Canadians surf better than they buy

Why are Americans more than twice as likely to shop on-line (Forrester: 47 per cent to 23) as their equally connected Canadian counterparts? A recent Ernst & Young survey found that Canadian on-line shoppers would spend, on average, 14 per cent of their holiday dollars on-line while their American counterpart will spend 29 per cent.

“Canadians are smarter,” was the rather blunt yet flattering opinion of Paco Underhill, managing director of Envirosell in New York and author of Why We Buy: The Science of Shopping. “I think that a lot of the e-commerce at the outset was hype (in the U.S.) and that we had an enormous amount of advertising beamed at us to drive us to the Web to shop and lots of us went there,” he explained.

There is little question that American companies have spent far more advertising dollars to propel consumers to their Web sites. At the same time many traditional Canadian retailers have been slow off the mark, some only recently introducing e-commerce options. Canadian retail’s slow adoption and minimal selection is seen by many as the real crux of the on-line shopping disparity.

“The selection and variety is so much greater on the American sites than on Canadian sites,” said Faye West, president of the Canadian Information Processing Society. “I would love to be able to shop and have the selection (that I have on U.S. sites) on Canadian sites. I have been very disappointed at the quality of some of the Canadian sites I have looked at.”

West said she saw a print ad for a sweater with a Web address printed at the bottom. She went to the site only to find the company had no e-commerce capability and a rather pathetic site. The company is a well-known Canadian retailer, which shall remain nameless since it is not alone suffering in from this affliction. Apparently having a Web address is de rigueur in Canada while having a useful Web site is not.

Jed Kolko, a consumer technology analyst with Forrester Research in Cambridge, Mass., agrees with West. “Canadian retailers are less well stocked for on-line purchasing than Americans are,” he said. “A significant percentage of Canadians said they ended up buying something off-line because they couldn’t find it from a Canadian retailer on-line.”

That selection is far greater in the United States is hardly surprising given a population base of almost 300 million potential buyers. What is surprising is why Canadian on-line retailers are, for the most part, not doing a very good job. To be sure some sites are outstanding but others are, at best, a lame attempt to join the e-commerce world.

West points to the American risk-taking culture, the “build it and they will come” attitude. Americans take risks more than Canadians and retailers set up sites in hopes of being profitable, she explained. Canadian companies want the Web site traffic but may not be as willing to put the money up front to get eyeballs.

“I think that is exactly right, I really attribute it to choice [that Americans are shopping more on-line than Canadians],” said Ben Babcock, partner at Ernst & Young LLP in Toronto.

“I think Canadian retailers have taken a measured approach to the on-line channel as an alternative to the store channel,” he said. “I think it is this measured approach that is causing things to be a little slower here.”

The Ernst & Young survey found that seven of the top 10 sites for Canadian on-line shoppers are located here in Canada. When you look at our stumbling dollar and other trans-boarder shopping issues, it is not surprising.

“The prices are fine but once you add on the shipping, the handling, the duty, the exchange, the GST for things that are coming out of the States, it gets to be very expensive, it is just not worth the cost to complete the purchase,” West said.

“That exchange rate makes a big difference in people’s minds,” Babcock added.

In fact shipping is often a big issue, especially for smaller ticket items.

“It is certainly the case that a lot of Canadian shoppers have found shipping costs to be a rude surprise…and when people are buying on-line, nobody likes a rude surprise,” Kolko said.

Regardless where we shop, security and privacy do not seem to be a big concern. “Though [security] is what people say when we do the interviews, I don’t believe that is the real demotivator,” said Gaylen Duncan, president and CEO of the Information Technology Association of Canada (ITAC) in Mississauga, Ont. “If it was privacy and security, there is no bloody way we would be doing our banking on-line,” he explained.

The Forrester survey found that 25 per cent of on-line Canadians bank on-line while only 15 per cent of their American counterparts do. And where would security be more of an issue that at your bank?

The message seems clear: Canadians want to shop on-line but find Canadian Web sites just don’t offer what they want. Shopping in the U.S. is an option but not the most favoured.

“A lot of shopping does not occur because they can not find it at a Canadian site, yet they know that they can find it at a Canadian store,” Duncan concluded.

Note to Canadian on-line retailers: build it properly and they will come.

B copy for page 4


Canadian on-line business may reach $272 billion


By IT World Canada staff

On-line business trade in Canada will reach $272 billion in 2005, representing 18 per cent of all business-to-business transactions, according to a recent report from independent research firm Forrester Research, Inc. of Cambridge, Mass.

In the report “Canada’s B2B Future,” Forrester reported $272 billion of a total $1.54 trillion in business-to-business (B2B) trade conducted in Canada would be transacted on-line in 2005.

James Sharp, a Toronto-based analyst for Forrester said that although only 16 per cent of Canadian companies have a clear B2B strategy, they would increasingly recognize the benefits of the Internet and come to depend on it to plan, source, distribute and sell product over the next five years.

In 2005, more than 92 per cent of Canada’s on-line B2B trade will occur in four provinces: Ontario, Quebec, Alberta and British Columbia. Of the provinces, Ontario and Quebec will emerge as on-line leaders accounting for $193 billion of the total $272 billion in 2005, Sharp predicted.

Second only to Michigan in North American automotive manufacturing, Ontario will see $69 billion of motor vehicle trade shift on-line by 2005, Forrester’s research indicated. Twenty-nine per cent of Quebec’s total on-line B2B trade will flow through its computing and electronics supply chains. Alberta’s on-line petrochemical trade will hit $23 billion by 2005, and rapid adoption of on-line B2B trade by electronics and automotive firms will account for 45 per cent of British Columbia’s 2005 on-line B2B trade, Forrester reported.

Forrester predicted that Canadian on-line business trade growth will vary across industries, dominated by automotive and petrochemicals. Due to tight links with the U.S. auto industry, Canada’s automotive supply chain will sell $91 billion on-line, with petrochemicals generating $46 billion. By 2005, 40 per cent of Canadian computing and electronics trade will go on-line, followed by maintenance, repair, and operations (MRO) supply chains, which will account for 24 per cent of trade in paper and office products. Shipping and warehousing firms will help drive $13 billion in on-line trade by 2005, while food and agriculture face slow adoption with only $12 billion.

Forrester interviewed 50 Canadian executives about B2B e-commerce and analyzed the 13 industrial supply chains that make up the overall Canadian B2B market, examining two key inputs: industry revenue data from Statistics Canada for the years 1994 to 1999, and industry-specific factors such as fragmentation, distribution intensity and ‘perishability’.

– 30 –



Canada’s top 10 shopping websites


Here are the most popular Canadian websites from which consumers purchased over the last 12 months. The list is from the fourth annual Global Online Retailing study conducted in 2000 by International Data Corporation for consulting firm Ernst & Young.







7) (Business Depot)




Irena, there is also the e-commerce graphic from Stewart – maybe it could fit on here instead of a pull quote??

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