One retail executive has called it a bloodbath, and the retail landscape is about to get uglier.
American e-commerce powerhouse Amazon.com Inc. is launching online grocery and auto shops on Thursday, adding to an array of category additions this year that has included toys, beauty and home goods. The company is aggressively pushing into Canada, more than doubling its offerings this year, with 14 new kinds of products.
“We’re working to deliver an unmatched selection of everyday essentials and must-have products,” said Alexandre Gagnon, country manager for Amazon.ca.
Amazon’s expansion – especially in the cutthroat grocery segment – means competition will become even more fierce, at a time when many retailers are lagging behind when it comes to e-commerce. None of the conventional grocers offers online sales in a major way while discounter Wal-Mart Canada Corp. is just ramping up its online grocery sales.
“It’s going to be ugly, particularly in the desperately over-stored Ontario market,” said Luke Sklar, founder of retail and marketing consultancy Sklar Wilton & Associates.
In Canada, about 4 per cent – about $19-billion – of retail sales are made on the Internet, compared with twice that proportion south of the border, industry data suggest. Online grocery sales account for even less, just a fraction of 1 per cent, although it’s expected to jump tenfold by 2025, according to consultancy Booz & Co.
Amazon.ca will offer 15,000 non-refrigerated food products, including such items as Campbell soup and Kellogg cereals, as well as baby food and formula. Wal-Mart Canada has 2,000 food products on its e-commerce site, with 1,000 items added monthly since the site launched in late September, its officials say.
“E-commerce is at the core of our strategy to deliver Canadians a real omni-channel shopping experience,” Simon Rodrigue, vice-president and general manager of e-commerce at Wal-Mart, said in an e-mail. “We want our customers to be able to shop anywhere, any time, whether in our stores or online, and get the same value proposition – the products they want, including groceries, at everyday low prices.”
South of the border, where grocery online sales make up between an estimated 2.5 and 3 per cent of the market, Amazon.com and walmart.com are testing fresh food as well.
But in Canada, Amazon has been slower to roll out new categories and services.
In addition to groceries, Amazon will offer 200,000 auto products, from windshield wiper blades to jump starters. Wal-Mart currently sells 1,000 auto items via its website. Canadian Tire Corp., which only sells tires online, has said it plans to broaden its e-commerce offerings by the end of this year. The company did not comment for this story.
Loblaw, the country’s largest grocer, recently launched an e-commerce site for its Joe Fresh fashion line, offering about 80 per cent of the merchandise that it stocks in its stores. And e-commerce is “an important part of our long-term strategy,” spokesman Bob Chant said.
Mr. Sklar said it is difficult for grocers to shift to e-commerce because customers essentially do the deliveries at their own cost now, which makes shipping charges difficult to swallow. Mr. Gagnon said most grocery items on Amazon.ca are eligible for free delivery with Amazon Prime, while Wal-Mart generally offers free shipping.