Canadian Apparel Retailer E-commerce Behind that of US Competitors: Expert

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Canadian apparel e-commerce retailers have made great strides during the past two years in improving their programs, and the annual growth rate has for some time been significantly greater than that for the entire apparel market, but compared to the United States it continues to be underdeveloped.

Those are the major findings of the 2019 Canadian Apparel E-commerce Report by Trendex North America, a marketing research and consulting firm.

Randy Harris, president and owner of the company, said three important factors will limit the growth of apparel e-commerce in Canada which reached C$3.45 billion in sales in 2018.

They include increasing cross-border shopping by Canadians; the lack of growth in emerging subsegments of apparel e-commerce including subscription and rental services; and the inability of Canadian apparel retailers to incorporate new technologies into their e-commerce platforms.

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“Apparel e-commerce continues to be underdeveloped in Canada compared to the United States. That’s the first major point. The second major point is that Canada has really gotten their act together in the last year – the apparel industry – as far as e-commerce,” said Harris.

“It’s a good news story. Yes, we’re still behind but we’re making great strides. The one statistic that I think is interesting is that e-commerce sales increased by 12 per cent last year for apparel and for the entire apparel market they grew by 1.7 per cent. That’s showing that progress is being made.

“The thing that’s holding back Canada to some degree I believe is cross-border purchasing which continues to happen for e-commerce. The United States is just not affected by Americans buying from Canadian e-commerce sites. I mean it’s so minimal it doesn’t probably even register. So it’s kind of a one-way deal.”

Another thing that holds Canada back is that the industry does not have the capital to make the needed changes to be an e-commerce retailer at the level of a U.S. retailer.

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“Companies in the United States can throw hundreds of millions of dollars in upgrading their whole e-commerce system and Canadians just cannot do that so their websites are not as specific and they have not been able to move to omnichannel retailing which is the major thing that American companies are doing,” explained Harris, adding there are some exceptions like Harry Rosen which is a great example of an omnichannel retailer.

The industry is also experiencing these days tremendous growth in m-commerce where items are ordered on the phone. And all of the retail sites don’t necessarily have the capacity currently to take advantage of that trend. M-commerce also facilitates e-commerce, making it easier for the consumer especially the younger demographic.

“Also if you look at the sites they’re not as sophisticated. Many cases they don’t tell you the inventory available or the sizes available and those things all cost money to build into an e-commerce platform. It will come. Don’t get me wrong. It just comes at a much slower rate,” said Harris.

“It will never reach the level of the United States. It’s strictly economies of scale and cross-border purchasing.”

Last year, he said, e-commerce accounted for 11.1 per cent of apparel sales in Canada while in the United States it was 27.5 per cent.

“We will never get anywhere near that in Canada. Will we improve? It all comes down to dollars and cents,” said Harris.

“The other thing that’s become more important in Canada but is still not as big as it should be is what’s called bopus – which is buy online pick up in store. That’s a part of an omnichannel program. The number one thing you have to do with omnichannel retailing, which is the ultimate buzzword in e-commerce, is you have to allow the consumer to order from m-commerce or the desktop and then you have to allow the consumer to pick up the purchase at a local store if they want to and thirdly return the purchase at the store as opposed to mailing it back if they choose to do so. You’re empowering the consumer to do it any way they want.”

He said all statistics have shown that when a company has an omnicommerce website and the consumer has the flexibility to do what they want their sales go up disproportionately.

If a consumer purchases online and then goes to a store to pick up an item, they do tend to buy other items at the physical location of the store.

Here are some interesting points from the Trendex report:

  • Canada in 2018 was home to almost 35 million internet users. Canada’s internet penetration rate exceeds that in the United States and is only slightly less than in the UK and Germany. In 2018 more than 72.6 per cent of the Canadian population made a purchase online. The average amount spent per purchaser during all of 2018 was C$1,493;

  • From 2016 to 2018 according to Canada Post the number of Canadian online shoppers buying from the U.S. increased by 44 per cent. The highest percentage of online shoppers buying from the United States were in Alberta (73 per cent) and Prince Edward Island (73 per cent), the lowest percentages were those for Quebec (60 per cent) and Newfoundland (62 per cent). In 2018 only 37 per cent of Canadian e-commerce buyers shopped only domestically;

  • Three reasons are primarily given by Canadians for online shopping in the U.S.: availability of product (69 per cent), better prices (36 per cent), and better selection (26 per cent);

  • Total Canadian e-commerce sales increased 15.4 per cent in 2018 to C$18 billion, while U.S. e-commerce sales increased 15.0 per cent to US $517 billion;

  • Growth of Canadian e-commerce sales in 2018 was attributable to: Amazon’s expansion in Canada, and the offering of its Prime service; The specific investments that Canadian Tire, Loblaws, Walmart and Shopify made to expand their e-commerce sales; Growth of omni-channel retailing; The overall growth in e-commerce grocery sales resulting from a fierce battle among Canada’s largest food sellers (e.g. Loblaws, Walmart, etc.) for e-commerce market dominance; and A Canadian consumer who increasingly feels more comfortable purchasing online.

The Canadian 2018 Largest E-commerce Retailers were:

The Canadian 2018 Largest E-commerce Retailers

Estimated Monthly Traffic (millions) was:

  1. Amazon Canada 42.0

  2. Best Buy Canada 33.9

  3. eBay Canada 33.8

  4. Walmart Canada 32.2

  5. Canadian Tire 22.0

  6. Costco Canada 19.6

  7. Home Depot Canada 12.8

  8. Hudson Bay 12.1

  9. Etsy Canada 8.3

  10. Newegg Canada 6.4

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