November 24, 2014 12:49 pm
Updated: November 24, 2014 12:51 pm

Canadian retailers are getting their butts kicked online

Canadian retailers have been "reluctant" to develop online sales, according to a new report. That's allowed some big-name U.S. players to win the majority of e-commerce sales in Canada.

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Black Friday is on deck this week, and more than ever Canadian consumers are being deluged with surveys, data and polls telling them how much they will spend, travel, click and otherwise occupy their time — and drain their bank accounts — in the pursuit of gifts this holiday.

While the data moves around and can be debated, what’s clear is where Canadians are sending most of their dollars when making purchases over the Web: to U.S. retail giants.

Fresh estimates suggest the likes of Amazon, Walmart and Apple among others whose owners reside south of the border are collecting most of the money we spend making online purchases. That trio alone takes in about half of the $21.6 billion in Canadian e-commerce sales annually, according to some estimates.

Add in computer maker Dell alongside other big U.S. sellers of electronics and general merchandise who operate in Canada, such as Staples, Costco and Best Buy, and the total share of the billions being spent online this holiday season swings heavily in favour of retailers with U.S.-based addresses.

“The headline numbers are eye-opening,” financial analysts at Raymond James said in a recent research note.

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Small but growing

Online sales still account for a relatively small portion of total retail spending in Canada, or 5.2 per cent of the more than $480 billion consumers spent on goods and services in 2013.

But the share is growing at a clip of 17 per cent a year and is expected to reach 7.4 per cent by 2017, according to research firm eMarketer.

And Amazon is in the pole position, according to BMO Capital Markets. “Our estimates suggest Amazon.ca is the market leader in Canadian retail e-commerce,” BMO analyst Peter Sklar said.

MORE: Amazon jumps out to lead in Canada’s online shopping wars

Experts at Raymond James suggest that big-name Canadian retailers have seen their positions slip as Amazon, Walmart and other big U.S. operators have stepped up their online sales efforts over the past couple of years.

The majority of Canadian bricks-and-mortar stores have been “reluctant to develop their online channels,” Raymond James analyst Kenric Tyghe said.

That appears to be changing though. Big Canadian stores, like Canadian Tire, have been testing out online sales strategies in recent months, introducing services like “click and collect” that allow shoppers to purchase products online and pick them up in stores.

Last year, both Amazon and Walmart began offering free shipping for many orders, something each has carried on with this holiday season.

MORE: Can Canadian Tire win over younger shoppers? It plans to

Touch and feel

But Canadian operators’ hesitance may stem from consumers’ overwhelming preference to make in-store purchases.

Poll figures suggest while many are using the Internet to seek out deals and products, they’re still headed to the store to make the final purchase.

Accenture, a professional services firm, said 71 per cent of people it surveyed this year will browse and research online before heading out to shop. The reason, they said, was to “touch and feel a product” before buying it.

Yet almost as many – 67 per cent – said they will also do the opposite: investigate a product in store before heading online to see if they can find it for less there.

© 2014 Shaw Media

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