In its second-largest acquisition, Amazon buys the company for $970 million.
‘Canadian retailers should be shaking in their boots,’ a Forrester analyst says.
Two-thirds of Canadian online shoppers say they’ve purchased from U.S. or international e-commerce sites at least once, according to a new report from Forrester Research Inc. Overall, 25% of all Canadian e-commerce spending going to foreign businesses, the report says.
The report highlights four areas in which Canadian e-retailers are falling short of customer expectations: shipping costs, product assortments, prices and a lack of omnichannel shopping capabilities—that is, tying together web, mobile and stores.
“In the eyes of the consumer, the downsides of buying from a U.S.-based retailer rather than a domestic Canadian retailer are diminishing,” writes Forrester analyst Peter Sheldon, author of the report. “Canadian retailers should be shaking in their boots, as this is their last wake-up call.”
Sheldon predicts that Canadian online shoppers will change their expectations even more dramatically within the next 18 months as large U.S. retailers including J. Crew Group Inc., Nordstrom Inc. and Target Corp. expand into the country both online and through stores.
Forrester, together with Canada Post and Shop.ca, surveyed via the web 1,103 adult Canadian Internet shoppers in March 2013 for its “State of Canadian Online Retail 2013” report.
68% of the survey respondents say high shipping costs are their first concern in online shopping and 36% of those same shoppers say that concern has grown in the last six months. Sheldon cautions that Canada’s free shipping competition will increase because retail giant Amazon.com Inc. in January brought its Prime membership program to the country. Prime offers free two-day shipping on all items, along with other perks, to customers who pay $79 per year.
Of the survey respondents who have shopped online internationally, 80% say they’ve bought from non-Canadian e-retail sites because they couldn’t find the products they were looking for domestically, the report says.
62% of respondents say Canadian e-retail prices are the top factor influencing their online purchasing decisions and 59% say they looked outside the country in search of lower prices. Additionally, 37% of respondents say they can find the same products cheaper on U.S. web sites than on the sites of Canadian retailers, even with customs, taxes and shipping costs included. Their scrutiny doesn’t exclude U.S. retailers already selling in Canada: 27% of Canadian online shoppers check both the U.S. and Canadian versions of an e-retailer’s web site seeking the lowest price, Forrester says.
While 81% of Canadian online shoppers in the survey say they rely on search engines to compare prices online, more than half of the survey respondents—56%—say they use one of Amazon’s e-commerce sites, either its U.S. .com site or or the Canadian .ca version, to compare prices.
Canadian online shoppers also want a host of yet-unavailable cross-channel capabilities—65% say they want the ability to return online purchases to stores; 61% say they’d like to see in-store inventory online; 56% say they expect online and store prices to match; 41% say they should be able to order online for in-store pickup; and 39% expect stores to ship out-of-stock items to their homes for free, the report says.
Amazon is No. 1 in the Internet Retailer Top 500 Guide; J. Crew is No. 56; Nordstrom is No. 31 and Target is No. 23.