I’ve conducted an eCommerce study based on a list of 110 major retailers in Canada (not including food retailers) that I found in a Kubas Consultant study on “Retail Market Status”.

I’ve narrowed the list down to 104 retailers because some retailers belong to the same company and/or have the same website.

The purpose of this analysis was to evaluate the options Canadian consumers have when they want to buy online.

In this sample, 71% of retailers in Canada are Canadian based, 23% are US based, 6% are not based in North America.

Here are the findings:

• 52% of retailers in Canada have an eCommerce enabled website. 67% of them are Canadian based.
• 40% of online retailers in Canada ship to Canada.
• 87% of non-Canadian retailers in Canada are eCommerce enabled and 47% of them ship to Canada.
• 92% of US retailers in Canada are eCommerce enabled and 46% of them ship to Canada.
• 38% of Canadian retailers are eCommerce enabled.
• 53% of non-Canadian based retailers in Canada have a dedicated Canadian website.

Even though 38% of Canadian based retailers sell online, they account for 67% of online retailers in Canada. It would be interesting to know how much revenue all these companies generate online in order to see if the proportions are the same. I’m still looking for reliable sources of information on that topic.

This qualitative study reveals that major Canadian retailers seem to dominate the eCommerce market - in presence at least – however there is still room to grow as only a little more than a third of them have eCommerce enabled websites.

The analysis also shows that Canadian consumers can shop online with only 40% of major retailers in Canada. This leaves room for smaller players to gain market share where these retailer don’t sell online. See my post on “The Age of the eCommerce Davids” on this topic.

The Excel source file on which this study is based is available upon request.

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The University of Michigan introduced the “American Customer Satisfaction Index (ACSI)” in 1994, a methodology that measures Customer Satisfaction and Purchasing Intent which are both invaluable metrics for multi-channel retailers. The ACSI has become the leading indicator of consumer behavior, measuring the satisfaction of consumers across the U.S. economy

Photo credits: Alexander Rist

From the ACSI.org website:

“The ACSI model is a cause-and-effect model with indices for drivers of satisfaction on the left side (customer expectations, perceived quality, and perceived value), satisfaction (ACSI) in the center, and outcomes of satisfaction on the right side (customer complaints and customer loyalty, including customer retention and price tolerance).”

Larry Freed, President & CEO, ForeSee Results says that:

“The (ACSI) methodology goes well beyond just showing current satisfaction of online shoppers. The ACSI quantifies how improvements to specific website elements would positively affect both satisfaction and desired future behaviors, including likelihood to recommend and purchase in the future (online, offline, next time or next holiday season).

The ACSI methodology has also scientifically proven that Customer Satisfaction is deeply connected to loyalty, word of mouth, ROI, future financial performance, and even stock prices while also accurately assessing current customer attitudes.”

These metrics in combination with the more traditional KPIs such as number of visitors and conversion rates cover the full spectrum of how customers behave before and after their interaction with a brand online and offline.

ForeSee Results uses the ACSI to conduct bi-annual studies of customer satisfaction with the top retailers by sales volume as determined by Internet Retailer. Foresee Results also uses ACSI to assess the impact of satisfaction on two important, but less tangible attitudes: overall satisfaction with the retailer and commitment to the brand.

Here are key findings from the ForeSee Results Spring 2007 study:

• Satisfaction leads to loyalty and future purchase. There’s a tight link between online customer satisfaction and consumers’ propensity to choose a particular retailer above all others the next time they buy similar merchandise.

• It’s not all about price. While people typically rate price the lowest of all the drivers of online satisfaction, it’s rarely the aspect of the shopping experience with the greatest potential to increase satisfaction, purchase and loyalty. Price is only one part of the value equation. For many shopping sites, improvements to the site experience and the brand would have more influence on desired behaviors than lowering prices.

• Online satisfaction drives positive word of mouth recommendations. Satisfied customers are also more likely to recommend the retailer to their family, friends and colleagues.

• Web satisfaction improves shoppers’ satisfaction with the company overall: Online shoppers of the top-performing sites are 15% more satisfied with the retailer overall than are customers of the lower-scoring sites. Improving satisfaction with the online shopping experience has a halo effect on the entire company.

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eCommerce is the fastest growing retail channel in North America as buying on the Internet is becoming more and more appealing to consumers. However, not all customers feel comfortable buying online compared to physically buying in traditional stores.

A study from Allurent, an eCommerce platform provider who released a Merchandising Survey in September 2006 gives us some insight into the buying habits of online customers in the US.

Not surprisingly, 64% of surveyed consumers* preferred shopping in physical stores for most purchases. Here are the key findings regarding the appeal of one way of shopping over the other:

In brief, even though shopping in stores seems by far more impractical than shopping online, understanding the product is what draws most customers to brick and mortar locations.

Understanding a product can be many things but it usually involves the senses such as seeing, touching, weighing, and even smelling the item. It also involves social interactions like asking the staff questions about functionality and service around the product.

Fulfilling the need to understand the product is more important than the convenience of buying it. In some cases this is even more important than the price simply because it is intimately related to perceived value.

eCommerce websites can benefit from this knowledge by:

1. Providing more information on products such as: more photos (different views, different colours, etc.), 360° product views, videos reviewing the product, etc.

2. Providing more qualitative information such as customer feedback through reviews and ratings for online products, comparison tools, other similar items, etc.

3. Providing more practical information such as giving shipping costs and delays up front and not at the end of the shopping cart process

The same study reveals that 67% of consumers who have visited an online store with the intend of making a purchase left the site because the retailer did not provide enough information about the product in order for the consumer to feel comfortable enough to make the purchase online.

* The survey was completed by 803 adult Internet users, US residents, who made an online purchase during the past year spread across 4 age groups (18-24, 25-34, 35-49, 50+) with a gender mix of 59% male / 41% female.

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Many companies cannot afford to implement a fully functional eCommerce website. They either don’t have the financial resources immediately available or they haven’t made the organizational changes to support their strategy (changing workflow processes, training and/or hiring staff).

This doesn’t mean however, that their businesses can’t benefit from their websites while they’re gearing towards eCommerce. I suggest we take a look at the different “stages of maturity” of websites, at what they mean from a business perspective, and the benefits organizations can expect from them.

First, let me remind you of the intrinsic advantages of using the Internet, whatever the stage of evolution of a website.

By default, a very basic website offers these following intrinsic advantages:

• 24/7 online availability. This means that any information or online services you have on your website will serve your business effortlessly at any time. For example, anyone can send you an enquiry at any time of the day or night, from anywhere in the world, just through a link to your email.

• Instant worldwide access to your business. This means that you can operate your business from the most remote village in the most remote country on the planet, as long has you have a website and a phone line, people from all over the world will be able to find your contact information and reach you. It also means that you can be contacted from the same level of remoteness. This of course broadens your reach to almost anybody with an Internet connexion in the world (no less than that).

• Almost costless exchange of information worldwide through email. Think about what a fax message would cost you to send overseas or to a neighboring country.

There are generally 3 recognized stages of maturity for websites.

1. The informational stage. Informational websites mainly display information on products and services, a list of clients and testimonials, FAQ, contact and location information, etc. From an eCommerce perspective, an online product catalogue (without the possibility of ordering) would fall into this category. This is usually the first and most common stage of website development.

• The business focus (or goal) of this stage is: brand awareness
• The means to achieve the business goal are: through content
• The return on investment (ROI) usually is: brand awareness and more customer inquiries

2. The interactive stage. Interactive websites offers features that allow online visitors to interact with the website through features such as forums or bulletin boards, newsletter registration, contests, polls, filling in forms (such as a request for quotations, sending a page to a friend, posting reviews and ratings (a very popular eCommerce feature), etc. These tools are called interactive because they require an action from the visitors and that as a consequence they become more involved in the online experience of the website.

• The business focus (or goal) of this stage is: engaging the online customer
• The means to achieve the business goal are: through feedback (or the request for feedback from the owners)
• The return on investment (ROI) usually is: brand loyalty through customer satisfaction, product and service quality enhancement through customer feedback

3. The transactional stage. Transactional websites enable their customers to buy products or services online. After the transaction goes through, customers can access the service (such as accessing paid content or a movie for example) or the products (such as DVDs, downloadable documents, concert tickets, etc.). These websites usually have functionalities such as an online shopping cart and an online payment gateway.

• The business focus (or goal) of this stage is: online sales
• The means to achieve the business goal are: through fulfillment
• The return on investment (ROI) is: increase in sales through a broader market reach and increased profitability through lower costs in selling goods and services (especially for retailers who bare the costs of brick and mortar stores)

Understanding these stages and their potential benefits should give you the means to setup a roadmap for developing your online strategy and plan the investments and organizational changes in phases while still taking advantage of each intermediate stage.

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For many companies, defining an online strategy is still very challenging. In order to be successful they need to fully understand how their businesses can benefit from eCommerce (or eBusiness for that matter) and to be able to assess what it takes to implement their strategy.

Companies are usually hesitant to move ahead because they don’t have all the information they require to measure the financial and organizational implications of eCommerce. It is critical for them to be able to evaluate the total cost of ownership (TCO) of their eCommerce architecture as well as the return on investment (ROI) for their business.

Going eCommerce is not like buying a new piece of equipment or investing in an advertising campaign. It is more like opening a new store. I will use this analogy to explain why an eCommerce website is just the visible part of the “eCommerce Iceberg”.

In real life, you can walk into a store, browse through the merchandise, ask the staff questions and then eventually buy something. The store however couldn’t operate if it didn’t have any merchandise to display. There must be a supply chain that makes sure the merchandise gets to the store in the first place and there usually are marketing and merchandising efforts to get your attention.

It is the same for an eCommerce website. In order to make products and services available online, to enable your customers to pay for them, and then for you to deliver them, there has to be more than just designing an eCommerce website.

What you see of an eCommerce website is often the end result of a complex process to deliver products or services to you over the Internet.

Here is a diagram of the “eCommerce Iceberg” and what lies beneath the surface:

Online Marketing, Web Design, Fulfillment, Customer Relationship, Inventory Management, Warehouse Management, Supply Chain, Shipping, Manufacturing, Outsourcing, are the main components that you need to take into consideration when planning an eCommerce strategy.

Depending on your business model, you might not need to address all of them but many of them will have an impact on the way you’re running your business right now.

The impact is not only financial (due to investments in infrastructure, technology, staffing and training), it also affects your supply chain as well as the people behind the business who will have to adapt to new processes. Any oversight will ultimately impact your customers and your bottom line.

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