E-commerce & Canada: Why are we falling behind?
E-commerce & Canada Eh…
The other day, I noticed a very interesting stat in the 2013 A.T. Kearney Global Retail E-Commerce Index report. 17.7% of businesses in Canada engage in e-commerce, which is generally unimpressive (especially in the face of our peers). The usual, digitally savvy countries top the list (as expected), but what struck me the most was where Canada is placed and, perhaps more importantly…Why? Why are businesses with a presence in Canada hesitant to take the e-commerce leap?
Before we get started, I thought I’d share our thoughts on this trend. From our perspective, e-commerce clients represent the holy grail of digital optimization. When a conversion is a sale, we’re able to understand and evaluate how each channel contributes to a purchase. We can identify barriers to purchase, test out tactics, and ultimately ensure that a digital marketing budget is allocated towards activities that result in sales. Ok, back to the study…
Is Canada not worth the effort? The report shows that 73.5% of the population has the appetite to purchase online, which puts us higher than China which sits atop the list. Target made its way north of the border recently with bricks and mortar…but no e-commerce…Why? Major supermarkets (excluding specialty stores) in the UK offer online shopping and delivery-to-door. Some US chains offer the same. In Canada, you can barely download the weekly online flyer…Why?
It’s not as though Canadians do not engage with e-commerce, we are just being outpaced by other countries at the moment. In 2010, 51% of Internet using Canadians ordered goods or services online amounting to roughly 114 million orders, valued at about $15.3 billion according to Stats Canada.
Of those who did not place an order, nearly one-third (32%) said that the main reason was that they had no interest, while 26% preferred to shop in person, and almost one-fifth (19%) cited security concerns.
Barriers to E-commerce
These numbers are significant, but there are certain barriers acting against us on the e-commerce front:
Banking structure. The majority of financial institutions in Canada (until recently) didn’t offer debit cards with a VISA/MasterCard guarantee. Canada seems to be very protective of Interac as the sole method of debit payment processing. Compared to VISA and MasterCard, Interac is very limited in the amount of merchants you can purchase from online. Interac now offers ‘Interac-Online’, but this comes at an additional fee from your bank and is only offered through BMO, RBC, Scotiabank and Canada Trust. Put plainly, the need for a credit card for online transactions has certainly slowed the adoption in Canada.
Population. Canada has a smaller population than the State of California (34m vs 38m) and just over ½ of the UK population (63m). Some businesses consider such a small population instantly unprofitable for the cost of creating e-commerce environments.
PST, GST, HST… The inconsistency between provinces in terms of laws and taxes can make it a real sore-spot for businesses looking to create e-commerce opportunities. Rather than jump through the taxation hoops that provincial legislation has dictated (for an already “unprofitable” market), many companies are just abstaining from e-commerce all together.
Canadians. We are a friendly bunch! We enjoy interacting with others (for the most part) and, according to Forbes magazine, we are the 4th Friendliest Country in the world. Why would we want to transact online when we can walk through a shop and have a good nose around with a large double-double in hand? People in Canada tend to choose the traditional purchase path if given the choice.
If we could order that double-double online, the Canadian figures would undoubtedly see a serious spike! In any case, e-commerce is here to stay and even if Canadians are a little slower on the adoption, this is still an important part of the digital marketing landscape. We have the infrastructure. We have the growth potential. Now we just need the adoption!
E-commerce or not, if you’re looking for someone to help drive your business forward, get in touch. We’ll provide the double-double.