Imagine a customer demographic that has more disposable income, spends more time online, is not as big on bargain-hunting and is more loyal than your core customer.
Sounds like a retailer’s dream doesn’t it?
I’m talking about the Canadian shopper, who has 65% more disposable income than the average American shopper, spends 41.3 hours online per month (second only to the 43 hours of the average American), and consumes more online content than anyone else in the world.
There are a multitude of reasons why American retailers like Target, Nordstrom, J. Crew, Crate & Barrel, and Bed Bath & Beyond have been expanding north into the Canadian market – sales per square foot are 50% higher at Canadian malls as compared to their U.S. counterparts, vacant real estate is plentiful and Canadian shoppers are conditioned to paying more than Americans across the border due to the practice of “country pricing” – only part of that price difference is attributable to cross-border tariffs as even some Canadian manufacturers charge more in the home market. But the real story is the wide open field in online retail.
Canada’s eCommerce hasn’t quite caught up with Canadians’ online engagement. Online sales account for just 5% of total retail vs. 8% in the U.S. and only about half the women in Canada shop online vs. 75% of American women. Four in ten dollars spent online go to foreign retailers. It’s an opportunity that retailers like Target, Amazon and Canada’s homegrown online retailer Shop.ca are happy to capitalize on. Target has 24 new store locations in Ontario, Canada and is sure to bring its online savvy to the Canadian market. Amazon now offers its hugely successful loyalty program, Amazon Prime with 2-day shipping, to Canadian shoppers. Then there is SHOP.CA.
Give to Get Back
Launched in 2012 by a dream team of Canadians lead by CEO and industry veteran Drew Green, Toronto-based SHOP.CA is an online mall that brings together more than a 1000 Canadian suppliers to cater to the needs of the Canadian shopper at zero shipping and zero return costs – of note as even Amazon doesn’t offer Free Shipping to non-Prime Canadian customers. Recognizing that getting first time visitors to convert is critical to repeat visits, the website awards $25 welcome credit to a new member spending $100 or more, and optimizes the checkout process by allowing visitors to shop as guests. Once they’ve made this first purchase, visitors come back to buy every other month on average and spend $155 per order. The site’s membership passed the 500,000 mark some nine months ago.*
A key differentiator from U.S. retailers is SHOP.CA’s multi-tiered loyalty program. As Drew explains, Canadians are second only to the Brits in their love of loyalty programs and, in fact, 94% of Canadians participate in a loyalty program. SHOP.CA caters to this with a multi-tiered loyalty program that incentivizes repeat purchase behavior, referrals and social sharing, with something in it for both the value-conscious mature(er) shopper and the socially savvy younger set. While the site overindexes on the 35-44 age group (Source: Alexa), Drew shares that visitors clicking through from social platforms have a 10% conversion rate, higher by far than other visitors. Drew’s future aspirations for the site also reflect the realities of the Canadian market with the top three areas of focus being breadth and depth of product selection, superior customer service and rich loyalty rewards.
It’s tempting to compare Canada to days of yore in U.S retailing history (or at least 1995 when Amazon was just getting off the ground), but it’s a lot more complicated of course. What came first, a lack of shopper savvy and inadequate volume in online channels or the lack of affordable online shopping options – supply or demand? The answer probably lies somewhere in between, but one thing is for certain – online retailing is about to get a lot more interesting thanks to websites like SHOP.CA, and we hope that in the end, the biggest winner is the Canadian shopper.
* Added in a subsequent email from the CEO
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