Canadians want to do holiday shopping online but retailers playing catch-up

TORONTO – This holiday season, about 20 per cent of gift purchases in Canada are expected to be made online.

One in five presents bought via the web sounds like a sizable number, but compare that figure to the shopping habits of web savvy Americans, Brits and Germans and it’s actually tiny.

According to a recent eMarketer report, 90 per cent of Internet users in the United Kingdom expect to do some of their shopping online this year and half expect to do most of their buying through the web.

An estimated 13.3 million consumers in Canada aged 14 and over, or about 56.9 per cent of all Internet users, made at least one online purchase in 2011. In the U.S., 70.3 per cent of Internet users were online shoppers and the figure was 82.5 per cent in the U.K.

E-commerce could be a much, much larger trend in Canada if consumers had more places to shop online, says Rafe Petkovic, Google Canada’s head of industry for retail.

The state of online shopping in Canada today is similar to what consumers in the United States, United Kingdom or Germany experienced in 2006 or 2007, Petkovic adds, with relatively few retailers to choose from, limited inventory selection and inconsistent shipping options.

“They are certainly markets that are very, very far advanced in comparison to some of the most nascent markets, of which I think Canada is one,” he says.

“That’s not to say it’s going to take five to six years to get to a state of e-commerce sophistication, because the benefit that Canadian retailers have is they can steal with pride and learn the lessons that have been painfully learned by their peer set in other markets around the globe.

“So I’m very bullish and optimistic about the opportunities that exist for Canadian retailers online.”

The country’s vast geography and lack of population density are daunting to Canadians retailers looking to launch an online shop, since they combine to make inventory management and the ability to offer inexpensive — or ideally free — shipping more challenging. Having a robust, secure e-commerce operation also requires a significant investment, which some companies have been reluctant to make.

Home improvement chain Lowes, which will mark its five-year anniversary in Canada in December, just took the plunge by enabling online shopping earlier this month.

“The demand here in Canada is increasing rapidly and I think you’re seeing retailers respond to that,” says Sonny Kekelj, director of online marketing.

“I think a growing number of Canadians are really turning to the web and digital channels to do their shopping. Whether they buy online or not, certainly they’re browsing, they’re doing comparison shopping.”

Lowes is planning a “store plus more” online presence, meaning the website will carry products typically found in stores plus other web exclusives. Currently, purchases over $25 include free shipping, while products can also be delivered to Lowes stores for free pickup.

It took about six to eight months of planning, design and testing to launch the new web store — and just a couple of weeks until the first problems emerged. Some customers have complained about finding great deals on clearance merchandise but later having their order cancelled. Others were shipped items they didn’t order and when they tried to return them to a local store, they were denied and told to deal directly with website customer support.

“This is a pretty big project that we undertook, it’s very complicated, and while we did a lot of extensive testing and retesting (for) every problem that we could come up, sometimes small glitches happen,” says Kekelj.

“We’ve got a dedicated team that’s working on resolving those problems and ensuring that customers’ issues get resolved. So we’re encouraging customers to get back to us to give us feedback.”

Lowes is also offering customers free WiFi access in its stores, so customers can pull out their smartphone or tablet to search for product information — or prices at other retailers.

The use of mobile devices while shopping is a growing trend, says Petkovic.

According to a recent study commissioned by Google on retail consumer intentions, involving surveys with 1,000 Canadian shoppers in September, about 55 per cent of smartphone users and 64 per cent of tablet users said they planned to use their device while in store this holiday season, to compare prices, read product information or reviews, or search for store inventory.

About 33 per cent of smartphone users and 42 per cent of tablet owners said they used their device last year for their holiday shopping. Of those, 74 per cent of smartphone users and 80 per cent of tablet users said they walked out of a retailer because of information they found online.

If Canadian retailers don’t step up to offer their products online, they risk losing business to U.S. competitors. With the loonie hovering around parity and cross-border shopping growing in popularity, a number of American retailers — including J. C. Penney, Macy’s, Neiman Marcus and Nordstrom — have made it easier for Canadians to buy online and have their items shipped north. Even with the prospect of potentially having to pay extra duties, many Canadians are choosing to give cross-border online shopping a try.

Petkovic says there’s no question Canadians are digitally savvy, so retailers here need to adapt to their online behaviours.

“We know from our search logs that they’re certainly searching more actively for products ahead of making purchase decisions,” he says.

“These are consumers who know what they want, who are aware of the different offerings globally.”