E-commerce is a significant part of the retail landscape. It has empowered over 24 Million businesses to sell their products and services to customers online as of 2023. Businesses across all industries, small or big, can leverage e-commerce to reach new customers, expand markets transcending geographical borders, and multiply revenues beyond one’s imagination.
Considering the 2000 dot-com bust, e-commerce made a comeback only as recently as 2005, but it has been unstoppable since then. With growth rates consistently outpacing traditional retail, e-commerce is paradigmatic of the 21st-century evolution of retail. We even named it one of the Top 5 Business Trends to watch out for in 2023.
Global e-commerce sales will reach US $58.74 Trillion by 2028, expected to grow at a CAGR of 26.55% from 2022 to 2028. This year (2023), e-commerce is expected to make up 22.3% of total retail sales.
North America is a developed and technologically advanced region poised to handle the boom in e-commerce adoption and growth. The North American E-commerce market is projected to expand at a CAGR of 12.5% between 2022 and 2027.
What is driving e-commerce growth in North America?
Consumers demand convenience:
The North American e-commerce market trends are largely driven by consumer interest in convenient shopping solutions. Previously it was mostly millennials and Gen Z who preferred shopping online, but since the pandemic levelled the field, all ages have found comfort in online retail.
Consumers of all ages now progressively favour home delivery; they value immediacy, reliability, breadth of options, and flexibility. Tech leaders like Amazon, Deliveroo, Netflix, and Uber Technologies have raised customer expectations and set a tall precedent for all online businesses. 58% of Canadian consumers said their purchases are influenced by the speed of delivery, and 46% said they are motivated by the expected delivery date provided by the retailer.
Businesses continue to innovate, adding various tools to increase accessibility and ease the consumer’s online shopping journey. Paypal added a new ‘Checkout With Crypto’ feature, allowing consumers to shop at millions of online stores using cryptocurrency. eBay and FedEx expanded their partnership in Canada, providing FedEx shipping integration directly through eBay Labels.
Mergers and Acquisitions for e-commerce:
With companies wanting to increase their expertise and widen their e-commerce capabilities, mergers and acquisitions across industries are firing up e-commerce growth in North America. Everybody wants to get a slice of the e-commerce pie.
Pinterest acquired AI-powered shopping startup The Yes; it said it would ‘help drive the company’s shopping efforts, including developing features for both shoppers and retailers’. Lineage Logistics, an international warehousing and logistics management company, decided to purchase Perishable Shipping Solutions (PSS), a leading e-commerce to pick and pack order fulfillment service as part of its D2C investment.
Facts about the Canadian E-Commerce Market
- In most countries, e-commerce was a cure-all for those seeking safety and convenience during the pandemic. According to Statista, online sales in Canada sky-rocketed by 625% in 2020, particularly for household appliances, electronics, building materials, and DIY. The pandemic was a solid equalizer that pushed all generations to find their trust in e-commerce.
- Canada’s e-Commerce infrastructure is very advanced and closely integrated with the United States. Approximately 94% of all Canadians have access to stable internet service. Broadband internet access is offered using the same technical infrastructure as the United States.
- Canadian e-commerce sales are set to reach US$46.63B by 2024.
- Computers and electronics, women’s apparel, and books dominate online sales in Canada.
- 59% of Canadian shoppers use credit cards online, and 20% use PayPal.
- The major holidays driving consumption in Canada are:
- Valentine’s Day (February 14)
- Easter (March/April)
- Mother’s Day (May)
- Father’s Day (June)
- Back-to-School (August)
- Halloween (October 31)
- Christmas (December 25)
- Boxing Day (December 26)
How Canadian online shoppers are evolving
- Canadians support local:
Cross-border shopping is still very popular in Canada. 60% of Canadians say they are consciously trying to shop locally. Canadian-made brands are primed to take advantage of this shift in sentiment.
- Hyper+ is growing:
The Hyper+ shopper segment, the Canadian online shopper segment that shops online most frequently, is growing. 60% of total Canadian online purchases are made by Hyper+ shoppers. They’ll go the extra mile for purchases given the right amount of attention.
- Environmental Impact:
37% prefer shopping with retailers who are reducing their carbon footprint. Gen Z and Millennials are specifically willing to spend more on brands doing their bit for the environment.
The future of e-commerce in Canada:
Omnichannel Online Sales: Online retailers must focus on unifying the online shopping experience. Customers expect a seamless buying experience across all channels with standardized pricing and exchange policies across platforms. Real-time inventory tracking and in-store employee access to customer purchasing history are examples of this approach.
Relying on technology is a pivotal step to make this execution easier for retailers; tech products like ShipStation are smart ways to consolidate orders from all channels and monitor real-time performance.
Mobile Commerce: By 2024, global mobile commerce sales are projected to reach C$6.1T, claiming
69.9% of total retail e-commerce sales. As of Jan 2022, 55% of Canadians used their mobile devices for online retail purchases. Led by millennial consumers, 47% of these shoppers make at least one weekly purchase via digital devices. Canadian retailers must ramp up their investment and optimization of mobile-friendly online store channels and improve their user experience for customers on their mobile phones.
Flexible tech products like WordPress and Shopify can help create mobile-friendly, highly scalable e-commerce stores. Managed hosting solutions and Headless E-Commerce Architecture are other growth-ready e-commerce tech strategies.
Social Commerce: Social Commerce will be driven by the creator economy and digital ads. A strategy that originated in China has quickly gained popularity. Hootsuite reveals that internet users aged 16 to 64 visit social networks more than search engines or web portals. Social media + e-commerce is a powerful combination for any brand.
Pina Sciarra, MD at Accenture, says Canada has been a ‘laggard in adoption’. In-app catalogues, live stream shopping, and leveraging social creators as social proof are social commerce approaches Canadian brands must prioritize.
Virtual Reality Shopping: Trying on glasses before buying, trying on a lipstick shade before purchase, virtual reality shopping is already here. It boosts the likelihood of purchase! Michael Prusich, Director of Business Development at 1Digital
Agency, said, “35% of people say that they would be shopping online more if they could virtually try on a product before buying it, and 22% would be less likely to visit a brick-and-mortar store if AR was available via their favorite e-commerce store.”
Canadian Government Support for Small Business E-Commerce
Digital proliferation and its lasting impacts on retail have been challenging for small businesses in Canada. The Canadian Government, on a Federal and Provincial level, recognizes the importance of supporting small businesses to adapt to new technologies and stay competitive in an increasingly online future. Here are a few programs for small and medium-sized businesses looking to jumpstart their e-commerce functions.
- Canada Digital Adoption Program
The CDAP helps small and medium-sized Canadian businesses grow their online presence and upgrade to digital technologies. The government has announced support of over C$4B over 4 years in grants, advisory services, and loans (from BDC), consisting of the Grow Your Business Online Grant, where eligible businesses can avail of a micro-grant of C$2400 to implement e-commerce capabilities, and the Boost Your Business Technology Grant which allows eligible businesses to get up to C$15000 to invest in technology that can help with a digital transformation.
- Digital Main Street
Digital Main Street, as the name suggests, is a support program for main street businesses to go online. Ontario’s DMS shopHere by Google is funded by the province of Ontario and key corporate sponsors. It helps home-based and commercial businesses create, configure, manage, and market online stores.
Digital Transformation Grant (DTG) program administered by the Ontario BIA Association (OBIAA) provides training, advisory support, and grants to brick-and-mortar small businesses to increase their capacity through digital transformation.
Are you looking to startup or expand an e-commerce business in Canada?
There is no better time than now to use Canada as a launchpad for your e-commerce business. TBDC’s Soft Landing Program is designed to help international entrepreneurs startup and scaleup in international markets. Contact a TBDC advisor here to find out how.