While Canadians enjoy surfing the Internet as much as or even more than Americans, we remain reluctant on-line shoppers. However, Canadian retailers have also demonstrated some reluctance regarding on-line shopping.
Michael Eubanks, vice-president of IT and e-commerce with the Retail Council of Canada in Toronto, recalls that initially traditional retailers were slow to get on-line as compared to the ‘pure’ dot.com players.
“Eighteen months ago, the complaint was that there wasn’t enough Canadian retail sites on-line and since then there has been tremendous growth. The new and younger dot.com retailers can react faster and they did,” Eubanks says.
The initial lack of investment into on-line retail was the result of Canadian retailers lacking the technical skills and the infrastructure that the United States had, explains Eubanks. Traditional Canadian retailers didn’t have the mail order and cataloguing businesses in place that the United States had to take advantage of the new on-line channel. In Canada there was only Eaton’s and Sears — and Eaton’s went under, points out Eubanks.
However, Eubanks says Canadian retailers are now getting wise as to how to exploit this new channel.
“We are in the evolution stage,” he says. “In 1999, we had less than half of Canadian retailers with an on-line presence and now we have more than half. The sites are now more consumer-oriented and there is a different mind-set [among retailers].”
BUILDING ON BRAND
The one strength he believes that the Canadian retailers have against their dot.com rivals is the brand recognition that a Canadian Tire or Hudson’s Bay Company has built up over decades or centuries.
“The dot.coms have spent billions [on advertising] but, you’re not going to get business without brand recognition,” Eubanks says.
“People are comfortable with what they know and they’ll be comfortable doing business on-line the same way,” agrees Joe Greene, IDC Canada’s vice-president of Internet Solutions Research in Toronto. However, he points out that Amazon, E-Bay and E-Trade have all built good brand names. “They led the charge and brought attention to what this can do.” Now, traditional brick-and-mortar companies need to explore if the new Internet channel should be a viable part of their own business strategy.
Greene says some good examples of traditional Canadian retailers (bricks-and-mortar companies) that have successfully moved to on-line retailing include: Future Shop, Hudson Bay, Canadian Tire, HMV Canada and Chapters. However, Chapters is still losing money in the on-line business, he notes.
One problem for traditional retailers, he suggests, is that there is a lot of duplication occurring in going on-line and having both an ‘organization’ for the Web site and for the traditional stores. If a retailer can keep things together, then the new channel will greatly enhance and complement their existing business, he points out.
Despite the brand recognition many ‘brick-and-mortar’ retailers have, Eubanks acknowledges that Canadian retailers still have their work cut out for them.
“We have a little more work to do. [For example] there needs to be a better job in communicating about security to consumers and retailers,” he adds.
In terms of the Internet economy, Greene says Canada is ahead of every nation on earth because we have the fortune of being the neighbour of the largest economy in the world – the United States. He says it’s not that we’re aggressive in Canada, but that we have a branch plant economy where U.S. multinationals that operate in Canada will maintain a Web presence here as well.
“Of course this is only for now, as Western Europe and Asia will pass us,” he predicts. “In Canada we tend to be a little more conservative.”
He says the biggest impediments to adoption of the on-line channel by Canadian retailers and wholesalers are cost and the lack of IT skills.
“There are two facets to building an Internet channel,” he explains. “The first is expanding your markets and the second is cutting costs by tying to your suppliers and partners. One question that has to be asked is where do you want to take your business? If you’re local, you have to think that through.”
Of course there are other problems to address. Greene cites transportation for example. Will you ship directly from the wholesaler and bypass the post office to get goods delivered to your customers? How will problems with data entry error or other customer complaints be handled?
TO GO ON-LINE
More and more Canadian businesses are finding it necessary to turn to consultants to help them answer these e-business questions. Depending on the company, consultants can play a big role in help the business adopt this ‘new’ channel.
There are two kinds of consultants, suggests Eubanks. He views the “traditional” business consultants as adept at answering how to improve your business plan and operation while the “technical” consultants can address the technical issues.
“If the retailers have done their homework, choosing a good consultant will not be a challenge,” he says Eubanks. “You need to have someone who understands your business process and the execution of your strategy.”
“What you need is someone who understands IT and who understands your business,” stresses Greene. He views the best e-business consultant as the “all in one” kind – who successfully combines the IT knowledge with an understanding of the business processes. Examples are IBM, EDS, PricewaterhouseCoopers, Ernst & Young, CGI Group and Andersen Consulting. While such consultants primarily work with large clients they will offer everything a business needs, says Greene.
However, the major consultants don’t come cheap either. For small- or medium-sized businesses there are other consultants that will cater to the e-business market. Some bring IT skills and others have the business process skills. Then, there are the “pure” Internet commerce consultants such as Toronto-based Cyberplex Inc. and Vancouver-based Burntsand Inc. However, these “pure consultants” are not as prevalent in Canada, says Greene.
Some consultants will do a complete assessment and then partner with IT specialists, but Greene cautions against this type of consultant.
“With the consultant who contracts out or partners with others, if something goes wrong then the finger pointing begins to happen,” he warns.
To avoid such problems, Greene recommends that the responsibilities of the consultants and their contractors be clear as well as the organization’s expectations.
Greene also recommends checking references of other clients the consultant has worked for: did they meet that client’s expectations? That homework now can pay off down the road to helping your organization getting on-line and on track.
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CAPTION FOR CGI GRAPHIC (BEING SENT TO YOU DIRECTLY):
Retail and wholesale firms can get the best help going on-line from a number of consultants who successfully combine IT knowledge with an understanding of business processes. Such consultants help you plan, implement and maintain IT within the specific context of a firm’s business strategy.
CREDIT GRAPHIC TO:CGI Group Inc.
CAPTION FOR JOE GREENE:
Cost and the lack of IT skills impede Canadian retailers and wholesalers from adopting e-commerce, says Joe Greene, IDC Canada’s vice-president of Internet Solutions Research.
CAPTION FOR MICHAEL EUBANKS:
Choose a consultant who understands your business process and the execution of your strategy, advises Michael Eubanks, the Retail Council of Canada’s vice-president of IT and e-commerce.
PULL QUOTE OR DECK:
The strength Canadian retailers have against their dot.com rivals is brand recognition. People will be comfortable doing business on-line with