An on-line study released by Deloitte & Touche together with the Angus Reid Group found that 70 per cent of Canadian on-line purchasers prefer to purchase from Canadian sites.
Fifty-two per cent made their last purchase at a Canadian site, compared to 38 per cent in March 1999. The survey was filled out by 824 Web users in November, 1999.
“The obvious economics for buying in Canada is, for a lot of goods, it’s cheaper including delivery costs, freight, GST, PST, whatever duties may apply at the border, the whole thing. It is factually less expensive to buy several things – not everything, because there are deals to be had anywhere in the world, but on balance for things people are looking to buy, it’s less expensive,” said Tom Dagenais, national director of information technology solutions with Deloitte & Touche in Toronto.
“But the bigger value and the more important issue is Canadians are comfortable buying from brand names they have historically had a relationship with. In that regard, the experience they’ve had with a company in the old traditional bricks-and-mortar buying way, carry through in their perception of comfort, security and feelings of safety of buying from them on-line.”
Dagenais said part of the reason for the difference between March and November is the increased presence of Canadian retailers on-line.
“You’re starting to see now that the tier one retailers are pretty much up and running. The tier two retailers are starting to get into the game, which is the local, regional franchise.”
Much ado was made throughout 1999 of the lack of Canadian businesses on-line. Some companies balked at the amount of money necessary, especially for the bank-required bonds for not-present credit card transactions. Dagenais said it isn’t just the bank bond, but the whole expense of setting up a proper e-commerce site.
“Canadians are not afraid, they’re not stupid, they’re not behind technologically… They have a clue, they know how to do this, it’s just a matter of getting the money and understanding the size of the investment.”
He said an e-commerce site could range from $300,000 at the absolute low end to as much as $5 million on the very high end, partially because of the need to restructure the business to handle on-line sales.
“You have to get your business processes realigned for on-line shopping and understand that customers right now are zero-tolerant of your site being down, your site being insecure, your site using private and demographic data for other purposes. They’re zero-tolerant about delivery problems and delays, about a lack of customer service and support policies and return policies being in place before you go live.
“So when you start looking at the combination of people, processes and technology that need to be in place, it gets expensive. But it can also be lucrative,” said Dagenais.
He said retailers need to learn that they must have a policy of “goods satisfactory or money refunded.” They also need to understand that customers won’t want to take on the charges for returns.
“A company like Sears that has extensive experience with catalogue buying — and on-line buying is no different except in how you place the order — they find that people would order two or three different sizes (of clothing) and then return the two that didn’t work. They had the build, processes and systems to deal with that volume of returns and understood that that’s how the apparel retail industry worked,” explained Dagenais.
“New retailers that don’t have that catalogue experience are finding out the hard way.”
Shoppers who go order from the U.S. will likely have to pay border charges that won’t be refunded, even if the company does take on the burden of return shipping charges.