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Ecommerce in Canada is Neither a Treat nor a Trick


In a blog article back in July of this year I laid out some statistics about Canada’s lack of leadership on online ecommerce. The article was part of our charting series; we highlighted some stats and talked about an infographic our friends at Nextopia had recently released. Our conclusion was that Canada is falling behind the G7 pack when it comes to ecommerce.

Since the July posting, we have been collecting more facts and figures to highlight just how serious the situation is. We’ve done the research and have compiled the numbers for you below, and some of this information might come as a surprise. For others, this information will represent a challenge. We will show you two companies that have stepped up to that challenge. Both are customers of VL.

This week, the iconic Canadian women’s retailer Jacob finally declared it was throwing the towel in and closing down. I particularly loved the obituary for the company written by Thane Calder; it’s a good read that highlights the depth of issue we have in Canada with ecommerce. You can read Thane Calder’s Article “Did Digital Kill A Retail Icon?” here.

the death of Jacob failure of Canadian eCommerce

So what are we to make of the mock Jacob obituary? Its sad but its also so very characteristic of what we at VL see time and time again in Canada when it comes to integration and data integration.

Canadian ecommerce is neither a trick nor a treat: our lag in ecommerce development is an issue we should be taking into serious consideration as SMB/SME’s and as Canadian Citizens. Why? Well, let’s start with the numbers.

We Canadians are heavy internet users, and we love ecommerce.

The BDC, RCC, and Google identify that 72% to 77% of Canadians use the internet to research a purchase. The BDC tells us that 56% of Canadians shop online, and Statistics Canada tells us Canadians purchased $122 billion in goods online in 2012 – double what we spent in 2007. Clearly, Canadians love the internet. Shouldn’t this be a treat for Canadian Businesses?

Not so fast. The same people who tell us we are heavy ecommerce users also looked at what we buy, where we buy, and from whom we buy, and the picture isn’t pretty. Canadian Shoppers will only spend less than $22.3 billion of their total ecommerce expedatures with Canadian etailers. That’s $99+ billion we spend elsewhere! And worse still, that $22.3 billion only represents 6% of the total Canadian retail sales. Clearly, Canadians are buying heavily from outside our borders, and when we actually do buy from Canadian etailers we buy from .ca transplants like Amazon, Costco, and Walmart. The traffic stats in the graphic below clearly outline our deplorable ecommerce situation for Canadian etailers. Forrester Research tells us that 45% of Canadians bought from Amazon, while bought 11% from Walmart in the last year. Our closest all-Canadian etailer for the same time period was Canadian Tire with only 6% of online sales… Scary.

Canadian Share of Ecommerce Traffic

So, being patriotic Canadians… we spend our dollars at transplants. When you peel the onion to understand why, the reasons behind our online shopping habits start to be exposed. Some have postulated it’s our lousy customer service, higher prices, and higher shipping costs. These are clearly all factors, but there is more to it – these are all symptoms, but not causes. So let’s dig deeper into some more statistics from the people who brought us the first round of what should have been ‘treats’.

BDC tell us that only 12% of Canadian companies have an online presence. The RCC and Google estimate about 61% of Canadian SMBs are not online at all. Only 45.5% of Canadian businesses have an online presence and that number drops to 41% with SMBs. To me, the most surprising number is 49% of businesses want to be on the internet but don’t know where to start and need guidance. To top it all off, only 61% of Canadian companies actually invest in technology.

So, as much as we Canadians would like to buy from Canadian companies, the fact of the matter is we simply can’t because those businesses aren’t online. When they do get online they under spend or don’t spend on the ongoing maintenance of their online presence so it becomes stale. Those who do spend see an 82% positive return, according to the BDC.

It all boils down to this: if Canadian businesses are not online, how can Canadians order from them? Go into almost any bricks-and-mortar retail store in Canada and you’re struck with limited availability, little choice, poor service, and sky high prices. But its far more complicated than simply gettting on the net for SMBs in order to win more e-commerce sales on our own turf. Lets explore this more …

The Business Issue:

The well documented under spending on technology is having a profound effect on the competitiveness and productivity of Canadian businesses, the number speak for themselves. There is an elephant in the room: data and the exponential growth of data within business is creating challenges that are exacerbated by the under spending on technology. Companies that don’t take data seriously, don’t have data usage strategies, and don’t educate their work forces on the intrinsic value of data will fall far behind. Canada is facing a perfect storm – under-investment in technological infrastructure, lack of knowledge, and slow adoption rates.

Why Take Data Seriously?

The creation of data globally has increased exponentially since 2005. This is being driven by the explosion of cloud services, mobile technologies, and data generation in all sectors of the economy. GE jet engines create more data globally in a single day than twitter does in a single year. Data, its aggregation, analysis, and repurpose has significant economic value. The ability to create new goods and service offerings from data aggregation and analysis is driving a complete restructuring of the global economy. With data comes power.

With the backdrop of under-investment and lack of awareness in Canada, how does this bode for the Canadian economy?

In our mind it has become absolutely crucial for companies to understand that data has intrinsic value both within an organization and without. Once data is viewed in this manner, an organization needs to establish a data strategy that encompasses data governance, data cleanliness, data flow, and integration to the application layer within the company. This requires not only investment but also a vision of what they want to accomplish. A vision that is based not on reactive responses.

Let’s frame this discussion with a case study. Lets look at two Canadian companies who don’t fit into the late-adopters profile we been discussing. These two companies have forged a successful online presence and have leveraged the data they collect to grow their businesses.

Ecommerce Integration – Eliminate the Manual and Get Serious:

Thankfully there are companies in Canada that are doing things well in the world of e-commerce. Two of VL’s customers that are leveraging the online market to their benefit are Listen to Your Gut and Daneson. Danseon sells toothpicks and Listen to Your Gut (LTYG) sells supplements for suffers of Chrons and Colitis. Both are etailers that have invested in proper technology and who recognize the value of ongoing maintenance of their platforms. Both have leveraged proper integration between their shopping carts to eliminate expensive manual processes. LTYG uses Bigcommerce and Daneson uses Shopify. Both went through difficult times trying to get to where they are today, but their investments into themselves and their companies has more than paid off long-term.

As always we want to hear your thoughts on what we write. We also want to leave you with some references of the material we have collected, which can be found below.

BDC Infographic

Retail Council of Canada and Google Article

Forrester Research Article

Canada Post Infographic

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