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Canada and eCommerce
Canadian eCommerce growth was recently flat but still has anattractive upside...
Recent studies found that Canadian retail e-commerce growth wasflat year over year (2003-2004). After further examinationhowever, approximately 60% of the 100 largest non-travel sitessucceeded in growing their sales over 20%.
Also interesting is the trending of Canadians from buying atnon-Canadian sites to domestic sites (63% domestic, 37%foreign). This "domestic shift" clearly benefits the launchingof a new eCommerce business in Canada.
The sales opportunity lies with the "early adopters",individuals primarily the 18-34 year old age range. This segmentis more technologically savvy and more likely to purchaseonline. In a 2003 to 2004 sampling comparison, this segment'soverall e-commerce spending increased 44%. The 35 to 54 agegroup increased only 5% and 55+ increased 18% (includes onlinetravel).
Overall Internet Adoption rates still trail the U.S. and come inat approximately 52%. However, with the development of newInternet infrastructures and the maturation of Canadian ISP's,this number will likely rise in the next 3-5 years. Thefollowing quote from the Canadian government re-enforces thistheme.
"To reach our new national goal (relating to e-commerce)Canadians will need to develop strategies that build anintelligent infrastructure to serve as the backbone of thee-economy- by encouraging investment, strengthening research,enhancing commercialization and ensuring that all Canadians haveaccess to this infrastructure and know how to use it."(September, 2004)
Shifting demographics & lack of online competition equal asubstantial opportunity...
Forrester Research reports that 48% of Canadian web shoppersare now female compared to 39% in 2003. 74% of web buyers aremarried and likely are home shoppers, compared to 68% in 2003.
With the gender gap closing, online home retailers have a greatopportunity to target their core customer segment: the
30-40yrold female who owns or maintains a residence.
Within this sector, it is rare for U.S. based retailers to haveonline Canadian stores. Many brands will ship to Canada, forvery high costs (customs duty & shipping) but this likely leadsto an unpleasant experience for the Canadian consumer. Thesehigh costs, compiled with a lack of domestic Canadian retailersproviding an e-commerce offering, are driving the stagnantgrowth of the online sales channel.
By being a "first-mover" in establishing a presence in theonline marketplace within Canada, online retailers willfacilitate sales from consumers that want to get productsshipped from their native homeland after being paid for inCanadian currency.
Similar to the U.S., consumers are exhibiting multi-channeltendencies and embracing the emergence of broadbandconnectivity...
Canada is the only country in the world in which broadbandovertook dial-up access in 2003. Currently 48% of all Canadianconsumers have broadband access and they are 67% more likely tohave high speed web-access than American consumers.
This impressive penetration may prove to be a strong driver foronline circulars and new online merchandising tactics, asproduct differentiation are established outside of price.
Canadian shoppers are also parallel to U.S. consumers in theirmulti-channel behavior. 58% of Canadian shoppers have researcheda product online and purchased offline, spending an average of$440. An online Canadian strategy must focus on integrating theonline and physical store with store locator functionality andother tools to promote cross-channel behavior.
In conclusion, multi-national retailers should closely examinethe Canadian eCommerce opportunity. Attractive consumerdemographics, an established broadband infrastructure, and ashift in overall shopping tendencies make the Canada ahigh-growth and un-saturated area for multi-channel retail.
About the author:
http://www.trinityinsight.com
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