Why Canada lags in e-commerce, and how we can catch up

Canada Post | BCBusiness
Canada post recently opened a $200-million facility in Richmond, in the hopes of drawing more e-commerce traffic.

Canada lags behind its competitors in the online retail world. How can we—and why should we—improve?

An impressive 56 per cent of the world’s top 50 e-tailers are based in the U.S., while not one is based in Canada. BCBusiness chatted with Geoff Le Quelenec, director of information technology, Retail Council of Canada; Kyle Vucko, CEO and co-founder, Indochino Apparel Inc.; and David Ian Gray, owner and principal, DIG360 Consulting Ltd., to find out why:

Why is Canada so far behind the U.S. and other countries in e-comm uptake and growth?

Geoff: The U.S. has a broader distribution network and can put product in hand quickly and at low cost. In Canada, the cost and time to ship outside a few urban centres is much higher. Free shipping, free returns and same-day shipping are integral and cannot be easily replicated.

Kyle: The U.S. has a larger pool of companies from which to pull examples, but what we’re doing up north is something to be proud of too. There are a number of Canadian companies doing innovative e-commerce, from Lululemon to Frank & Oak.

David: On the demand side, Canadians have relatively easy access to almost any physical retailer that exists in Canada. Barriers to foreign offerings have been duties and delivery. On the supply side, we simply have not had a critical mass of strong Canadian e-commerce sites.

E-comm typically represents a small slice of a retailer’s revenues, so why is it so important?

Geoff:The highest costs for a retailer are real estate and staff. E-commerce promised to reduce or eliminate both. An in-store shopper who converts to online is less likely to go back.

Kyle: While many established retailers remain primarily off- line, new retailers will start online or become meaningful online quickly. Customers know that and go online to shop the latest trends

David: It signals to the customer base that the retailer is modern and providing options. Better web channels can hit comparable numbers to a single store, at lower cost.

What are the biggest e-comm opportunities for local retailers?

Geoff: Remember that e-commerce can drive local traffic. Use location-based search, social media and search engine optimization to drive not only online sales but also foot traffic to your physical location. Your online presence should be complementary to your in-store promotion, not separate from it.

Kyle: The biggest opportunity for retailers is to get online. It’s easier than ever for brands to get online quickly and do it well. Companies like Squarespace and Shopify enable you to build a quality e-commerce site in days, so even the smallest retailer can create a great omni-channel experience. 

David: Consider offering extended stock to what can’t fit in the store (with free shipping and minimal time lags). If the product is differentiated, retailers can find a broader market over distance, especially for exclusive items. This requires careful planning around logistics, packing and returns.