eMarketer: US Retailers Help Boost Canadian Ecommerce

Domestic retailers get a push toward digital

FEBRUARY 23, 2011 – The Canadian ecommerce market has been slower to pick up steam than in the US. Major obstacles stand in the way of online buying, including limited product selection, the lack of a catalog culture that facilitates buying products sight unseen, and high shipping costs. But over the next few years ecommerce in Canada will begin to realize its potential.

eMarketer estimates consumers in Canada spent CAD16.5 billion ($16.0 billion) in 2010 on both domestic and foreign sites for products and services (including travel). By 2015, that amount will nearly double to CAD30.9 billion ($30.0 billion).

“Retail ecommerce in Canada is late blooming compared with the US,” said Jeffrey Grau, eMarketer senior analyst and author of the new report “Canada Retail Ecommerce Forecast: Measured Growth Ahead.” “But there are reasons for optimism. Online buyers in Canada are extending their purchases beyond travel services, books and event tickets to home electronics, apparel, luxury items and even bulky packaged goods like diapers.”

The online buyer population is diversifying beyond the young adults who are traditionally the early adopters. Web retailers report that online buying is becoming mainstream, with more middle-aged, middle-income consumers discovering ecommerce’s convenience and broader product selection.

A large portion of consumers’ online spending is conducted with establishments outside of Canada, mostly in the US. Statistics Canada reported in 2010 that foreign retail websites accounted for 39.7% of online spending in 2009, down from 44.3% two years earlier. Given the continued popularity of cross-border shopping, Statistics Canada’s 2011 survey will likely show again that foreign sites still account for a large share of online spending.

Online shoppers in Canada are drawn to US websites because they typically offer better product selection and lower prices for some items. And many US retailers have a separate Canadian presence, meaning these statistics understate the influence of US firms in the Canadian ecommerce market.

“The aggressive entry of US web retailers into Canadian ecommerce may also accelerate market growth,” said Grau. “Major store-based retailers are under pressure to launch viable ecommerce businesses or risk losing market share. US retailers, which give shoppers greater product selection, are also introducing those in Canada to ecommerce.”

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