Surge Seen for Canadian E-Holiday Sales

According to a study released Monday by business services firm Ernst & Young, Canadian consumers plan to spend 14 percent of their holiday shopping funds online -- a 100 percent increase over last year's level but still less than half as much as their American counterparts.

The report also said that Canadian consumers spent roughly US$890 over the past 12 months on Internet purchases, appreciably less than the worldwide average of $1,100.

However, researchers said that Canadian e-tailers have reason be to optimistic. Three-quarters of Canadian Internet shoppers surveyed for the report said they plan to make at least some of their holiday purchases online this year, spiking from roughly 49 percent in 1999.

Conversely, only 25 percent said they have no plans to conduct online transactions this season, a significant drop from last year's level of 52 percent.

"This will be a very interesting online holiday season -- strong across a broader range of products and very promotional for most retailers," said Ben Babcock, a partner with Ernst & Young's corporate finance, retail and consumer products practice.

Brick-and-Clicks Rule

The Ernst & Young study is the latest in a string of holiday e-shopping reports that point to the growing influence of multi-channel players in the highly competitive e-tail arena.

The firm found that this emerging trend reflects the shift away from pure-plays and toward companies that already have established a physical presence and brand before launching Internet arms.

"We see the e-winners as those companies who are implementing a multi-channel strategy so customers see a consistent and integrated brand at the corner store or the online mall," said Babcock.

Among those surveyed, Sears' Canadian site was ranked the most popular online retailer, followed by Amazon.com. Researchers also said that other Canadian-based multi-channel sites, such as FutureShop.ca and Staples.ca, will claim a larger share of online purchases leading into 2001.

E-tail Advantages

The primary driver of e-shopping in Canada during the holidays is a consumer desire to steer clear of the brick-and-mortar retail bustle, said the report. In fact, 62 percent of those surveyed said they do not like dealing with the rush of crowds in stores and malls. In addition, 60 percent said the ability to shop at more convenient hours online was a key advantage of buying via the Web.

Other reasons cited for making purchases over the Internet included saving time and less driving.

Notably, the study found that cost is not as significant a factor for Canadian online consumers as others surveyed globally, with only 17 percent saying they buy online in order to save money.

However, researchers advised e-tailers that the best recipe for success will be to meet demand and sidestep glitches, which will drive consumers away. "To win in online retailing, companies must excel in meeting or exceeding customer expectations and improving the customer relationship through world-class operations and merchandising," said Babcock.

Toys Gain Ground

This holiday season, online consumers will also shop in broader categories than before, researchers said.

While books, computers and music remain the perennial purchasing favorites among e-shoppers, the study noted that this year toy purchases - already a top holiday category in the U.S. -- are gaining ground.

Nearly one in five of those surveyed said they plan on buying a toy online, surpassing the 13 percent who will purchase videos.

About the Study

As part of its fourth annual Global Internet Retailing report, Ernst & Young surveyed more than 4,500 online consumers in 12 countries about their e-tail holiday habits and history.

The study included over 470 respondents in Canada who said they have made purchases via the Web over the past 12 months.