News

Canadians are trailblazers when it comes to banking and paying bills online. They're even comfortable buying concert tickets and booking travel.

But when it comes to snapping up a kettle or a cardigan, they've been slow to embrace virtual shopping. They tend to do the research on the Web and then head to the mall to make the purchase.

The paradox emerges in a study by New York research firm EMarketer, which called the phenomenon the Canadian conundrum.

“In recent years, Canadian e-commerce has stagnated in something of a ‘chicken or egg' situation,” the study says.

“Canadian online shoppers complain that Web retailers are not serious about selling on their websites,” said EMarketer, which analyzed data from several reports. “Meanwhile, retailers feel that too few Canadians are shopping online to justify the costs of operating an online store or doing it well.”

Duncan McKie, president of market researcher Pollara Inc. in Toronto, suggested that a big deterrent for Canadian consumers is the time it takes and the high cost of getting Internet purchases delivered.

“If you've got to wait three, four or five days for something you can walk out and purchase in a mall — what's the point?” Mr. McKie said. “They want it now.”

The problem stems from the comparatively expensive and underdeveloped systems in Canada to move goods from Web retailer to customer, he said. In contrast, U.S. e-tailers have found the economies of scale to provide free, 24-hour shipping, especially during the crucial holiday season.

During the current shopping rush, a recent Pollara survey found, about two-thirds of U.S. consumers will shop online; in Canada, shoppers will make purchases on the Internet at only half that rate, Mr. McKie said.

Many retailers in Canada haven't exactly raced to provide extensive online shopping, said Jeffrey Grau, senior analyst at EMarketer, who wrote the report on Canadian e-commerce. They're content to sell through their stores and don't want the technical headaches of running a website. They don't want the costly challenges of marketing in two languages and shipping to geographically dispersed customers.

“Some large retailers have neglected their websites,” Mr. Grau said, pointing to weak website designs and functionality. They have trouble tracking orders and meeting delivery deadlines, he said. And they have limited selections.

Amazon.ca, for example, offers a much narrower array of products than its U.S. counterpart, while department store retailer Hudson's Bay Co. has a smaller range of merchandise online than in its outlets, the EMarketer report says.

Heavyweight discounter Wal-Mart Canada Corp. has no e-commerce at all, despite the popularity of its online shopping site in the United States. Its U.S. e-shop does not ship outside that country. And clothier Gap Inc., with stores under its own, Old Navy and Banana Republic banners, is also without an online buying site in Canada, even though it has more than 230 outlets in this country.

Andrew Pelletier, a spokesman for Wal-Mart Canada, said it is planning to offer e-commerce, and in the meantime has one of the country's most visited informational websites. “Ultimately we would rather be right, than fast.” Few, if any, general merchandisers provide a complete online product selection, he said.

“Canadians generally want a very broad assortment of choices to draw from in all of their shopping channels,” he said. “Perhaps the lack of this expansive assortment online is one of the reasons Canadian customers have not yet embraced e-commerce quite as quickly as their American counterparts.”

Gap also is exploring e-commerce in Canada and, for now, has a “pre-shop” website to browse, said spokeswoman Tara Wickwire. The global merchant will not conduct e-business internationally until it is sure it can deliver the level of service that customers expect of its brands, she said.

Still, the report said Canada's e-commerce market is gaining momentum. Considerably more Canadians plan to buy gifts online this holiday season than last year, and a number of chains have launched online stores recently. Even fine jewellery purveyors Tiffany & Co. and Henry Birks & Sons Inc. have an e-commerce presence.

And Sears Canada Inc. has set an example for other major retailers, the report says. Last year it teamed up with Amazon to refashion its site. Even so, Sears' online sales are just an estimated $175-million of the retailer's total annual $6-billion.