eMarketer Webinar: Canada Ecommerce—Pedal to the Metal


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Join eMarketer's Paul Briggs for a discussion on what’s driving strong ecommerce growth in Canada.

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eMarketer Webinar: Canada Ecommerce—Pedal to the Metal

  1. 1. 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.
  2. 2. 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 ©2014 eMarketer Inc.
  3. 3. 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. Twitter – #eMwebinar @briggsrp ©2014 eMarketer Inc.
  4. 4. 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. Twitter – #eMwebinar @briggsrp ©2014 eMarketer Inc.
  5. 5. 2013: A TURNING POINT ©2014 eMarketer Inc.
  6. 6. 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) Twitter – #eMwebinar @briggsrp ©2014 eMarketer Inc.
  7. 7. Still, Canada remains far down the list when it comes to “digital retail market attractiveness” ©2014 eMarketer Inc.
  8. 8. But Canada ranks 5th globally in expected 2014 retail ecommerce sales growth. And doubledigit gains are predicted through 2017 ©2014 eMarketer Inc.
  9. 9. Retail ecommerce sales in Canada represented 4.5% of total retail in 2013 UK = 11.7% US = 5.8% Twitter – #eMwebinar @briggsrp ©2014 eMarketer Inc.
  10. 10. More than half of Canada’s population were digital buyers in 2013 UK = 71.0% US = 60.1% Twitter – #eMwebinar @briggsrp ©2014 eMarketer Inc.
  11. 11. Amazon.com and Amazon.ca combined have been dominant in attracting Canada’s online consumers ©2014 eMarketer Inc.
  12. 12. Cross-border shopping is a popular activity for digital buyers in Canada ©2014 eMarketer Inc.
  13. 13. Clothing, shoes, jewelry and accessories are the most popular product categories for online purchasing ©2014 eMarketer Inc.
  14. 14. Credit cards are the most popular payment instrument for buying digitally, although services like PayPal are a viable alternative ©2014 eMarketer Inc.
  15. 15. PCs remain the most popular device for executing online transactions Twitter – #eMwebinar @briggsrp ©2014 eMarketer Inc.
  16. 16. STARTUPS PACE CHANGE ©2014 eMarketer Inc.
  17. 17. Canada-based ecommerce vendors are attracting investor attention ©2014 eMarketer Inc.
  18. 18. 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 Twitter – #eMwebinar @briggsrp ©2014 eMarketer Inc.
  19. 19. Free shipping is the leading incentive for online purchases in Canada, a relatively new feature from retailers ©2014 eMarketer Inc.
  20. 20. 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 Twitter – #eMwebinar @briggsrp ©2014 eMarketer Inc.
  21. 21. More densely populated areas spend more online, the result of faster service ©2014 eMarketer Inc.
  22. 22. 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 Twitter – #eMwebinar @briggsrp ©2014 eMarketer Inc.
  23. 23. 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. Twitter – #eMwebinar @briggsrp ©2014 eMarketer Inc.
  24. 24. 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 ©2014 eMarketer Inc.