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How Star Companies are Redefining eCommerce in Canada

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eCommerce Strategy

eCommerce is on the rise and with it companies are dreaming up unique ways to promote online transactions. Amazon created #AmazonCart so that consumers could make purchases through Twitter. Starbucks has a similar initiative with Tweet-a-Coffee. If you’re dying to find out how companies on our home soil are redefining eCommerce, keep reading. We’re curious creatures, us digital innovators. Get ready to rethink your own eCommerce strategies.

How Star Companies are Redefining eCommerce in Canada

Recently our CEO, Matthew Bertulli (@mbertulli), moderated a panel of companies at Dx3 2015, he feels have nailed how to use social media to drive eCommerce in Canada. The panel consisted of:

For an in-depth look and recap of the discussion, check out the content below:

Is Canada a good home base? Or is it a good market?

Matt: First thing to chat about is the idea of: Is Canada a good home base? Or is it a good market?

Satish: From Shopify’s perspective, Canada has served as both a good market and home base. Today, it serves as an excellent home base for a software company where 99% of employees are based in Canada between Ottawa, Toronto and Montreal. It’s been a great place to build a sustainable business. Originally when we started our customer base grew quickly in Canada first, but then rapidly expanded into the US and around the world. We have more than 120 countries using Shopify, and 70% of our customers are in the US. For Shopify, Canada was a great breeding ground, and is a great reflection in our customer base.

Matt: As a Canadian company, thinking globally, was that a big leap? We tend to think in our own backyard.

Satish: If you can be successful in eCommerce in Canada, you can be successful anywhere. Canadians aren’t as online savvy, so if you’re building Canadian businesses it can be difficult, and moving into the US is promising, if your distribution and marketing is set up well. Founders of Shopify are global themselves, so people who work at Shopify are diverse and very internationally focused, and this helps our own successes.

Matt: BRIKA also sells everywhere, and Snuggle Bugz is largely focused in Canada. What are your thoughts?

Jen: We have somewhat of a diffierent perspective, as our home base is here in Canada. I am American, so my networks are in the US. When we launched the business we had USA on our minds, wanting to go after bigger markets, and eCommerce was more established there. The US was just a bigger opportunity. 85% of our customers are in the US, and 15% are in Canada. This is largely due to the fact that we don’t largely market in Canada. Most of what is happening in Canada is from word of mouth. We had an amazing offline partnership with The Hudson’s Bay to help the online push. Canada is a great place to build a business because it’s our hidden gem. Everyone thinks we’re based in San Francisco, but when we say we’re based in Toronto people are very surprised. It’s nice to be a little bit outside of the view in what’s going on in other markets, we have a lot of inroads and connections to New York and the Bay area. Our maker base is 90% American, and 5% Canadian. Maker communities are very inbound, so they are mostly in the US and spread by word of mouth. It’s not to say Canada doesn’t have the talent, or should be by passed as a market, but actually, the Canadian base of customers are rich and savvy in terms of a customer base. They are more loyal, and have a higher shopping baskets. BRIKA really likes the Canadian customer, but we are more based in Canada, then thinking of Canada as a distinct market.

Matt: Ben, you’re very different from BRIKA. How do you see Canada?

Ben: We’re different in that we didn’t start to be big in eCommerce. We started as a small Bricks and Mortar store in Burlington and it just grew. And as we grew, we adapted. My background is in tech so eCommerce made sense and saw HUGE opportunity in that space. We focused a lot of time and energy on that, and just looked within Canada since that’s where we lived and focused our business. So if you can do eCommerce in Canada, you can do it in the world. We are now looking in other markets. The US is just one of them, but the UK is another huge market we’re considering.

Do you pay attention to what huge companies like Amazon and Starbucks are doing? Is it worth it?

Matt: We’re talking about how to build a successful eCommerce business in Canada. How do other people look at this country? Yes we lag, but it can be a very good market. Canadians tend to spend more and are more loyal. One thing that comes up often is Amazon and Starbucks. These huge companies do weird stuff, they’re tweeting to shop, and to me I look at this stuff and ask “is this applicable to these companies? Is it useful to look at these tactics?”. A lot of it sounds cool, but is it worth it? Do you pay attention to this kind of stuff?

Jen: As an analog to BRIKA, do we learn anything from it? I think we’re always steeped in anything that’s happening in the retail sector, we hope that we’re smart and staying on top of things and using social media etc. At the end of the day, we’re a brand that is trying to build a brand and a business, as much as any other company and we’ll take the learnings of what works and doesn’t and experiment. We don’t feel we need to do the exact same things as everyone, but they use those avenues for story telling for their brand, and how can they promote and tell their story. When they think about social media they tend to stay away from the gimmicky stuff.

Is social good for customer acquisition? What are they really good for?

Matt: Is social, and those platforms good for customer acquisition? What are they really good for? Should you look at social to get customers?

Jen: Depends on the channel….

Ben: Social is a huge instrument to build a business, but it’s becoming more frustrating than anything lately. We’re over 50K fans on Facebook, for being a small local brand, it’s a decent sized following. Everything changes and adapts, Facebook, Google and Instagram are all changing. So it’s important to tweak, and run analysis, AB tests, to see what works better. We’re investing a ton of time into this but we don’t get the same acquisition we use to. Now, social is more about community, and having those conversations and brand building.

Jen: Pinterest for BRIKA is tricky. They’ve tried to get our head around it. We have 12K followers, and have products that are perfect for Pinterest, but acquisition is so low. It drives traffic, but doesn’t convert. People on Pinterest aren’t really wanting to buy.

Satish: I think most of people have seen a Shopify ad on Facebook now. My perspective is different, a small business investing in social for brand building is very difficult to stomach, given the volume of resources you’d be committing where it might not bring you a positive return. I thinks there’s a clear opportunity for measurable customer acquisition and very little has to do with the social media profile you’ve build. Facebook is no longer a free lunch anymore, it’s an ad opportunity. They’re providing a clear and measurable way to access your customer, it’s now an ad network. So the more intelligent you can be, the better, since everything is now measurable. Pinterest doesn’t matter in terms of followers, but rich pins or eCommerce enhanced pins and other experiments. These experiments are focused around increasing the level of measurable and assured ROI. The reason we see poor conversion is because eCommerce is hard, and most people are on phones for social media, then the likelihood to click through and go through a convoluted checkout process is extremely low. More than 50% of traffic comes from mobile devices, but only 30% of conversions come from mobile.

If you’re a business starting and trying to scale, where would you be spending the time and effort?

Matt: If you’re a business starting and trying to scale, where would you be spending the time and effort? If mobile is bad at converting, would you still think mobile first? Is that the first place to go?

Satish: As a starting eCommerce business, you go where you customer is. It’s way more difficult to acquire eyeballs then to present your products or eCommerce site to customers wherever they are. Customers are on social media on their phones. The more you fight against it, and focus on acquiring traffic to an independent website and then try to covert them on a mobile device, the harder it will be. It’s an uphill battle. There’s a portion of this that is valuable, but mobile is primarily a discovery device and process.

Matt: BRIKA is very curated designed heavy product, does that ring true?

Jen: People just browse on our site through mobile. We were on Magento but have now launched a new proprietary site. A lot of this was driven by data. How are people behaving? What is the traffic like? It’s all mobile friendly now, and we’ve seen an uptick of conversions because of it. You absolutely have to go where your customer is. When thinking about Omni-Channel, we’re big believers in offline.

Do you need a physical store to make money online?

Matt: Let’s talk offline. Retail is still a very big component, you mentioned before BRIKA is opening a store. Everyone is opening stores, even Amazon! It started with Bonobos, they flat out said “I can’t make money online so I’m opening stores”, but actual dollars, pocket in the shareholders come from online and offline stores.

Jen: The test we did with The Hudson’s Bay and others, we don’t carry branded products, so people don’t know who we are, or our artisans. When consumers see the offline permutation of the brand, and see the artisanship, and quality etc, they want to buy it, and come back online to buy it, and buy more. So there’s a nice cycle there. People still shop offline. Women still shop offline!

Ben: I don’t think it matters if you have the brand names, you can still be offline. Snuggle Bugz only carries branded product, a lot of it is at a lot of retail outlets. Baby R US is our biggest competitor with similar/same products and they have 80 stores in Canada. At the end of the day it doesn’t matter. If you’re just talking eCommerce, you won’t be around very long. Vertical profits and market are different though.

How do you deal with coast-to-coast shipping in Canada?

Matt: The hardest thing in this country is coast-to-coast shipping. Physical stores help to take pressure off of this. MEC does a ton of shipping from its stores.

Ben: We’re a “small retailer”. We have 2 DCs, one in Vancouver and Toronto. This was purely for margins, and decreasing the shipping dilemma.

Matt: Do you tell people this is a good tactic, because it’s scary! Retail is a hard life! It’s a 6-7 day a week, long hours job.

Jen: We’re a no inventory model, we drop ship online. My co-founder ran retail stores, she knows it inside and out. It’s an easy leap to go into retail.

If someone is born digital, how do you grow your business?

Matt: If someone is born digital, how do you grow your business? It’s never been easier to start these things. You can get from zero to one so easy now. But zero to 1 isn’t an issue, it’s 1 to 100.

Satish: You need to be a savvy online marketer to do well in eCommerce. It’s not hard to open a retail store, or an eCommerce site. It’s the next step in building it, that’s a challenge.

Matt: It’s a physical location game. You need to be a great real estate retailer.

Satish: We see 30% of online merchants have some kind of physical retail objective, and that’s why we released a POS system that ties into Shopify. Most people use it for popup shops or sales people that travel.

Ben: It’s easy to get into eCommerce, but to take eCommerce to a $20M online business that costs a lot of money. You have to invest so much in people, products, and systems, to make that jump. To do $1M online, that’s easy, but if you want to do $50-100M you really need to invest. Once you stat investing in those dollars, there are bigger ROIs.

Satish: It depends on the experience you’re trying to create. The touch, feel, see, try is still very much an experience for offline, and hard to replicate online.

Jen: BRIKA has done inventory-less stores in NYC 2 years ago. It worked. Someone comes in, and it’s like a showroom, then you order it give your shipping address. In the US it’s a different game, than in Canada.

Ben: Pure inventory-less stores, aren’t necessarily going to work. In some industries they’ll work, but there are some things people want to take with them. Snuggle Bugz has started doing next day delivery to help with consumers that want to have it now. You need some elements of both inventory-less and having inventory within your stores.

The challenge of building and scaling an eCommerce business or eCommerce + Retail is staffing. Who was the first person you hired, and what was the role? Where did you have to scale immediately? ie. Customer service? Merchandising? Photography? What was the holy shit moment “I need help”?

Matt: The challenge of building and scaling an eCommerce business or eCommerce + Retail is staffing. Who was the first person you hired, and what was the role? Where did you have to scale immediately? ie. Customer service? Merchandising? Photography? What was the holy shit moment “I need help”?

Ben: Every business is different, and where you came from will determine your staffing needs. There are funded startups with 10 marketing people and 1 logistics person, but then you see other people who grew organically and their team structure is different. Snuggle Bugz started with a web manager and you did everything with the web (EVERYTING – pack boxes, customer service, fulfill orders, marketing etc), that position doesn’t exist anymore. I oversee the website, but then I have marketing both for the company, and online/offline, then there’s finance for the company. There’s no silo for Retail vs eCommerce anymore. It’s just for everything.

Jen: We are the leanest machine. We have 1 full time hire. Kena and I do a lot, we are execution machines. We take on different aspects of the business. We run everything: merchandising, logistics, social media, marketing etc. We’ve used contractors, and our one hire is a jack-of-all-trades but is extremely proficient (everything from logistics, merchandising, customer service etc).

Satish: If you can automate the rest, logistics and fulfillment great, but first you need customer acuiqistion and relationships covered. You need more hands to keep going later to fulfill orders, but first you need customers.

When do you start thinking about retention?

Matt: When do you start thinking about retention? I’ve got some customers, it’s working, people are here and shopping, they’re happy, but when do you start thinking about keeping people loyal?

Ben: When you start thinking or doing?

Matt: When do you start putting effort into dedicating resources to retention/loyalty?

Ben: It’s always been in the back of our mind. There are so many things we see, walking the floor of retail, there are the ideal strategies, but at the end of the day at Snuggle Bugz, we only have so much bandwidth to get stuff done. From our standpoint, our customer is only there for a short period of time. We sell for children under 3 years old, and we keep a customer for about 2 years. I’d love to sell to a customer in the pet industry where I can see to them for 15 years. So we don’t put a lot into retention, we put a lot in acquisition. We want to find the customer at the right time! If we find someone a family with a child who is 6 months old already, with a stroller, they already have their big purchases done. We have loyalty programs etc, but acquisition is more important for us. We’ve seen great results from sending targeted lists for email, and getting the same results in revenue as blasting a whole list.

Jen: For us, it’s very manual for how we do a lot of stuff, it’s a lot of excel, pivot tables etc.

Matt: You see that all the time. I should go out and buy X enterprise system, but excel works so well! It’s a little scary for big companies, but you can do a lot and be creative without large systems.

Jen: We look at things, how can we NOT spend a lot of resources but experiment the hell out of things. What works one time, might not work another time. When it comes to retention and loyalty, there’s a lot out there. Ok, you start a loyalty program, and you get points for doing things, we looked at a lot of these things, but ultimately for us, it’s our brand and customer. How well do we know them? We know she is NOT feeling incentivized by loyalty programs/points. We think very deeply on how would that consumer want to be treated, and how will she purchase, and how/when will she buy again? How can we capture in the moment? How can we create and give a good experience and come back for more?

What would be the thing that surprised you the most, about building your respective eCommerce site, what tactic/strategy, what things happened that made you go “whoa”… and what flopped?

Matt: The idea of points. It’s getting annoying. How many cards can you possibly carry? How many programs can you keep track of? If you’re going to think of loyalty, maybe points isn’t the right place to start? I think you should focus on your brand first, and get people knowing that your brand/product is a good thing, a good service, great experience etc. People and the news are always focused on the brand and experience. What would be the thing that surprised you the most, about building your respective eCommerce site, what tactic/strategy, what things happened that made you go “whoa”… and what flopped?

Ben: A couple things that blew me away: 1) That we could send an email to 1% of our database list and still generate the same amount of revenue as sending to everyone. When it actually starts working, you’re like holy crap, but there’s a lot that goes into that. 2) For us, one of the things we were skeptical about, and took other business owners telling me multiple times, and prodding me to try it, was traditional media outlets like flyers, print media etc. I thought wow that will never succeed. Upticks in revenue were for both online and offline. We were blown away by it.

Jen: Direct mail. We did it in a small way. We did it to a certain subset of customers, that have purchased X times over a certain amount. We sent them cards, signed a personalized message, and we did the same for Mothers Day, it was very surprising. It’s very easy to press delete in your inbox, but it’s very hard when you get something in the mail that doesn’t look spammy to just throw that away. People open it! And they get warm and fuzzy. The thing we’d love to try is a catalog. Our products are so primed for that. To tell the story and print it, there is so much we can do with a catalog.

Satish: People try everything. Even Shopify tries stuff. We were putting posters on city poles with phone number to try Shopify and that worked better cost wise than using Google Ads. The realm of experimentation is wide, and it’s as far as your creativity will stretch. So, you should try things! Something that crashed and burned for us when experimenting in the holiday season, was we tried to do a local pick up at Union Station, to or from work. It didn’t go well. You would think it would work, because of the high volume of traffic, but for their market and the analysis of stores that were involved, more people opted to pay for the $5 shipping rate to get it to their door, then pick consumers are able to pick it up on the way home. So in that case, in-store pick up actually worked way better.

Matt: Getting stuff delivered to your house, isn’t really getting to your house. You’ll get a slip, to go pick it up. So an idea of a pick up location sounds like it should work.

Matt: What else has crashed and burned?

Jen: One thing that we do not do, partly because we think about where we employ our time and resources, is Google Adwords. Unless you sell a branded product it’s a terrible place to focus your attention (unless you have a lot of $). Many people try to game that system, where you want to “beat” Google Adwords, it’s a full time job. It’s a strategy that we don’t do, to the surprise of many people, given that we’re in eCommerce.

If you were going to give a new startup one piece of advice, what would it be?

Matt: If you were going to give a new startup one piece of advice, what would it be?

Jen: Figure out who you are. Example is when we started, people were like start a Shopify a store, see if your product sells, there’s your minimum valable product. But, figuring out who you are, your brand proposition, who your cucsomter is and how you’re going to speak to them. What are you going to provide them that they’ll love? We thought so deeply about who we are, and investing time and resources in that, against the advice of other people. At the end of the day, you have one shot to hit the market. Figure that out intently. Unless you have millions of dollars, you’ll hear crickets chirping if you haven’t figured out who you are and your customer if you want to start in eCommerce.

Ben: My thing is that you’re going to fail, don’t be scared to fail. Try something, analyzing what you’ve done, then fixing it, and trying again, then analyzing it, and make it better. There are few people that just want to put something online and it just goes boom, that doesn’t happen anymore. It happened 10 years ago but not now, you’ve got to be in your mind set that it’s going to work first time out of the gate. You have to plan, and you’re still going to fail, you need to accept that, and you have to try different things. Testing different scenarios from product to marketing/offers, etc. How it all goes, it’s all apart of the equation, but don’t throw your eggs at something. You’ll throw so much energy from something and can’t recover from it. Don’t be scared to invest the time to test!

Satish: Have a strong foundation and even better product. The stronger the product, the better. Then you can focus on the customer and the channel. Or you can start with a great customer focus and find the right products and channels. You need to build a foundation in your business that you feel good about. For most eCommerce startups, it’s the product. A crappy product will not sell. If you sell it you will push it down their throats through customer acquisition. So the best and fastest eCommerce businesses start with high quality products with limited customer markets. Then find every channel creatively as possible, to find that customer.

Audience Question 1: How do you get around shipping in Canada?

Ben: You don’t. One of the reasons eCommerce in Canada is so tough is because of our population density, 2-day shipping etc. All you can do is manage shipping costs. That’s what makes the ROI on eCommerce so much more difficult than retail. There are ways to manage those costs. We use different carriers, more than just Canada Post, depending on the regions etc. We have 2 DCs in Canada, and might increase that potentially. It’s all a game. It costs money to move product from Toronto to our DC in Vancouver. So you don’t ever get around shipping in Canada, you just manage the costs.

Audience Question 2: Shopify’s POS, where do you see the integration of a customer going forward? A big area we’re looking at is that you can’t push a customer one way or the other. Will there be a connection between offline and online?

Satish: If you have customers that are interacting on multiple channels, on a marketing level or product publishing or purchasing level. You want to try and track and understand those touch points. It takes strong analytics and integration to understand those different points of marketing, commerce and transactions. In Shopify we have an eye on how to bridge that with our POS for example. To understand where your customers are coming from, but there is more to be done to understand customer relationships. Value comes from where you see what, when and how your customer has purchased, but also where they first found out about you.

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