buy Canadian for some of the same reasons mentioned above. This fear culminates into the idea that they will not be able to tap into the huge market just across the border in a cost effective manner.
– Finally, I think there is likely a plethora of cultural reasons that I haven’t really thought about as to why Canadians act differently when it comes to e-commerce. Something to be explored for sure.
The Canada Post problem cannot be understated. Ironically, their “BorderFree” (http://www.borderfree.ca/b2b/index.jsp) is making it easier for American ecommerce to come to Canada, but I haven’t heard about any intiatives to make it easier within Canada itself.