By spring 2011, the time looked right, and the two friends quit their jobs (Mr. Green, working in Chicago for a mobile advertising firm, moved back to Toronto) to focus on the business. HBC had returned to online selling and Wal-Mart was ramping up its e-commerce presence in Canada. Meanwhile, small Canadian retailers were doing well online. For example, Snuggle Bugz, a baby goods retailer with two stores in the Golden Horseshoe, decided in 2010 to get serious about online selling. It stopped using store staff to fill orders through its lacklustre website and improved its Web presence with a new site and by investing to ensure it placed well in online product searches. It added a warehouse and 10 staff dedicated to its Web business. Two years later, online sales are up by 1,000 per cent and account for a majority of revenue, up from 10 per cent, said owner Ben Burmaster, who has signed up with Shop.ca.
Technological progress has also made it cheaper and easier to run an online store. “If we had launched this business five years ago, it wouldn’t have been the right time because the technology was not developed,” Mr. Black said. “Now, a lot of this is assembling building blocks.”
Shop.ca’s online platform is from IBM. Data is stored on Bell Canada’s network, giving Shop.ca more flexibility to handle the expected Christmas rush. Mr. Newell’s former employer, Oracle, sells call centre systems for millions of dollars, but Shop.ca pays just $100 a month to access a recently developed tool that provides toll-free numbers and 10,000 minutes of inbound calls routed over the Internet through its computers. Another $100 a month per agent buys Shop.ca an app to manage calls and interact with customers by e-mail, Twitter and Facebook.
If the e-commerce space has matured, so have the people in the business. Shop.ca’s senior team is comprised of accomplished executives in their late 30s and early 40s, most of whom are ex-work colleagues of the two partners. They give the impression that they know exactly what they’re doing. “I shy away from the notion we’re a startup,” says Mark Daprato, a 44-year-old marketer who led accounts for Clearnet and Swiss Chalet before joining Shop.ca as chief marketing officer in February. “We treat this as an established company that happens to be new.”
Success in e-commerce relies on driving people to your website and converting those “leads” into repeat buyers. Mr. Daprato’s job is to get Shop.ca’s target shoppers – young, social and tech-literate single adults and thirtysomething plugged-in moms – to visit, buy and return. His team is working on a marketing push including a splashy launch event at Toronto’s Dundas Square in June and incentives for early adopters.
But having a website that’s easy to use is crucial. On this day in early May, Mr. Daprato leads a meeting to review the site’s design. The group debates what colour the text under the “Buy It Now” button should be (all agree: not red), the placement of key messages on screen, even the use of capital letters and fonts. “We’re making final decisions now,” he says later.
In a few weeks, he’ll find out if they’ve made the right ones.
HOW SHOP.CA WORKS
1. Retailers and merchants sign agreements with Shop.ca to offer their wares for sale through its website. They list and manage the products themselves, and must offer their full catalogue at prices no greater than they themselves charge online.
2. Shop.ca sells the products and sends the orders to the merchants.
3. Merchants ship the orders directly to Shop.ca’s customers within three to five business days.
4. Shop.ca pays a negotiated percentage of the sale price to the merchants after delivery.
5. Shop.ca doesn’t maintain an inventory or warehouse. It pays for returns, but these are sent directly to the merchant.
Shop.ca’s loyalty program - Shop.ca Rewards:
Shoppers earn virtual dollars to be used against future Shop.ca purchases every time they buy a product on the site. They can also earn dollars for writing reviews or referring products on social media that result in purchases by others. With shoppers able to earn up to 2.5 per cent in virtual cash back, “it’s potentially one of the richest loyalty programs ever launched in Canada,” CEO Drew Green said. Shop.ca is also offering additional incentives to shoppers who sign up before launch and refer others to its website.