Pulse Check: The State of Canadian E-Commerce in 2020

“Unprecedented times” is a phrase you’ve probably seen and heard dozens of times by now.

It’s an understatement.

Canadians have adapted to living “the new normal” in fairly short order. The good news: the relatively early adoption of social distancing has slowed the impact of the virus, and the Federal government announced an $82B COVID-19 relief package to ease the impacts of the virus on the lives of Canadians. The bad news: wide-spread closures of non-essential services and brick-and-mortar stores essentially hit pause on the economy, and worse, led to over a million job losses across the country.

The ripple effect on Canadian business has also been dramatic: Less cash flow and shuttered stores, restaurants, and clinics have meant less consumer spending in general. Especially for traditional businesses, the impact on revenue has meant shifting gears on a daily basis to keep virtual doors open as customers flock online to meet their needs.

We did see this on the horizon, though. Prior to the crisis, ‘digital disruption’ was already sunsetting traditional in-store brands: Over 1000 retail store locations were set to close prior to the end of March, according to Retail Insider. The 2019 Meeker report also hinted at this digital growth, with e-commerce continuing to gain share over physical retail. No surprise there, as over half of the earth’s population (51% of 3.8 billion people at the time) now identify as internet users. If shops weren’t convinced to make the leap online before feeling the impact of COVID-19, they have every reason to now.

E-Commerce in Canada: What’s happening right now?

While there exists uncertainty for every Canadian, certain trends are taking shape in Canadian e-commerce that will continue to shift as merchants adapt to the ever-changing needs of their customers.

E-commerce revenue is growing during this crisis. A recent report by Absolunet found that several sectors are seeing growth in online revenue compared to last year, with apparel seeing the least growth at 21%. This uptick comes as non-essential businesses close doors and go fully online. Yet, overall online traffic has slowed for Canadians, which may indicate more strategic shopping, i.e. purchasing essentials only, and continued growth is not a sure thing. Nowadays, nothing is.

Online businesses are changing the meaning of ‘customer experience.' Even the savviest of e-commerce businesses have been forced to change their typical operations in an effort to engage and retain customers right now. This has meant enriching the online customer experience by offering different types of interactions and expanding to a multichannel format. The expansion of curb-side or in-store pick-ups and contactless delivery has also been adopted to meet current consumer demand.

Offering payment choices at check-out is a must right now. Staggering job losses have obviously shifted customer spending habits. Even though Canadians are likely spending with scrutiny and with limited cash flow on the brain, they still need to purchase essential items for home and health. By offering multiple ways to pay at checkout, whether that is via Interac, PayPal, or 0%-interest installment payments, like PayBright, Canadian businesses are rising to the new financial realities of their customers in order to retain them. Helping customers out in the interim by offering more financial convenience and choice at check-out is the right thing to do. And for businesses looking to maintain or grow revenue right now, offering this payment option has been proven to increase AOV and boost conversions.

Even E-commerce giants are experiencing growing pains. While e-commerce has thrived in the last month, the sustainability of revenue growth is not assured. In fact, growing pains will continue to present themselves as the increase in demand of certain products grows. Even Amazon, Apple, and other e-commerce behemoths have struggled with delivery fulfillment, managing issues with the supply chain (impacted by distribution and factory shut-downs), the social distancing of employees, and increased customer inquiries.

E-Commerce in Canada: What we can expect in the next 6 months

While online merchants have seen an uptick in sales, this doesn’t necessarily indicate a steady trend over the next six months. The ‘new normal’ will be harder to predict than that. Business health-checks are a daily, even hourly, necessity in understanding the long-term shape e-commerce will take.

Brands equipped with E-commerce before COVID are in a winning position. Canadian businesses who did the prior legwork of setting up an e-commerce offering prior to the pandemic (specifically those who were already earning a quarter of their revenue online) are in a solid position for keeping their doors open in the months after the crisis. Not only does this show a business’s ability to think ahead, it also has shown their agility in moving online and meeting the changing needs of its customers. As the Absolunet report tells us, “the percentage of e-commerce revenue as it relates to global revenue is growing significantly. Merchants’ past in digital seems to be paying off.”

Some retailers will fare better than others. We know that furniture, electronics, sport equipment, food, and building material providers are already faring well in the online space. What we can surmise is that how the virus impacts e-commerce will very much depend on the type of retailer a business is, as well as whether that retailer was already savvy in running an online portion of their business.

Offering choice and convenience will be a no-brainer. Whether boomer or millennial, the increased move online means that customers will be expecting brands to offer them more choice and convenience in general. To rise to this occasion, retailers will likely offer more omnichannel options, increase spend on digital products and improving UX, and offer diverse pick-up, delivery, refund, and return options best suited for customers who expect a seamless experience.

We’ll see new innovations in products, customer service, and business strategy. Out of crises come innovations in the ways customers and businesses behave. Businesses will rethink how they traditionally generated revenue and racked up good CSat scores, especially as they continue to solidify online. This could mean expanding into previously unexplored markets, developing new technologies, or partnering strategically with other businesses. Operating with the creative constraint of social distancing may prove to be a catalyst for resourcefulness and innovation.

Post-COVID, some things will stick. On the other side of the COVID mountain, “digital disruption” will become less of a scary phrase for brick-and-mortar businesses as they move online. The current crisis will not disappear from memory after social distancing is lifted -- it’s likely to have a lingering psychological impact across the board.

According to a recent survey, shopping habits are swiftly changing: more are shopping with health, sustainability, and the environmental impact in mind. Customers will remain hyper-aware of their spending habits and maintain some online shopping habits they picked up while in isolation. Likewise, merchants will be hyper-aware of the frailty of their revenue now that they’ve witnessed the devastating impact a crisis can have on even the healthiest of businesses.

As these are “unprecedented times,” we can’t say with certainty what will happen for e-commerce, but more importantly, for Canadians. Businesses and household incomes have taken a hit, yet both are rising to significant new challenges as a result.

Whether merchant or customer, right now, every moment is an educational one.

This article is provided for informational purposes only. It is not an exhaustive review of this topic. The content is not financial or investment advice. No professional relationship of any kind is formed between you and PayBright. While we have obtained or compiled this information from sources we believe to be reliable, we cannot and do not guarantee its accuracy. We recommend that you consult your personal finance professional before taking any action related to this information. PayBright is a provider of Buy Now, Pay Later (BNPL) solutions. BNPL providers offer plans with a variety of terms and conditions, including interest rates, fees, and penalties, and have different standards for qualifying for loans. Laws and regulations governing BNPL providers vary by jurisdiction. We recommend that you compare and contrast plans, read the fine print, and conduct detailed research into any BNPL provider before using their services.