The State of E-commerce in Canada

E-commerce in Canada is still playing catch-up to online retail in the United States.

E-commerce in Canada

Compared to the United States and some other countries around the world, Canadian shoppers have been slower to adopt online shopping. As of 2013 (the most recent year of verified statistics), only 13 percent of Canadian businesses were selling online. But other statistics show that Canadians are more than willing to adopt e-commerce. Projections show that 10 percent of all Canadian retail spending will be online in 2019, up from 6 percent from 2014. This is almost the equivalent to the 11 percent predicted for the United States.

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The challenges in growing e-commerce in Canada are no different than in most other countries:

  • E-commerce retailers are held to a higher standard. Retail consumer trends show that shoppers expect personalization with best-in-class service and greater transparency on product and price than they do from brick-and-mortar stores.
  • E-commerce means managing numerous variables. Online retailers often manage a vast inventory of product. Daily operations are more intense with the picking, packing and shipping of individual orders. The higher volume of post-purchase customer care is also an issue.
  • “One-size-fits-all” marketing doesn’t work. Traditional retailers send out one mass flyer each week. E-commerce requires personalized marketing emails sent at a frequency and volume determined by individual customers.
  • Geography sinks profit margins. The cost of picking and packing thousands of orders is no different than paying store employees. However, the cost of distribution to homes across entire countries is a much greater cost to the retailer.

Some have speculated that the slow adoption rate of e-commerce in Canada is due to a cautious approach in solving these challenges. Others have suggested that Canadian businesses aren’t ready or aren’t interested enough in e-commerce to make it worth the cost to accelerate its growth. Still others have noted that Canadian cross-border shopping with the United States has lessened the demand for faster growth in Canada. Statistics show that 9.2 million Canadians placed at least one order with US e-commerce retailers in 2015.

The geography challenge has a far greater impact in Canada than in most other countries. The need to serve Canada’s vast geography with a relatively small population base makes e-commerce growth particularly difficult for Canadian e-tailers.

But consumer demand is there and growing in Canada. Fortunately for them, numerous Canadian technology companies are equipped with the technical know-how and financial support necessary to support rapid e-commerce growth in the future of retail. Because Canada faces some major challenges, the adoption rate may never be as high as in the United States. But it is increasing and will continue to increase year-over-year as the Canadian retail industry continues to invest in systems, marketing and inventory to support it.

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