_This article is by Guest Contributor Jennifer Evans._
I met recently with an individual responsible for development at one of Canada’s largest and most successful fundraisers, and we were discussing the fact that the ‘ten percent’ rule when it comes to projecting Canadian online activity using the US as a benchmark just doesn’t apply to e-commerce.
The theory goes that because Canada’s population is about 10% of the US population, then we can apply the same ratio to prospective activity results. Canadian marketers “frequently”:http://www.primezone.com/newsroom/news.html?d=82316 use this as a metric when planning or budgeting. But it’s time to put that ratio to bed, at least when it comes to e-commerce. Political parties in Canada don’t raise anywhere close to 10% of what the major US parties do online. Canadian charities don’t raise 10% of what is donated online in the US. And when it comes to selling online, forget about it. eMarketer announced last week its “September report”:http://www.emarketer.com/Report.aspx?ecom_canada_sep05 is the latest state of the Canadian ecommerce nation study, and this should really be the death knell on the 10% rule. Sure, there’s a 20% projected increase in buying. But that’s coming from a low starting point, the percentage of people who are online who buy is increasing only fractionally, and most of the activity is going to US companies.
The eMarketer study goes on to say that:
bq. While Canada has the essential underpinnings of a strong e-commerce society: high rates of PC penetration, Internet usage and broadband uptake – and Canadians go online in droves to research purchases, make bank transactions and partake in most of the same activities as US users do – online purchasing remains minuscule.
Given that “Canucks love the web”:http://www.onedegree.ca/2005/08/09/canucks-love-the-web and some of us are spending more time online than we are with other forms of media – what gives?
The eMarketer report promises to tell us, among other things, “what is holding Canada’s online retail market back, why Canadians shop online – but don’t buy, and the single most important thing Canada’s retail e-commerce sector must do.”
My theories:
* We still want to go out and shop because in the winter, it’s the only excuse we have to get outside on a regular basis
* Our malls aren’t nearly as crowded, and we like to wait in line
* We’re pragmatists who believe in the tangible, and are really, really big on instant gratification
* We’re a naturally suspicious, faithless nation and haven’t quite gotten our heads around the ‘click and it will come’ idea
_Jennifer Evans is President of “Sequentia Communications”:http://www.sequentia.net, a Toronto-based marketing and public relations firm that specializes in helping companies acquire and retain customers through community building._
3 Comments
Comments are closed.
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.
Expanding on Ryan’s post, this is an old problem in Canada that has been debated in the DM industry for decades. As he points out, the selection is just not there and never has been.
We don’t have the catalogue-shopping frenzy they have in the US, as it requires volume to make direct sales worthwhile, and between the need for fulfillment services, a call centre, website, promotion to build a trusted brand, etc, and support a business across a continent and 3 time zones, it’s not cheap. Therefore to invest in direct sales you need to have some guts and the willingness to stay in it for the long haul, especially for a market that has not been trained to shop direct. What has been noted in comparing shopping psychology between our countries is that we are more pragmatic, less emotional in our buy –basically at checkout our left brain says, “do I really trust Canada Post to deliver this in one piece soon?” (And actually I’ve found them pretty good…)
As and avid online consumer (I’d much rather buy from the comfort of my living room than face a mall) I find your listed reasons naive, but then I don’t think I’m the typical Canadian consumer. The reason that I find myself having to go out and shop is lack of availability of quality Canadian eCommerce. Either a) I can’t find a Canadian consumer for the type of products that I’m looking for; b) the shipping costs are too much to make it worth it; or c) the web sites are so mickey-mouse that I don’t trust the vendor to get me the item. As Ryan and June said, the problems include availability, trust, and incentive.