The e-commerce lesson Canadian retailers still need to learn

Visit Target Canada online and you’ll find lots of pictures and names of products, but no shopping cart to actually buy anything. The entire thing is a web-based brochure. The same is true for HomeSense, which goes a step further by listing prices but no ability to click through. You’ll get a little closer at HMV Canada, where you can reserve albums and Blu-Ray discs for purchase, but that’s where the experience ends.

As the U.S. retail market prepares for the onslaught of holiday shopping in-store and online, it’s hard not to look at the landscape in Canada and wonder why we’re living in such an e-commerce backwater.

A few weeks ago Statistics Canada released data from 2012 that showed online sales actually grew 24 per cent since 2010, but don’t get too excited. The number of Canadian Internet users ordering goods only went up 4 per cent, and the number of companies selling online rose even less, from 8 per cent in 2007 to 11 per cent last year.

Given the level of high-speed Internet use here, “You would expect we would be a fertile ground (for online sales), said Kelly Askew, managing director of the retail management practice at Toronto-based Accenture Canada. What explains it, in part, is that the U.S. geography is laid out like a “hub and spoke” distribution system,” Askew said. In contrast, “Canada is more of a ribbon that runs roughly along the 49^th parallel, and getting across the ribbon is far more expensive.”

Canada is more heavily urbanized than the U.S., Askew added, which means people are more likely to just use the Internet to research and drive directly down to a store rather than order online. Accenture calls this “Webrooming,” and it recently released the results of a survey that indicated nearly three-quarters of Canadians will shop that way this year. Meanwhile, 63 per cent will go the opposite route, visiting a store first and then going home to search for a deal, otherwise known as “showrooming.”

This is why, within the broader North American retail sector, companies are focusing on what they call the omni-channel. This is the idea that consumers will come at a store in a variety of ways – through their website, in person at a brick and mortar location, or in conversation on social media. The smartest firms have strategies in place for all of these various touchpoints, but Canada’s still falling behind. Just look at Indigo Books and Music, which has signs in its store trumpeting a mobile app as though it was a revolutionary offering, or Bowrings, which had an “online store coming soon” banner at a location I recently visited.

“It used to be that in the old retail model, people thought about going shopping, and if they liked something, they bought. Now it’s a lot more complicated. The purchase funnel has become a purchase cycle,” said Askew. “Our retailers have definitely lagged some of their global and North American counterparts in their omni-channel presence. They might have a site that works OK on a PC, but it might be a shrank-down version on a phone. It doesn’t drive an experience that’s terribly conducive to shopping.”

There are a few exceptions to this rule, but apart from TheBay.com, which is slowly getting with the times by accepting PayPal, they tend to be younger companies like Lululemon or Clearly Contacts. The other standouts are online-only ventures such as Well.ca, and Jewlr.com. For the rest of the retail sector in Canada, it will require a shift in mindset and in some cases, considerable investment.

It doesn’t help that most Canadians are looking to spend less this holiday season, not more. If investing in e-commerce capabilities doesn’t mean more purchases, why should retailers bother? Here’s why: because those who set up their omni-channel strategy right will be the ones Canadians develop loyalty towards, the ones that they trust to have not only affordable items but products in stock and available for purchase in person or via delivery. E-commerce in Canada should not be about making the cash register ring more often but creating the kinds of relationships with consumers that extend well past the holiday season