eMarketer Webinar: Canada Ecommerce—Pedal to the Metal

F E B R U A R Y 12, 2 0 1 4

Canada Ecommerce—
Pedal to the Metal

Paul Briggs
Analyst, Canada
©2014 eMarketer Inc.

Agenda
A Brief History of Ecommerce in Canada
 Traditional inhibitors and what’s changed

2013: A Turning Point
 Key market developments
 Key ecommerce metrics

Ecommerce Startups Pace Change
 SHOP.CA
 Snuggle Bugz
 BuildDirect

Twitter – #eMwebinar @briggsrp

In the fall of 2012, we reported …
 The last mile in Canada is a costly mile.
Supply chain challenges due to geography and distribution
networks geared to bulk orders triggered from retail inventory.

 Ecommerce platform costs. Firms in Canada had
underinvested in the ecommerce platforms necessary to transact
with customers online.

 Limited payment options. Credit card transactions
were the main option for online transactions, resulting in higher
costs to retailers and consumers.


That was then, this is now …
 Supply chain improvements. Free shipping is the
norm and retailers have implemented innovative fulfillment
strategies (e.g., ship to store).

 Ecommerce platform costs have dropped
dramatically. Solutions from vendors like Shopify and
Magento make ecommerce much easier to implement.

 Broader payment options. Increasing use of debit,
cloud payment services, and payment solutions embedded in
ecommerce solutions increases choice for retailers and
consumers.


2013: A TURNING POINT


Recent ecommerce developments
Record-breaking December
 Online share of retail sales in Canada reached 7.8% in
December 2013, a record high for any month
(Source: “MasterCard Spending Pulse,” January 2014)

Online Apparel Purchasing is Hot
 50% growth in holiday transactions compared to a 15% gain in
retail ecommerce transactions overall
(Source: “The Moneris Spending Report”; transactions compared over same two week period in December 2012 and 2013)

Canadian-ization of Black Friday
 On Black Friday 2013, 10% of consumers in Canada bought
from a website in Canada, and 3.5% bought from a US site
(Source: DIG360 Consulting, Dec. 6, 2013, press release)


Still, Canada
remains far
down the list
when it
comes to
“digital
retail
market
attractiveness”


But Canada
ranks 5th
globally in
expected
2014 retail
ecommerce
sales
growth.
And doubledigit gains
are
predicted
through
2017

Retail ecommerce sales in Canada
represented 4.5% of total retail in 2013

UK = 11.7%
US = 5.8%

More than half of Canada’s population
were digital buyers in 2013

UK = 71.0%
US = 60.1%

Amazon.com
and
Amazon.ca
combined
have been
dominant in
attracting
Canada’s
online
consumers


Cross-border shopping is a popular
activity for digital buyers in Canada


Clothing,
shoes,
jewelry and
accessories
are the most
popular
product
categories
for online
purchasing


Credit cards
are the most
popular
payment
instrument
for buying
digitally,
although
services
like PayPal
are a viable
alternative


PCs remain the most popular device for
executing online transactions


STARTUPS PACE CHANGE


Canada-based ecommerce vendors are
attracting investor attention


SHOP.CA: Focusing on the key tenets of
ecommerce
“A few years ago, it was a different story. There
wasn’t a great online shopping experience for
consumers, and retailers were challenged in serving
this market.” —Drew Green, SHOP.CA founder and CEO
Launched in 2012, SHOP.CA focused on:
 Shipping experience
 Free shipping, free returns
 2.8 days average ship time nationally
 No inventory; direct ship from merchant partners

 Customer acquisition
 $25 incentive on a first buy of more than $100 (adjusted to $15 on $99)
 5% discount for loyalty members

Free
shipping is
the leading
incentive
for online
purchases
in Canada,
a relatively
new feature
from
retailers


Snuggle Bugz: Omnichannel ambitions
Baby goods retailer competes against big
box competition using an integrated
approach
 Two bricks and mortar locations in the Greater Toronto area
 Ecommerce revenue far surpasses physical retail
 Services a national online customer base
 Free shipping for purchases over $40, partnering with Canada Post

“We decided to treat ecommerce as a business.
We started investing in people that were solely
ecommerce. We started investing in inventory that
was solely ecommerce.”
—Benjamin Burmaster, founder and CEO, Snuggle Bugz

More densely populated areas spend
more online, the result of faster service


BuildDirect: Differentiating with supply
chain
“A lot of people do creative platforms in the
ecommerce space [for products] under 150
pounds—Amazon being the strongest, obviously.
Over 150 pounds requires a different network.”
—Jeff Booth, CEO of BuildDirect

Striving to be “the Amazon of building supplies”

 Focuses on orders weighing more than 150 pounds (mainly
flooring)
 Controls warehouses and freight costs
 Passes savings on to customers due to efficiencies in its network

 Two-pronged approach to “fix the channel”
 Ecommerce front end
 Supply chain management

Conclusions

 Strong ecommerce growth is expected annually,
with 17.4% growth in 2014. Gains will be driven by
rising consumer interest and better options from retailers.
 Retail ecommerce sales will surpass 7% of
Canada’s total retail sales by 2017. But Canada
will lag global leaders due to natural inhibitors like low
population density in much of the country.
 An increasing variety of specialty vendors will
become notable players. They will be enabled by
lower-cost ecommerce platforms and greater ease of launch.

Q&A Session
Canada Ecommerce—
Pedal to the Metal

Learn more about digital marketing with
an eMarketer corporate subscription
Around 200 eMarketer reports are published
each year. Here are some recent reports you
may be interested in:
 Canada Ecommerce: Startups Pressure Established
Players to Innovate
 UK Retail Ecommerce: Q4 2013 Forecast and
Comparative Estimates

Paul Briggs
You will receive an email
tomorrow with a link to
view the deck and
webinar recording.

 Canada Mobile Payments: Cultivating Fertile Ground
To learn more: www.emarketer.com/products
800-405-0844 or webinars@emarketer.com


eMarketer Webinar: Canada Ecommerce—Pedal to the Metal

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