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Free Shipping Day Canada to boost online sales?

Jennifer Kwan
SWANSEA, WALES - NOVEMBER 24: Staff at the Amazon Swansea fulfilment centre process orders as they prepare their busiest time of the year on November 24, 2011 in Swansea, Wales. The 800,000 sq ft fulfilment centre, one the largest of Amazon's six in the UK and the also the world, is gearing up for for both 'Black Friday' and 'Cyber Monday'. Black Friday is traditionally the discount shopping day that follows Thanksgiving in America and signals the start of the Christmas shopping period. In 2010 it is was reported that over 45bn USD was spent by shoppers in America over 'Black Friday' weekend. Cyber Monday, which this year is Monday December 5, and is predicted to be the UK's busiest online shopping day of the year with over 2 million orders expected to be made. (Photo by Matt Cardy/Getty Images)

Not only are Canadian retailers latching onto the U.S. Black Friday and Cyber Monday shopping events, but some are also trying to lure consumers online by joining Free Shipping Day.

Nearly 250 merchants including Roots, Indigo, the Bay and Sport Chek have joined Free Shipping Day and promise to deliver items ordered on Wednesday by Christmas Eve.

It's the second annual event in Canada and the number of merchants participating is up roughly 50 per cent from last year.

"Last year was an eye opener for a lot of retailers in Canada and they really got to see free shipping really works and this is what shoppers want," said Luke Knowles, founder of the Free Shipping Day sites in Canada and the U.S., where the event began four years ago with around 250 merchants participating. So far there are 1,350 U.S. merchants signed up for the Dec. 17 event south of the border.

In Canada, Knowles said some retailers are even offering more competitive offers this year such as removing minimum purchase requirements or providing extra online coupon savings.

The snapshot comes as retailers around the globe ramp up ways to attract consumer dollars. With more U.S. retails sprouting here, retailers and consumers in Canada are partaking in what is typically a U.S.-style shopping frenzy notwithstanding the familiar mayhem on Boxing Day.

Retailers here are also offering deep discounts to keep shoppers from crossing borders due in part to more generous duty free rules and a lofty Canadian dollar.

By most accounts, high shipping costs in Canada remains a major deterrent to online shopping, especially squeezing the margins of small retailers. Consumers and experts alike cite shipping as a major problem due to Canada's geography.

Diane Brisebois, president and chief executive officer of the Retail Council of Canada, put it this way in a recent interview with the Globe and Mail newspaper: "You could be a retailer in California and just ship in California and have as much market as you would in Canada, and you might be going 300 miles, instead of 3,000 kilometres. So the distance itself is a huge barrier. And the cost of fuel has constantly gone up, so that affects the price of the cost of shipping, too."

That's a big reason why Free Shipping Day is gaining traction in Canada, said David Elsner a manager in PwC's retail consulting services.

"Although the concept itself of free shipping isn't based in rocket science, it's something we haven't really seen Canadian retailers do," he said. "I think this whole free shipping phenomenon is going to be a really good litmus test to see how consumers react."

"I think that this is going to go a long way in removing that one barrier to actually making that online purchase," Elsner added.

By the numbers

It's good timing given recent online shopping statistics. In the U.S., Black Friday retail sales online soared 26 per cent and topped $1 billion this year for the first time as more consumers used the Internet to shop, according to data from comScore Inc, which tracks and analyzes digital trends.

In another snapshot the U.S. shopping craze is taking hold in Canada, the country's largest debit and credit card processor says its data shows consumer spending on Cyber Monday edged higher compared to last year. Moneris Solutions, which offers debit, wireless and online payment services for merchants, said spending on that day climbed 22.5 per cent compared to last year.

In a recent report of retail conditions in Canada, the Retail Council of Canada said online shopping is a growing trend, but many retailers say their websites represents less than 3 per cent of sales. Nonetheless, retailers know it is an investment they must make in future.

And earlier this year, the council said it expects to see a surge in mobile solutions spending by retailers in a bid to boost online shopping.

Trendy yoga wear retailer Lululemon Athletica stands out as a clear leader in the e-commerce space. It began offering free shipping in 2009.

Recent quarterly results showed that Vancouver-based company saw a huge jump in growth in the segment compared to a year ago, contributing some 14 per cent of the company's total revenue, said Paul Zaengle, senior vice president, global digital commerce at lululemon, in an e-mail.

The company also places enormous emphasis on boosting its social media, email, and blog activities to support its e-commerce business, he said.

"We are a culture based on feedback and heard loud and clear from our guests that they wanted complimentary shipping," said Zaengle.