Canadians are online but they’re not shopping. In 2013, Comscore calculated that Canadians spend the most time online in the world. In fact, the average Canadian is on the web 41 hours per month. However, countries such as South Korea which average less time spent online have a greater adoption of e-commerce.
Online sales in Canada, according to Forrester, averaged just 5.7% of overall retail in 2013, so it’s not surprising that retailers continue to focus investment on their bricks-and-mortar businesses. According to the same report, it will take an estimated five years to break the 8% threshold for online sales in Canada.
So why aren’t e-commerce sales growing faster?
There are several factors that contribute to the lag in adoption of online shopping.
Shipping and Returns
In a recent study by UPS, the number one reason for online shopping cart abandonment was shipping costs. Canadian consumers want free shipping.
However, it is rare to find a Canadian online retailer with no-minimum purchase free shipping.
Shipping costs are high in Canada due to the lack of scale (lower population, wide geographic disbursement of people) which inhibits the offering from the business side.
Retailers need to get creative with their distribution and start to think of adapting to business models like “ship from store” to lower their overall cost while retaining the experience that a consumer looks for in an online shop.
Lack of price parity to comparable products on US websites may drive consumers to shop cross-border virtually. When consumers see prices cross-border that are 20-40% less than retail tags in Canada, some will risk incurring duties to save money.
The pricing challenge doesn’t end there. Aligning promotions and pricing online to offline and back again, continues to be a hurdle, particularly in franchise-driven retail models.
However, to a consumer - they want a seamless experience end-to-end, regardless of the method of reaching and engaging with your retail brand.
Lack of breadth of assortment online
Consumers use online shopping websites not only for purchasing but also as a tool for pre-research to purchasing in store. It also helps build brand loyalty. A recent PwC study indicated that 81% of consumers shop at their favourite retailers because of the ability to check availability of a product online. Therefore, if you don’t have your full breadth of assortment online, you are potentially missing out on shoppers as the perception to consumers is that if it’s not online, it doesn’t exist.
Right or wrong, retailers need to offer visibility to their entire assortment online, if not purchasing capabilities. Alternative distribution models can also be explored such as drop ship relationships, and affiliate marketing to lessen the inventory burden on the e-commerce provider.
Poor online experience
Many e-commerce sites offer a lackluster customer experience. A large main slider, and gridded product layout. Low to no use of video. Minimal information on product specs and sizing. Not enough photos. No 360o view. Lack of responsive design. No ability to reserve in store. No backorder capability. No visibility to inventory.
These simple things inhibit the online - and offline - customer experience. Why would a consumer purchase from you if you aren’t making it worthwhile for them to spend them on your website?
Knowing these challenges, why aren’t more retailers addressing them?
It’s the age-old adage of which came first, sales or the dynamic experience?
Those leading e-commerce in retail organizations are challenged to provide business cases for a business that is growing double digits but still a small portion of the overall sales pie.
E-commerce pivots, especially ones that require infrastructure investments are sizable, and require significant reason to be.
A case for change
The world is moving online. Omni-channel is no longer a theory, it’s a mandatory strategy that every retailer must have and embody throughout their entire organization.
Technology is everywhere - enabling the purchase journey from end-to-end, and driving the online and offline experience.
Retailers who want to take a larger share of online sales need to be acutely aware of their consumers’ preferences for an omni-channel experience and how to deliver that in a cost-effective, scalable manner.
The case for change, starts with understanding what realistically you can capture as an online share, and the subsequent revenue and margin implications for the overall business.
One thing is certain. Consumers are online.
Retailers who efficiently target, attract and convert them into online shoppers will gain a larger share of the e-commerce sales and, what could be most important, a larger ‘share of heart’ of their consumers.
Learn how we can help you create an engaging customer experience both online and offline.
Disclaimer: The statements and opinions expressed in this article are those of the author(s) and do not necessarily reflect the positions of Thoughtworks.