“Are businesses, rather than consumers, holding back eCommerce development in Canada?
If so, how?”
How does Canada measure up?
In a 2012 landmark report by the Boston Consulting Group, it was estimated that the eBusiness sector across G20 nations has the potential to grow to $4.2 trillion, signaling the future potential of eCommerce. So how does Canada’s eBusiness industry measure up among other eTailers? ePath Consulting surveyed 69 Canadian eBusiness and eCommerce managers of some of the largest and most prominent Canadian B2B and/or B2C eBusinesses to find out.
According to ePath, Canada is only considered a “Player” and not a “Leader” in the industry, compared to countries such as the United States and the UK. Furthermore, Canadians consume more online content per capita than any nation in the world, signalling a disconnect between offline and online business units in “bricks and clicks” organizations.
Many businesses in Canada who took part in the study expressed their frustrations or the complexities of corporate strategy and eCommerce:
“Although I have full control of my eCommerce group, I’m quite constrained by corporate strategy. The traditional “bricks” part of the business still determines the overall business strategy. They set my budgets.” (1:1 interviews, ePath)
What’s holding Canada back?
ePath Consulting discovered two key issues that many Canadian eBusinesses feel contribute to the current state of Canadian eCommerce:
1. Lack of Scale – A company’s market potential can be limited by its inability to engage in commerce and expand the firm beyond its current size, geography, or industry. This is a result of Economies of Scale where the financial investment associated with eCommerce development do not benefit the firm.
2. Typical Canadian Aversion to Risk – Canadian businesses are more prone to making decisions based on results that produce the least amount of risk. From a financial perspective, an investor presented with two investments with a similar expected return and different risk, would typically prefer the investment with lower risk.
A business model that limits you geographically is an indication that the market is simply not big enough to justify the eBusiness investment required for eCommerce. Additionally, the Canadian eBusiness industry is comfortable with meeting the status quo and taking on the mentality that “good enough” is enough. Canadian eBusinesses tend to favour a safer competitive strategy therefore operating as a market follower rather than of operating as a pioneer or innovator in their industry.
Furthermore, Canadians have a different mind set and culture when it comes to ordering online. This is one of the reasons our country is lagging within the eCommerce space. Without the demand or desire from customers to order online (until very recently), companies haven’t been able to justify the investment and risk that comes along with eCommerce development:
“The challenge I have is getting them (corporate management) to buy into the online opportunities. Unfortunately we’re typically Canadian. We don’t like risk.”
(1:1 interviews, ePath)
How Canada can get in the game
ePath consulting has outlined 4 key insightful and actionable opportunities Canadian eBusinesses can:
1. Develop the Management Condition for eBusiness Success
2. Innovate Beyond “Price and Delivery”
3. Accelerate the Implementation of CEM and Analytics Initiatives
4. Build High-Performance Teams
Implementation of even one of these key insights will go a long way in terms of a firm’s continuous improvement and its ability to reach current and potential customers.
Back to the question posed above:
“Are businesses, rather than consumers, holding back eCommerce development in Canada? If so, how?”
In my opinion, Canadian businesses play an important role in the general development and direction of Canadian commerce as a whole. As it stands, I feel that Canada’s current eCommerce landscape is in its introductory stage of implementation. Some Canadian businesses are just getting their feet wet and slowly experiencing the benefits of having an online presence (e.g. a static website at the very least); however, many Canadian businesses have yet to harness the complete benefits and potential that eCommerce has to offer.
As outlined in this report, Canada’s hesitation and risk aversive nature will be the leading factors hindering eCommerce development in Canada. In order to make the change from market “player” to market “leader”, Canadian business can implement strategies such as education, training and corporate governance to mitigate risk, foster innovation, and become market leaders of eCommerce.