Canadians are some of the most connected consumers in the world, with above average computer use, internet connections and relatively inexpensive internet access costs.
So why aren’t Canadians above average internet purchasers? The simple answer—Canadians have a subpar e-commerce presence. According to a study on Canadian e-commerce by BMO Financial Group, the percentage of leading traditional retailers that sell online in Canada compares very poorly against the US and UK and there are almost no pure-play e-commerce retailers in Canada with a strong brand presence.
Yes, e-commerce in Canada has been growing over the past few years and there are many businesses that are doing it right (SnuggleBugz, Shop.ca, Beyond The Rack). But many Canadian businesses do not see it as the strategic opportunity that it is.
As billion dollar corporations such as Amazon.ca make inroads into Canada to take advantage of the Canadian market, it creates a little bit of fear, yet the opportunity remains, with plenty of market share to go around. Canadian retailers know that they need an online solution, but are stuck trying to figure out how to make it work.
The perception that one can hire a kid working out of their parent’s basement to build them an e-commerce site for $5,000 is unrealistic, and unfortunately too common today. To rank first or second on Google, make a million plus dollars in online sales each year, collect payments, automate processes, ship products, and market products—in other words, do e-commerce properly—takes serious investment and as the study suggests, a culture of change, innovation and risk taking.
It requires time, money, people, automated processes, integrated back-end ERP software, and separation. To truly succeed at running an e-commerce store it needs to be treated as an entirely separate business, and not many Canadian companies have accepted this reality.
Compared with American businesses, Canadian companies are investing 40% less in communications and information technologies and the growth of the internet economy within Canada is projected far below other developed countries. If Canadians want to see these numbers change in 2013 it is time retailers start to take e-commerce seriously and invest the right amount of resources into the process.
Building an e-commerce site is like investing in any other major business asset: it takes a significant amount of capital to be successful and should be treated as an entirely separate business. Retailers who claim that they can operate an e-commerce site from the back of their retail locations are only fooling themselves. Customers physically in the store purchasing products will always take precedence over those ordering products online.
E-commerce sites need their own staff, inventory, marketing, budget, promotions, accounting, reports etc., and just like a retail store, will need to deal with customer complaints and product returns, further adding to the need for additional staff. According to the BMO study, within the past three years, SMEs that have embraced e-commerce and the idea of treating it as a separate business have realized 22% higher revenue growth compared with those who haven’t.
One reason why a $5,000 e-commerce site will not suffice is the level of functionality and amount of features a successful site needs. Many of the few Canadian sites around today look and function so poorly that consumers are deterred from using them.
Choosing a cheaper e-commerce solution means less functionality such as fewer payment gateways, limited pricing, discount and promotional features and less product catalogue functionality. Not to mention the quality of the user experience. In addition, sites that aren’t optimized for mobile and tablet devices will not be able to compete with those who are. Too many Canadian businesses are approaching e-commerce with a conservative attitude, causing them to miss out on these new opportunities.
Investing in the development of a fully functioning e-commerce site and hiring additional staff to manage a business’ strategy is not enough: an eCommerce web store cannot succeed without a strong back-end ERP system. It doesn’t matter how user friendly a site is if it doesn’t have the inventory and order management processes in place to meet demand.
Believing that a business can manually fulfil orders, update inventory information as well as pick, pack and ship products on time is fine when that business’ e-commerce site is generating 20 sales a day, but unrealistic and costly from a human resources point of view as sales grow. Not only will a strong back-end ERP system automatically update and sync inventory levels, descriptions, colours, attributes, pricing etc. with your front-end store, the entire order and shipping process becomes automated.
If Canadian businesses want to stake a claim in the e-commerce market in 2013 and beyond, they need to follow the examples set by the few success stories and start to take it seriously. This means treating e-commerce as a separate business and investing resources in a proper front-end site and back-end ERP system, without making compromises.
E-commerce in Canada has huge growth potential and those business that invest now will see positive results in the future as more and more retailers develop strong online offerings enticing consumers to purchase from Canadian companies.