Canada is a land of dissatisfied online shoppers. From high-end fashion to hardware, Canadians are the poor e-commerce cousins to Americans in just about every way: Higher prices for poorer selection; shipping costs are often more expensive; and, for items ordered from abroad, duty and customs-related charges can drive up total costs.
Large Canadian retailers have struggled to serve their customers on the Web: Canadian Tire abandoned online selling three years ago, and while it now has plans to return, the only thing customers can buy through its website are tires. Hudson’s Bay Co. is straggling back after shutting down its online efforts in 2009. And Holt Renfrew and Shoppers Drug Mart only offer e-flyers and directions to their nearest stores online. Their U.S. peers, meanwhile, operate full e-stores.
Dealing with foreign retailers also leaves much to be desired. Canada seems like an afterthought to them. Amazon.com Inc.’s Canadian site has been adding categories, but the selection is a fraction of what is available in the United States. Fashion retailer J. Crew Group Inc. prompted an angry response when it launched its Canadian website last summer with higher prices than its U.S. site – and customs fees (which it later dropped). Online shoe merchant Zappos, frustrated by the hurdles it faced to offer Canadians the same service as it does in the U.S., simply gave up.
“We’re like an e-commerce colony and have developed a mentality that we can’t do anything about it,” digital economy guru Don Tapscott said. “You suffer in silence and hope you have a U.S. relative.”
Canadian online retail, in short, looks a lot like Canadian retail did 20 years ago: unimpressive, outdated and at threat of being thrashed by American retailers – many of which are already making steady progress in better serving this market.Despite the country’s reputation as one of the world’s most wired and digitally social people, Canadians only spent $18-billion online in 2010, or 3.4 per cent of total retail sales, according to Boston Consulting Group – well behind other developed countries such as the U.S. at 5 per cent and the United Kingdom at 13.5 per cent. While online spending is expected to nearly double by 2015, Canada is expected to fall even farther behind. “Canada has been a little sleepy as far as getting online” to shop, said Jeffrey Grau, an analyst with U.S. market research firm eMarketer.
Some blame the lack of a catalogue-buying tradition in Canada, but demand clearly goes unfulfilled here: Four in 10 dollars spent online goes abroad, meaning a large portion of spending isn't going back into the Canadian economy, at a time when the retail industry is on rocky footing and facing new competition from foreign rivals such as Target Corp. Getting e-commerce right is a part of making the sector more productive and competitive – a vital step in a country where consumer spending represents some 60 per cent of economic activity.
This month, a startup with a snappy URL and huge ambitions is hoping to change that. The business, Shop.ca Network Inc., opens its virtual doors and sets in motion what its owners hope will become Canada’s top shopping website – an Amazon of the north, with free shipping, free returns, a big selection and even a loyalty program.
Shop.ca has signed up close to 850 retailers and suppliers to offer their wares through its website, and claims to offer the largest selection of any Canadian site, with more than 15 million items and 4,000 brands including adidas, Canon, Nine West and Stanley.
At first glance, Shop.ca seems like a throwback to the 1990s dot-com era. The firm is adding staff by the week and recently outgrew its 1,600-square-foot loft space in a converted knitting factory near Toronto’s hip Distillery District. Employees work around the clock, come to the office in jeans and untucked shirts (no ties, of course), and drink beer on the roof on Fridays. The tone is confident and the talk is big. “Our mission revolves around changing the dynamic of e-commerce in Canada,” chief executive officer Drew Green said.
Shop.ca’s leaders are a group of thirty- and fortysomething Canadians who have abandoned high-flying, high-paying careers and invested in the business. They’ve also impressed investors – including Mr. Tapscott, media magnate Gary Slaight, former Microsoft Canada boss Jeff Dossett and NHL star Eric Lindros, who, along with others, have put up more than $5-million . “I rarely get involved with startups ... but I think this is going to transform shopping in Canada,” Mr. Tapscott said.