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More and more shoppers are online, so where are the retailers?

The Globe and Mail Report on Business by Andrea Stairs 24 June 2015

It’s been a dramatic year for retailers in Canada with major closures, new entrants into the market and mergers and acquisitions. And while e-commerce is playing a bigger role, bricks-and-mortar stores remain central to the retail experience. As a result, investing in both offline and online experiences to deliver true omnichannel retail is more critical than ever.

Consumers are online. Where are the retailers?

BMO Capital Market’s Canadian Digital Retailreport highlighted major gaps in Canadian online retail, which is heavily concentrated on electronics and apparel, with light e-commerce sales in other categories. eBay and Amazon, the country’s two largest online players, are light years ahead of other major Canadian retailers in technology, customer experience and scale.

At eBay, our continued investment in technology has been critical to sustaining our leadership position and to efficiently connecting Canadian sellers with both domestic and international buyers. As devices and technology change and improve, online retailers need to anticipate the implications and adapt, quickly.

We bet early and significantly on mobile – as of last April, 50 per cent of eBay’s nine-million Canadian visitors had a mobile touchpoint in their purchase journey and 33 per cent interacted with eBay exclusively on mobile. Retailers need to be where their customers are buying – and that now includes mobile.

Online investments are also a core contributor to in-store purchase decisions. Deloitte’s recent Retail’s Omnichannel Omnichallenge report found that even though consumers are still buying in bricks-and-mortar stores, they are pre-shopping online, placing more emphasis on the need for omnichannel strategies.

While Canadian retailers work to launch and upgrade their online and mobile capabilities, they should also look to partner with companies, particularly e-commerce marketplaces, which offer ways to bridge their existing gaps. By selling on sites such as eBay and Shop.ca, Canadian retailers can get the benefit of these platforms’ investments in technology and online marketing, while giving themselves the breathing room to improve their owned channels.

For example, if a retailer is not able to prioritize mobile development or search-engine optimization, then a marketplace strategy provides the opportunity to take advantage of the marketplace company’s investment and expertise in those areas.

The Retail Council of Canada’s E-Commerce Benchmark Survey 2015reported that online marketplaces aren’t being used effectively despite the fact that sites such as eBay and Amazon each have millions of active users in Canada.

As retailers edge into the online space, marketplaces are one of the most cost-effective ways to test retail strategies (pricing, inventory selection, etc.) and develop a global customer base. For instance, ScoutTech Outfitters, a small business out of Mississauga, launched initially as an eBay-only business. After accumulating sales in excess of $1-million on the site, it expanded to open a bricks-and-mortar store.

Marketplaces also provide opportunities for larger companies, whether it’s to extend omnichannel capabilities or strategically manage distressed or aged inventory. eBay’s partnerships with leading Canadian retailers showcase how marketplaces can successfully add to the sales mix and even improve profitability: A Forrester Research report noted that “retailers can generate high-margin revenue because there are few variable costs associated with marketplace operations.”

Canadian retailers have a long way to go to be competitive online. The good news is that there are solutions available, but online investment must be prioritized to remain competitive. Leveraging marketplaces is a good first step into e-commerce, but further work needs to be done to be relevant to customers in a global economy.

Retailers should be investing in technology, and maintaining that level of investment over the long term, to keep up with rapidly evolving consumer behaviours and preferences.

Andrea Stairs is managing director of eBay Canada.