Shipping frustrates Canadian shoppers
Much like in the United States, Canadian residents are spending more of their money at online retailers as opposed to in brick-and-mortar businesses. However, before eCommerce operations can fully take off in the country, entrepreneurs will have to do a lot of work in improving the logistics of order fulfillment and delivery, new Forrester Research suggests.
As of 2013, the average Canadian shopper spends $1,130 online per year, with Web sales accounting for 5.7 percent of overall retail spending.
To put that into context, their American counterparts spend $1,483 annually and online sales makeup 8.4 percent of retail expenditures.
Forrester analysts believe the reason for the discrepancy can be boiled down to the logistics of making online purchases in Canada. In many instances, Canadian residents paying more money for shipping and being forced to wait for longer (which is especially noticeable in international purchases). Comparing the cost of delivery for a six-pound package, researchers found that Canadian consumers were paying an average of $40.63 compared to $11.30 in the United States.
Forrester chalks the higher shipping costs up to a lower population spread out over a vast distance. Retailers struggle to generate enough orders online to effectively pay for more regional distribution centers, so packages are sent to customers from only a few fulfillment locations. This also hinders their ability to lower shipping thresholds or offer expedited shipping.
Given the sparse product offerings and limited shipping options of domestic merchants, many Canadian customers are even looking across the border.
"Frustrated at the inability to find what they are looking for online in Canada and driven by the lure of cheaper prices south of the border, these Canadians are diverting online dollars into foreign markets, which fills the coffers of foreign online retailers rather than helping domiciled ones earn the much-needed revenues to expand their businesses," the report concludes.
Improving shipping abilities to better meet the needs of customers.
The distaste for high shipping costs and long delivery times is universal, with even American consumers fingering it as one of the prime determinants of buying products online. For example, a report from the United Parcel Service (UPS) suggests that while free shipping and accurate delivery were lead drivers of positive recommendations from customers, high shipping costs and long delivery times were the primary reasons consumers told their friends and family not to shop with a merchant.
Retailers need to find ways of better managing their eCommerce operations, regardless of whether they serve American shoppers, Canadian shoppers or consumers for any other region. Slow and expensive shipping is universally linked to worse customer experiences and if brands want to win over more customers, quicker shipping and more options could be the key.