TORONTO — Canada’s online retailers are getting stronger and are making marketing and customer acquisition their biggest priorities, according to a new e-commerce study by Forrester Research and the Retail Council of Canada.
The results of the first annual RCC Benchmark Online Survey were revealed at STORE 2015, a two-day conference hosted yearly in Toronto by the Retail Council of Canada.
“This survey is a work in progress and came about as a result of the success of an analogue study on online retailing done in the U.S.,” said Forrester vice president and principal analyst Sucharita Mulpuru.
Based on 169 retail respondents who were surveyed between March and April, 72 percent of the participants were small, store-based multichannel companies. Two-thirds of these companies generated less than 100 million Canadian dollars, or $80.3 million at current exchange, in overall revenue. Fourteen percent generated 1 billion Canadian dollars, or $803 million, in revenues or more.
“Canadian online retailers are relatively young and are still starting up their businesses,” Mulpuru told some of 2,400 attendees on hand at the Toronto Congress Center for this year’s conference.
Indeed, 25 percent of the businesses surveyed were less than one year old, while 48 percent had an established e-commerce presence for four years or more.
“Many of these respondents were multichannel retailers and had one or several stores,” Mulpuru said.
As well, the majority, or 63 percent, of the survey’s participants were headquartered in Ontario, while 13 percent were based in Quebec and 11 percent in British Columbia.
“It’s important to note that more than half of the surveyed retailers grew their business by double digits in fiscal year 2014 over 2013,” Mulpuru said.
Moreover, online retail in Canada is forecast to see an annual growth rate of 12.3 percent over the next five years. That figure is almost five times higher than the growth of total retail sales.
Forrester’s research also predicts that online retail sales in Canada will reach 39.9 billion Canadian dollars, or $32.1 billion, by 2019 and that the percentage of Canadian Internet users who buy online will grow from 59.7 percent penetration in 2014 to 63.6 percent in 2019.
“We are seeing significant growth driven by consumers going to mobile,” Mulpuru said.
In fact, 36 percent of the businesses surveyed ranked mobile initiatives as their number-four most important priority, behind site merchandising (38 percent), omnichannel efforts (39 percent) and marketing (64 percent).
The report said 63 percent of Canada’s online retailers are spending more in 2015 than in 2014 on Facebook, and that 38 percent of this group is comprised of smaller businesses.
“Marketing is a key strategic initiative for smaller online retailers,” Mulpuru said.
“Here, in Canada, there is a lot more experimentation with Facebook, Instagram and other marketing tactics that are out there. But the interest in Facebook is strong in Canada because it’s less expensive and has some of the best impact on smaller brands, particularly those with no national presence,” she explained.
“That was an important consideration, particularly when half of this survey’s respondents planned on dedicating less than 250,000 Canadian dollars [$200,865] per year toward marketing,” Mulpuru said. “However, as the sizes of these Canadian online businesses grow their marketing dollars will likely grow and converge.”