Canadian E-Tailers Need to Shape Up

E-tailers need to provide service and convenience to a large, skeptical group of consumers if the Internet is to become a more significant retail channel in Canada, according to research by J.C. Williams Group and BizRate.com.

The first wave research from “Retail.ca: Connecting with Canadian E-Shoppers” found that while early adopters of online shopping in Canada are relatively satisfied with their online buying experiences to date, there is a high degree of blind trust involved. As a result, the research found service and convenience are important factors that will affect the future growth of the Internet as a retail channel.

“While satisfaction levels are currently high, what is less apparent is whether this will translate into loyalty to online retailers in the long run,” said Jim Okamura, senior consultant for J.C. Williams Group. “Due to the fact that switching costs between online retailers are much lower for consumers than they are between traditional retailers, the importance of meeting consumers’ expectations the first time is especially important for online merchants.”

The research also found that the online buying population is less mainstream in Canada than it is in the US. Canada has a lower online purchase incidence by women (21.7 percent of e-shoppers in Canada versus 35.1 percent in the US), the higher proportion of first-time buyers (19.5 percent versus 9.5 percent), and by the types of merchandise being purchased online.

Canadian online retail start-ups will have to play catch-up, meeting or exceeding the ability of US sites to deliver a total shopping experience, including the various service elements of their Web sites, the study found. Due to their relatively small capitalization, Canadian online retailers will in many cases be akin to smaller specialty stores competing against larger category killers — a service strategy may be the only way that they can effectively compete.

The first wave of data of the study was collected from more than 800 Canadian e-shoppers at the point-of-sale by BizRate.com. Two more waves of the study will be released by October.