Online shoppers do tend to be younger, but older demographics are becoming accustomed to eCommerce, and are buying online in greater numbers.
Canadian eCommerce has been a sleeping giant, but it’s waking up. And quickly. This article looks at the online shopping behaviour of the Canadian eCommerce market.
While eCommerce represented only 4.5% of retail sales in 2013, this is predicted to rise quickly to 8.2% by 2018 (Source: 2015 Borderfree Index: Canada Country Report), and several other data points seem to suggest even more rapid growth than this might be expected. The overall trend is definitely onwards and upwards.
Figure 1: Overall eCommerce sales trends in Canada (2015 Borderfree Index: Canada Country Report)
In fact, it could reasonably be argued that the status of Canada closely resembles that of Australia a year or two ago: everything points to green, and there is probably a significant early-mover advantage to be claimed.
For those suspicious of this type of high-level aggregated data, there is some very strong collateral available in the form of actual parcel volumes delivered by Canada Post (who have by far the dominant position in parcel carriage in Canada – see the logistics section). They report an overall rise of 16% in parcel volumes first-half 2014-first-half 2015.
Figure 2: Category level parcel growth (Canada Post, eCommerce Continues to Grow, October 2015)
Be warned however: “mass merchant” on this chart might well be a nice euphemism for Amazon.
In mid-2013, it was estimated that 41% of consumers bought at least one product online (Business Development Bank of Canada, 5 game changing consumer trends, October 2013). By the end of 2014 this had risen to around 80%, a fairly startling rise.
As is typical in most developed markets, there is a skew towards younger consumers. This is less marked than in many countries, meaning that silver-surfer propositions targeting more affluent older demographics will be relatively strongly placed in the Canadian online retail space.
Figure 3: Demographics and evolution of internet shoppers in Canada (Ipsos Canadian Inter@ctive Reid Report, 2014), (Canada Post, Online Shoppers & Buyers, 2012)
Encouragingly, Canadians are keen to buy online in categories which are relatively easy to implement cross-border, especially clothing / apparel, health & beauty, baby & toys, and homewares.
Figure 4: Consumer category purchasing behaviour (Canada Post, Online Shoppers & Buyers, 2012). (Ipsos survey for Business Development Bank of Canada, 2013.)
Being realistic, categories such as consumer electronics or motor accessories only lend themselves to cross-border eCommerce in very specialised niches: nevertheless, online consumers for such products are also present in Canada (although of course you may well find competition from the US, especially for items with significant shipping costs due to weight or bulk, to be rather strong).
Average order values
Average order values (AOV) in Canada in 2014 were 74% of those in the UK (2015 Borderfree Index: Canada Country Report). There is no evidence that this reflects an unwillingness to make larger purchases online and is therefore possibly simply a mix issue — it is slightly unusual to see apparel so prominent relative to consumer electronics as a category in an evolving market such as Canada.
There is also some evidence that Canadians have traditionally been less comfortable with cards as payment methods than UK or US consumers, and although this has changed rapidly over the last decade, it may still be reflected in AOV.
It is also worth repeating IMRG data demonstrating that overseas orders typically have higher AOV. Even if Canada really does have lower AOV in your categories (which seems unlikely in reality), this effect will probably compensate overall.
Figure 5: Average 1-man non-food order values for UK retailers (IMRG Metapack UK Delivery Index Report, January 2017)
Canada has been slightly behind other markets in embracing smartphones due to prohibitively high data fees, and so mobile penetration remains a little behind what you might be used to.
Nevertheless, mobile is still significant and growing, and you cannot afford to be without a strong mobile experience if you intend to target Canada (it is in fact possible to speculate that one reason Canadians often shop online outside Canada – see opposite – is that quality of local mobile propositions is rather variable. Porting an existing strong mobile or responsive site to Canada might offer you an advantage.)
The percentage of visits via mobile exceeded 50% in early 2015.
Figure 6: Sessions by device on Canadian eCommerce sites, 2015 (Source: Demac - Canadian eCommerce Quarterly Benchmark Q2 2015)
There is the usual disconnect between mobile sessions and mobile transactions seen in many countries (really in almost all countries except China), with conversion rates on mobile much lower than those on desktop.
Figure 7: Revenue by device on Canadian eCommerce sites, 2015 (Source: Demac - Canadian eCommerce Quarterly Benchmark Q2 2015)
Why Canadians buy online
Canadians buy online for reasons you’ll be familiar with: most believe it’s easier to research online than in store, 39% claim it’s the wider range of products, and 22% claim it’s for price reasons (Canada Post, Online Shoppers & Buyers, 2012).
You might be tempted to take that last statistic with a pinch of salt. Canadians are seriously prepared to look at overseas sites (especially US ones of course), and Amazon is growing rapidly. Price, and price transparency, almost certainly plays just as important a role in eCommerce in Canada as it does everywhere else.
Why Canadians don't buy online
Once again, no surprises…with one exception: customs and duty fees feature high on the list. Canadians are evidently more than usually aware of the cross-border purchasing possibilities that eCommerce offers them.
Figure 8: Why Canadians don’t buy online (Source: Demac - Canadian eCommerce Quarterly Benchmark Q2 2015)
Importantly, all of these items with the exception of customs duties are issues you can do something about. It’s also instructive to compare this with IMRG’s own data about why consumers are reluctant to buy from overseas sites, which once again largely includes easily-overcome obstacles.
Figure 9: Reasons for not shopping from overseas sites (IMRG Blackbay UK Consumer Home Delivery Review, 2015)