emarketer webinar: canada ecommerce—pedal to the metal

©2014 eMarketer Inc.

Canada Ecommerce—

Pedal to the Metal

Paul Briggs

Analyst, Canada

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


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

attractive-

ness”


But Canada

ranks 5th

globally in

expected

2014 retail

ecommerce

sales

growth.

And double-

digit 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

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


“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


Free

shipping is

the leading

incentive

for online

purchases

in Canada,

a relatively

new feature

from

retailers


Snuggle Bugz: Omnichannel ambitions

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


Baby goods retailer competes against big

box competition using an integrated

approach


More densely populated areas spend

more online, the result of faster service


BuildDirect: Differentiating with supply

chain

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

“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



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.



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

Canada Mobile Payments: Cultivating Fertile Ground

To learn more: www.emarketer.com/products

800-405-0844 or [email protected]

Q&A Session

Canada Ecommerce—

Pedal to the Metal

You will receive an email tomorrow with a link to

view the deck and webinar recording.

Paul Briggs

mailto:[email protected]

emarketer webinar: canada ecommerce—pedal to the metal

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