Summary: While Canadian eCommerce growth appeared stagnant at first glance, there’s an untapped market with considerable potential. Studies reveal that approximately 60% of the largest non-travel Canadian websites experienced sales growth of over 20%. A shift toward domestic online shopping, especially among tech-savvy 18-34-year-olds, presents significant opportunities. Despite a lower overall Internet adoption rate compared to the US, Canada’s broadband penetration and changing shopping behaviors make it an attractive and unexplored market for multi-channel retailers.
Unlocking the Potential of eCommerce in Canada
At first glance, Canadian eCommerce growth may seem flat, but a closer look reveals an untapped market with considerable potential. Recent studies show that approximately 60% of the largest non-travel Canadian websites experienced remarkable sales growth, surpassing the 20% mark. While it’s true that overall eCommerce growth appeared stagnant year over year (2003-2004), there are several factors that suggest an attractive upside for businesses willing to explore this market further.
The Canadian “Domestic Shift”
One noteworthy trend is the shift in Canadian consumer behavior – a move from buying at non-Canadian websites to favoring domestic sites. In fact, the majority of online purchases in Canada (63%) now occur at domestic sites, compared to just 37% at foreign sites. This “domestic shift” is a clear indicator of the favorable climate for launching new eCommerce businesses within Canada.
Targeting the “Early Adopters”
To unlock the full potential of the Canadian eCommerce market, it’s crucial to focus on the “early adopters.” This segment primarily comprises individuals aged 18-34, known for their technological savvy and a greater inclination to make online purchases. A comparison of e-commerce spending between 2003 and 2004 2004 reveals that this demographic experienced an impressive 44% increase. In contrast, the 35-54 age group saw only a 5% increase, and the 55+ category, which includes online travel, grew by 18%.
Internet Adoption Rates and Infrastructure
Canada’s overall Internet adoption rates, currently around 52%, may trail behind the US, but there’s a strong potential for growth in the coming years. With the development of new Internet infrastructures and the maturation of Canadian Internet Service Providers (ISPs), this figure is likely to rise. The Canadian government also recognizes the importance of eCommerce and the need for infrastructure development, emphasizing the role of intelligent infrastructure as the backbone of the e-economy.
“To reach our new national goal (relating to e-commerce) Canadians will need to develop strategies that build an intelligent infrastructure to serve as the backbone of the e-economy – by encouraging investment, strengthening research, enhancing commercialization, and ensuring that all Canadians have access to this infrastructure and know how to use it.” (September, 2004)
Shifting Demographics & Lack of Online Competition
Demographics play a crucial role in the Canadian eCommerce landscape. The gender gap is closing, and online home retailers have an excellent opportunity to target their core customer segment: the 30-40-year-old females who own or maintain residences. Surprisingly, many U.S.-based retailers lack online Canadian stores, which creates an opening for savvy businesses. While some brands may ship to Canada, the high costs associated with customs duties and shipping can create a less-than-ideal experience for Canadian consumers. By establishing a presence in the online Canadian marketplace, “first-mover” retailers can facilitate sales from consumers who prefer products shipped from their homeland, paid for in Canadian currency.
Broadband Connectivity and Multi-Channel Behavior
Canada stands out as the only country where broadband surpassed dial-up access in 2003. With more Canadians having access to broadband than their American counterparts, this impressive penetration opens up opportunities for online circulars and innovative online merchandising tactics beyond price differentiation.
Canadian shoppers are also adopting multi-channel behavior, mirroring the tendencies seen in the U.S. market. A significant portion (58%) of Canadian shoppers research products online and make purchases offline, with an average expenditure of $4,500. Implementing cross-channel functionality and tools can enhance the overall shopping experience.
In Conclusion
In conclusion, the Canadian eCommerce landscape offers tremendous potential for growth. Attractive consumer demographics, an established broadband infrastructure, changing shopping behaviors, and a lack of online competition make Canada a high-growth and relatively untapped market for multi-channel retailers. By understanding and capitalizing on these factors, businesses can unlock the full potential of eCommerce in Canada and establish a strong foothold in this evolving market.
