Nearly half of online purchases made at foreign retail sites
TORONTO — Even though Canada’s biggest online retailers are growing faster than their U.S. counterparts, competition is at an all-time high given that close to half of Canadian consumers’ online purchases are made at foreign retail sites, according to a new report.
The report from E-Tail Canada also found that 62 per cent of Canadian retailers surveyed saw the value of their online orders rise between 2015 and 2016, and 71 per cent saw their conversion rate grow — the number of initial customer clicks that result in an actual purchase, as opposed to browsing.
That’s positive news for retailers given that Canadians are expected to spend $39 billion a year online by 2019, accounting for about 9.5 per cent of all retail purchases, according to estimates from Forrester Research.
“With double-digit percentage increases in online sales year on year since 2010, Canadian retailers are having to adapt to remain competitive,” the E-Tail Canada report says.
The agency’s research also illustrates what trends are catching on among retailers who are trying to offer customers easier online shopping experiences, a strategic asset if it can prevent a loss of sales to foreign retail websites.
Thirty-seven per cent of Canadian retailers surveyed currently offer customers socalled “cross-channel” returns or exchanges, allowing customers to return items in stores that they bought online, while 8 per cent were in the process of implementing the capability and 13 per cent planned to do so in the next two years.
Similarly, 31 per cent of retailers show web customers realtime store inventory online, while 15 per cent were in the process of implementing the technology and 22 were planning to introduce it within the next two years.
“American retailers have been generally ahead of the game in e-commerce compared to Canadian retailers — it’s just a more mature market, about two to four years ahead of where we are,” said Craig Patterson, director of applied research at the University of Alberta’s school of retailing. Some Canadian retailers still do not sell much, if anything, online. “Holt Renfrew has some e-commerce, but they don’t have a comprehensive fashion offering online.”
Statistics Canada reported that Canadian e-commerce sales were $19.2 billion in 2016, with about 60 per cent of the purchases made from domestic retailers and 40 per cent from foreign retailers.
The Retail Council of Canada has been trying to maintain the socalled “de minimus” threshold on imports of U.S. goods at $20 — the level at which a parcel incurs taxes and duties — arguing that raising the threshold will hurt Canadian retailers.
“It’s a disadvantage to Canadian retailers have to charge the tax when U.S. retailers who do not, and it’s a disadvantage to government entities who would otherwise be collecting sales tax,” Patterson said.
“But it’s a challenge, because in there are many products that are not available for sale on Canadian sites that (Canadians consumers) want to buy.”
One of the clearest emerging digital trends in the E-Tail Canada data is digital media’s influence on marketing.
Sixty-seven per cent of the retailers surveyed said their traditional marketing budgets had shifted to digital marketing; 12 per cent of the companies said their overall marketing budget had shifted to digital by more than 50 per cent, while 19 per cent said digital marketing took up 25 to 50 per cent of their overall marketing costs.