As the northern neighbors of the United States, online retail opportunities in Canada present a unique appeal to an array of different brands. Given some cultural similarities between the two countries, this is especially true for brands familiar with the United States market that are looking to expand into new geographies.
So what should online retail professionals know about the potential Canada eCommerce growth opportunities?
Here are 11 things…
1) eCommerce in Canada is growing much faster than brick and mortar – According to Forrester Research, eCommerce in Canada will continue to grow over the next five years at a rate five times faster than traditional brick and mortar sales (eCommerce 12.3%, retail 2.6%). In addition, approximately one million Canadian households shopped online for the first time ever in the past 8 months.
2) Canadians are poised to substantially increase their online spending – With the growth of online retail sales in Canada, it’s no surprise that consumer spending with online retail sites is set to increase as well. What is a surprise is the amount which Canadian consumers are set to increase their eCommerce spending – up from C$1,210 this year to $1,860 by 2019 (a 54% increase).
3) Shipping prices and times in Canada have decreased – One of the major factors behind the increased online spending by Canadian consumers is the decreased shipping costs in the country. Led by major online retailers offering free or affordable two day shipping on a large array of products, the once high prices to ship orders have decreased closer to leading online retail countries (but can still remain high for coast to coast shipments).
4) Online retail in Canada is catching up to the United States – Currently online retail sales in Canada make up only 6% of all retail sales in the country (approximately 9% in the United States). However, this percentage has been projected to grow to 10% by 2019, just 1% behind the same year projection for the United States (11%).
5) Omni-channel capabilities are as strong as the United States – With most of the Canadian population located in urban areas and the high prices associated with coast to coast shipping, omni-channel initiatives have been popular investments in Canada. Ship to store and store pickup offerings have worked well to change the mindset of Canadian shoppers to become more accustomed to shopping online without immediately losing the physical retail store experience.
6) The online retail experience in Canada can bring unexpected results – With many major brick and mortar retailers being slow to sell online in Canada, some large online retailers have had to pick up the slack in certain product areas that are not typically associated with their business. For example, an online pharmacy in Canada sells musical instruments online and a leading electronics retailer actually sells baby supplies on their site.
7) Weak Canada dollar discouraging cross-border purchases – Another reason for online retailers adding products outside of their traditional product scope is the weakening of the Canadian dollar against other currencies. This has resulted in fewer cross-border orders as these orders will cost more with the unfavorable currency exchange rates for Canadian consumers, not to mention the increased shipping costs of importing from another country.
8) Holiday season leads the growth of eCommerce in Canada – Similar to other countries, the holiday season is a key opportunity for online retail growth in Canada. This holiday season, Canada Post expects to deliver 20% more eCommerce related parcels than in the previous year and omni-channel related experiences are expected to increase across the country.
9) Mobile and tablet commerce is on the rise in Canada – With the urban nature of many Canadians, mobile and tablet ownership remains prominent in the country. According to the Retail Council of Canada, almost 25% of online retail transactions are happening on mobile or tablet devices. The strong and growing presence of mobile and tablet devices in Canada has led to more application and responsive design initiatives by brands compared to other countries.
10) Digital ad spending continues to increase – Given the presence of mobile and tablet users in Canada, more brands are looking to use digital ads to drive sales to their online retail sites. In fact, eMarketer is projecting digital ad spending to reach $4.8 billion by 2018, a 45% increase from the 2013 total spend of $3.3 billion.
11) French Canadians are less likely in general to use technology – The mobile and tablet growth comes with a caveat. Recent research from the CRTC has shown that even though mobile and tablet usage is on the rise in Canada, this growth is primarily with Canadians who speak English as their first language. For example, only 30% of Canadian adults who speak French as their first language own a tablet, a double digit percentage decrease from 42% for first language English speaking Canadian adults.
In conclusion, eCommerce in Canada may currently trail other leading countries but the gap is closing quickly. Canadians continue to embrace new technology both on a consumer level (mobile and tablet devices) and at an online retail level (omni-channel), making the country an appealing expansion location for retailers with existing online operations in the United States, Europe, Asia, or in other geographies.