Online retail competition in Canada

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The good news is that Canadians are amongst the most prolific cross-border eCommerce purchasers in the world.

 

The even better news, at least if you’re not a Canadian retailer, is that this is to a significant extent because the local retailers have been poor at eCommerce, although the bad news is that they seem to be getting better at it.

 

This article looks at some of the top retailers in the Canadian eCommerce market to help you understand the competitive landscape there.

 

This issue has even been raised at senior government and parliamentary levels with in-depth reports being published looking into the weakness of Canadian businesses online in general and in eCommerce in particular. (Source: E-commerce in Canada: Pursuing the Promise: Report of the Standing Committee on Industry, Science and Technology, House of Commons Canada)

 

Rather staggeringly, in 2016, in one of the most consumer-online countries in the world, only 46% of Canadian businesses had any sort of website (Source: CBC). And it’s much worse for SMEs, so if you have some sort of niche proposition, you might find the playing field is empty.

 

Key Points

  • Canadians have been forced to become enthusiastic cross-border shoppers
  • This is starting to change, not because cross-border purchasing is decreasing, but because domestic retailers are at last starting to get their act together. They’re still coming from a long way back in general, and it’s likely you’ll be offering a superior experience on day one
  • Many US retailers have an online presence in Canada. Don’t automatically assume it’s as good as it is in the US
  • Amazon are already present in strength, but without dominating in the way they do in the US, or to a lesser extent in Germany
  • International brands such as H&M, Zara and IKEA have eCommerce-enabled Canadian sites that conform to their global template
  • A few UK retailers appear to be taking Canada more seriously, notably Next and Marks & Spencer, neither of which is using a .CA domain name

Americans in Canada

 

The very bad news is that US retailers have been busily filling the gap between supply from the local retailers and demand from Canadian consumers.

 

The top 3 online retail sites are eBay (9%), Amazon (12%) and Apple. The top 10 are all American. And amazingly, only one of the top 20 sites is Canadian: Canada Computers. (Source: BMO Nesbitt Burns, May 2015)

 

Walmart, Costco, Nike, Gap, and American Apparel are all present under Canadian domain names, and will be used to benchmark payment and delivery propositions.

 

Amazon presence

 

Amazon is increasingly active in Canada, with online sales estimated (as always, Amazon is rather coy with its published data) to be currently about CA$2bn. This could be either bad news if Amazon is a competitor, or good news if Amazon marketplace is a useful route-to-market for your products.

 

It isn’t offering quite the full range it offers in the US or UK, but categories include books, music, movies & TV shows, Kindle, electronics, software, video games, home, kitchen & pets, garden, health & beauty, toys, clothing, sports, automotive and boutiques.

 

Note that if you want to use Fulfilled by Amazon to sell via the Amazon marketplace into Canada, you’ll need to import your goods into an Amazon Canada fulfilment centre. This is different to operating within the EU, where this importation step is not required.

 

Local Benchmarks

Top sites

 

The following list has been used to benchmark Canadian retailers online. It was constructed by listing top online retailers, and then eliminating those that are not Canadian, and also those in categories which are unlikely to be of interest for cross-border. It isn’t exhaustive, but gives a good illustration. You might also take the view, once you’ve looked at a few sites, that it also explains why Canadian retailers aren’t more dominant in their own domestic online market.

Canada Top Websites

These retailers will be used later to illustrate domestic propositions for payment methods and delivery times that international retailers might want to aspire to.

The British in Canada

 

Many larger British retailers already offer shipping to Canada. These include (not an exhaustive list) Next, Marks & Spencer, Debenhams, Harrods, John Lewis, ASOS, New Look, House of Fraser, JD Sports, River Island, Boohoo, Peacocks, Jack Wills and NotOnTheHighStreet.

 

Very few offer explicitly localised Canadian propositions, although both Marks & Spencer and Next do so, supported by quite competitive delivery promises. Even ASOS appears to currently be treating Canada as ‘just another international destination’, unlike its country-stores in Australia or the US for example.

 

Next have chosen a subdomain structure, while Marks & Spencer have elected for folders. Neither has attempted to use a Canadian domain name.

For more information on the Canadian eCommerce Market, download the FREE Canada Country Guide.

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