A new front is opening in the online retail war – and it entails such mundane everyday staples as soap, deodorant and detergent.
On Thursday, e-tail powerhouse Amazon.com Inc. is launching more than 80,000 beauty, health and household items on its e-commerce site in Canada, with the potential for free shipping. The U.S.-based online retailer is taking on an array of rivals, ranging from Shoppers Drug Mart Corp. to Wal-Mart Canada Corp. and Loblaw Cos. Ltd., which stock these staples to draw customers to their stores more often.
“The more things we can give our customers that they’re looking for, the more they’re going to come to our site,” Steve Oliver, country manager for Amazon.ca, said in an interview.
Retailers in Canada have been slow to roll out e-commerce shops – and have barely attempted to sell consumer and beauty products online. The business model of carrying low-cost staples is challenging, especially when having to ship bulky products such as boxes of detergent.
But with the prospect of an increasingly crowded market, and a new Canadian competitor in Target Corp., retailers are quickly stepping up their e-commerce game. Shoppers Drug Mart offers beauty items at its Murale.ca site, while London Drugs Ltd. of Richmond, B.C. also introduced last year beauty and consumer products on its re-launched e-commerce site. Walmart.ca started offering them late last year and will have a full selection by the end of 2013.
Seattle-based Amazon is betting that if it can draw customers with tubes of toothpaste or bottles of shampoo, shoppers will buy other items at the same time – and come back more frequently.
“People are already coming to Amazon to buy a book or other items,” said Jeff Doucette, general manager of mobile market research firm Field Agent Canada. “This is another thing they can put in their shopping basket.”
But Amazon will have to break shoppers of the habit of going to the closest Shoppers or Loblaw Superstore for many of these items, especially when they run out of toothpaste and need another right away, he said.
Bricks-and-mortar retailers may have a slight edge there. London Drugs, for example, now offers pickup of purchases in its stores within four hours of an order, which should drop to half that time within the next year, said Wynne Powell, chief executive officer of the chain. “Amazon does not have that.”
E-commerce makes up about 7 per cent of retail spending, but it’s picking up, Mr. Powell said. Online shoppers in Canada shelled out an estimated $21-billion on e-purchases last year and that is expected to rise by double-digit percentages annually through to 2016, when outlays will be $35-billion, predicted researcher eMarketer.
“While many retail stalwarts in the country have dabbled in e-commerce, sustained success has been absent,” eMarketer said in a report last October. “Canada’s low population density makes shipping difficult and highly expensive for retailers – and consumers when retailers pass on those costs.”
Amazon’s Mr. Oliver said the company has built two distribution centres in Canada, one in Delta, B.C. and the other in Mississauga, Ont., to help keep delivery costs low. It’s been gearing up its online selling here, adding more patio, garden and pet merchandise recently, as well as a mobile app.
His research has found customers want the convenience of buying items such as toothpaste, tissues and facial creams online, he said. “It’s a five-minute trip to your cell phone or computer and within a couple of days you’re going to have those products at your door.”
Amazon has experience catering to online customers of consumer and beauty products, having carried the items for almost a decade on its U.S. site. “Customers who buy consumables from us do shop the site more frequently,” he said. “These are things they use every day.”