December 11, 2007, 12:00 AM

Canadians warm up to e-commerce, eMarketer reports

Online spending in Canada will grow by nearly 28% per year through 2011, projects market research firm eMarketer. But Canadians still shop less online than U.S. consumers, and e-retailers may have to add features to lure Canadians to buy more online.

Canadians are spending more online-with a good portion of those purchases being made at U.S. e-commerce sites-but they remain less willing to shop online than U.S. consumers, according to a new report from market research firm eMarketer entitled “Canada B2C E-Commerce: The Barriers Melt.”

The report estimates Canadians spent C$11 billion (US$9.7 billion) online in 2006, of which 60% was spent on travel. E-commerce spending will grow at an annual rate of 27.6% through 2011, when it will amount to C$37.2 billion (US$30.2 billion), eMarketer projects. U.S. e-retailers should benefit from that growth, as about one-third of Canadian online purchases are made at foreign sites, most of them in the United States.

Despite the growth, Canadians are less likely to buy online than U.S. consumers. Canadians who buy online spend on average one-third less in a year than U.S. online consumers. And that trend will persist, as eMarketer projects U.S. consumers in 2011 will spend 14 times more online than Canadians, $411.3 billion versus $30.2 billion, even though the U.S. population will be only nine times bigger than that of its northern neighbor.

“While Canadian consumers are comfortable purchasing travel, media products and computer hardware and software online, they tend to shy away from high-touch categories such as apparel and home furnishings,” writes the report’s author, senior analyst Jeffrey Grau. “Instead, they head to one of their excellent shopping malls. A common explanation for this tendency is that, unlike Americans, Canadians lack a catalog tradition and have not been conditioned to shop remotely.”

Grau recommends that e-retailers seeking the business of Canadian shoppers add features that help consumers visualize products online as well as customer product reviews, which surveys show are often more trusted than reviews written by professionals. Customer resistance can also be reduced by multi-channel merchants that allow consumers to return online purchases to stores, Grau says.

Here are some other highlights from the eMarketer report:

  • 62.6% of Canadian households have broadband Internet access, ranking Canada second worldwide in broadband penetration to South Korea.
  • Of the 20 million Internet users in Canada today, 70.9% are online shoppers-that is, they go online to research, browse and compare prices-but only 55.5% have made a purchase online in the past year. By 2011, eMarketer predicts, 71.9% of the 22.6 million Internet users will be shopping online, and 60.3% will be buyers.
  • Of those online shoppers who browse but have not bought in the past year, 78.2% will make an online purchase in 2007.

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