We’ve stopped what we are doing and creating your personalized BrandZ™ report, which will appear in your inbox soon.

Acceleration of e-commerce in Canada

Acceleration of e-commerce in Canada

Deborah Bobier
Vice President

Historically, we’ve seen steady year-over-year growth in e-commerce in Canada, as consumers have become more comfortable with shopping and paying online. Today, only 10 percent of Canadians say they don’t shop on this channel at all. Despite this, online share of retail sales has historically remained low – from 2.8 percent in 2017, to 3 percent in 2018, to 3.4 percent in 2019—even with an abundance of options and new online retail offerings.

What has been keeping Canadians from shopping more online?

The key barriers for consumers around e-commerce prior to 2020 had been around cost, convenience, and consumers finding what they want. Time and again, they told us that they didn’t want to pay for delivery (but still wanted fast and easy delivery). They weren’t convinced that online shopping saved them time, and there were challenges around finding what they wanted. The online experience needed to be easier, and consumers were looking for a more seamless experience linking online and offline shopping.

And then came COVID.

Once the pandemic struck, consumers who had never or rarely shopped online for groceries or household products were suddenly searching for available delivery and pick up slots to avoid shopping in brick and mortar locations. To their surprise, they often needed to book weeks in advance as grocery retailers raced to enhance their infrastructure and provide more options. Similarly, third-party delivery services struggled to meet this new consumer demand.

With all nonessential retailers and services closed across the country, many retailers moved to build new online capabilities (hello, Shopify!) or enhance their existing platforms, and e-commerce soared.

As a result, online sales accounted for a record-breaking 9.5 percent in April, and online revenue more than doubled vs. February! This happened in spite of a decline of a third in total retail revenue. Supporting this, we saw Canadians saying that they were shopping online more than they did the month before with rates continuing to increase even at the end of April. A third said they believed that they would shop online even more in the future.

What’s next? Can this be maintained?

It’s always difficult to predict the future, something that COVID-19 has amply demonstrated. While we see Canadians thinking they’ll shop online more in the future, we also know that two-thirds say they are currently doing so because retail stores are closed. This suggests that the pivot to e-commerce is unlikely to be sustained at current levels when restrictions are loosened. Retailers that want to capitalize on their e-commerce platforms need to understand how to make this channel a matter of preference not pandemic.

To continue to develop e-commerce in Canada, retailers need to provide a seamless experience to consumers. Canadians have moved toward the channel; however, the experience has not been without challenges, particularly for the food, beverage, and household product categories. Limited delivery or pickup slots, product shortages, and difficult-to-navigate websites have led to online fatigue. As the country begins to emerge from lockdown, consumers have become less likely to say shopping online is more convenient than shopping in physical stores. They are also now more likely to say that they find shopping online challenging. Without a significant focus on improving the experience, many barriers to online shopping that existed prior to COVID-19 will continue to limit e-commerce as more options return to consumers.

Retailers also need to broaden their available pool of online shoppers. Although many Canadians began to purchase new categories online during physical distancing, most were previous category shoppers. The exception is for food and beverages, where more consumers now say they purchase the category online, and retailers will need to provide both value and convenience to hold on to them.

Finally, we know that Canadians love to shop in physical stores. After getting together with friends and family, Canadians say they are most looking forward to going to restaurants and shopping as soon as they are able. True to this, as restrictions have begun to lift, we’ve seen long lines of people waiting to get back into stores, some even bringing chairs to settle in!

The message to retailers is that Canadians will embrace e-commerce under the right circumstances. Outside of a pandemic, retailers need to create an environment that meets their needs through good value, convenience, ample selection, and easy and enjoyable experiences to be a legitimate and attractive option.