Amazon.ca outselling its rivals
Company sells four times as much as biggest e-commerce competitors
TORON TO — Amazon.ca could crush other online retailers in this country even as Internet shopping in Canada continues to lag other markets, according to a new industry report.
The report from BMO Capital Markets estimates the Seattle-based online shopping giant captures up to seven per cent of Canada’s $21.6 billion in e-commerce sales, a vastly bigger market share than other retailers who sell online, and more than four times larger than the nex-tin-line players, Costco.ca (1.6 per cent) and Walmart. ca (1.5 per cent).
It comes as retail giant WalMart Stores Inc. slashed its sales forecast this week and said it would slow down the pace of its U.S. brick-andmortar store expansion, while stepping up its spending on e-commerce and digital initiatives by as much as 50 per cent next year.
“Canadian retail e-commerce appears to be a fragmented market with few operators of scale, (and) Amazon.ca has a significantly lower share of retail e-commerce in Canada versus Amazon.com in the U.S. (about 14.9 per cent) and Amazon.co.uk (about 9.8 per cent),” analyst Peter Sklar wrote in the report.
“Based on the U.S. and U.K. experience, it appears Amazon.ca has the potential to significantly increase its share of Canadian retail sales and could eventually represent one per cent of total retail sales in Canada.”
Notably, online shopping is still undeveloped here relative to other countries; in 2013 e-commerce represented 4.5 per cent of overall Canadian retail sales, according to eMarketer, compared with 5.8 per cent in the U.S. and 11.6 per cent in the U.K.
Sklar attributes Amazon.ca’s success in part to its leapfrog in the number of goods it sold relative to its Canadian rivals in 2013, when it introduced 14 new merchandise categories, including dry groceries, office products and cosmetics. And with 58 million items on offer, Amazon.ca still has a ways to go before it catches up to Amazon.com at 266 million items, the analyst noted.
Still, while Amazon Canada saw its share of total Canadian web traffic double in 2013, its traffic growth rate has flattened a bit this year.
“Amazon.ca could still represent a threat to the retail sales of the incumbent domestic retailers if the website were to begin to dominate certain product categories such as health and beauty,” the report concluded.
“Amazon.ca’s revenues could triple or quadruple from current levels, and noticeably impact the sales of the incumbent Canadian retailers” if the retailer increases its offering in apparel and groceries and achieve retail sales share here similar to what it has in the U.S. and the U.K.
The BMO report is based on comScore Internet traffic data coupled with estimates of customer “conversion rates” of those who browse versus those who buy and estimated customer shopping basket sizes. It did not include potential sales from mobile commerce, so the actual sales could be above the report’s estimates, Sklar said.