Smaller Firms and Startups Pushing eCommerce Growth in Canada

Did you know that Canadians are some of the most connected individuals in the world? Last year 78.1% of Canadian homes were outfitted with high-speed Internet access; however, despite this connectivity, Canadian’s seem reluctant to engage in online commerce. Can slow consumer adoption be directly attributed to a lack of consumer interest in online shopping? On the contrary, poor online shopping experiences offered by retailers is likely the culprit according to eMarketer. This year, it’s all about to change. In a recent study on Canadian eCommerce, eMarketer says, “Canada is poised to see significant gains in retail eCommerce sales”, estimating online sales to reach CA$21 billion and maintain annual growth rates in the double-digits through to 2017.

Related: Canadian eCommerce Benchmark Quarterly Reports

What is Driving eCommerce Growth in Canada?

Innovative online startups are putting the pressure on established players to innovate and improve the consumer online shopping experience. Demac Media CEO, Matthew Bertulli says,

“This past year [2013], we’ve seen a big improvement in this country. Smaller firms like Shop.ca and Snuggle Bugz now have better knowledge, investment and ambition.”
Smaller firms are offering a creative boost in the eCommerce market by enabling innovative ideas like:

  • Product Research
  • Price Comparison
  • Loyalty Rewards
  • Free Shipping

Lower Entry Barriers:

Off-the-shelf eCommerce solutions like Shopify have lowered the entry barriers to eCommerce with its go-to-market eCommerce platform. It’s easy set up and hassle-free maintenance makes the platform easy to use for merchants with varying technical knowledge. With platforms like Shopify, merchants can focus their efforts on managing their business while simultaneously establishing their online presence.

Increasing Mobile and Tablet Adoption:

Mobile is also a key factor to prominent eCommerce growth in Canada. The use of mobile and tablets are on the rise. Consumers are more than likely utilizing these devices while in store. The dreaded “showrooming” effect is being embraced by innovative startups like Shop.ca, Snuggle Bugz, and BuildDirect, who are constantly in search of ways to engage consumers in digital channels. However, PCs and desktops continue to be the primary choice for online shopping.

device-popularity-graph

What’s taking Canada so long?

Simply put, Canada is slightly behind the curve. According to eMarketer, Canadian consumers are ready to adopt online shopping but Canadian businesses are holding back. When deciding to establish an online presence through eCommerce, retailers have to consider a few key functional areas of their business:

  • The Canadian Geographic Landscape: With a population of 34.88 million Canadians, living across a vast geographic landscape, retailers must consider the supply chain and distribution costs involved in getting product to a customer’s doorstep.
  • Relatively Low Competition: With only a few players in the market, there is a strong reason to forego online competition as retailers compete less for a buyer’s attention.

The Turning Point

2013 marked a turning point for eCommerce while 2014 ushered in new era of eCommerce. Pure-play startups engaged Canadian consumers through compelling experiences. eMarketer estimates eCommerce sales to surpass $21 billion this year! At the time of the study, Ipsos Reid reported 79% of Canadian Internet users made an online purchase in the 12 months previous. Furthermore, online spending increased to an average of CA$899 resulting in a 40% spike from the previous year.

The most popular product groups for online purchases include:

  • Clothing, Shoes, Jewelry, Accessories (52%)
  • Travel & Tourism (50%)
  • Cultural Goods (e.g. books, music, movies) (49%)
  • Technological devices (47%)

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Startups continue to embrace innovative ways to capture the ever-growing consumer dollar, putting pressure on Canadian retailers to invest in establishing a stronger online presence. Take a page out of a Startup’s book and see how you can capture a part of the growing eCommerce market. Game on Canadian Retailers and Happy eTailing! For more details and to download eMarketer’s report summary visit: Canada eCommerce Startups Pressure Established Players to Innovate

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