SOURCE: eMarketer

December 21, 2006 09:00 ET

Canadian Retail E-Commerce to Double by 2009

Data Shows Slumbering Canadian E-Commerce Market May Be Stirring

NEW YORK, NY -- (MARKET WIRE) -- December 21, 2006 -- Canadians are world leaders in broadband penetration, time spent online, electronic banking and bill paying. Yet surprisingly, when it comes to online retail purchases, Canadians strongly prefer buying in the store. The situation has resulted in a relatively stagnant Canadian e-commerce market, according to a new eMarketer report, "Canada Retail E-Commerce." Shoppers complain that Web retailers are not serious about selling, while retailers have not seen enough people shopping online to justify the cost of developing a good site. Security concerns have caused Canadians to prefer window-shopping online, and retailers have resorted to using the Internet primarily as a business-to-business sales channel.

Even so, there are signs that the slow-to-develop Canadian retail e-commerce market is gaining momentum. eMarketer believes that Canada's retail e-commerce market has entered a stage of accelerated growth. This year, sales are expected to grow by 25%, reaching US$8.3 billion (C$9.4 billion), and next year the annual growth rate will peak at 26.3%. Going forward, sales growth will continue to be healthy, although rates will decline.

Among the factors driving this growth, considerably more Canadians plan to buy gifts online this holiday season than last year, and a number of large retail chains and smaller specialized retailers have launched online stores in Canada this year. Canadian online shoppers have increased confidence and are extending their online purchases into categories such as jewelry, apparel and home furnishings.

"To assure the continued growth of Canadian e-commerce, retailers must provide consumers with an online shopping experience that is satisfactory from beginning to end," says eMarketer's Jeffrey Grau, senior analyst and author of the report. "The problem is that some large retailers have neglected their Web sites. This is apparent from their lack of selection, poor Web site design and limited features and functionality. They have trouble tracking orders and meeting delivery deadlines."

Additional questions addressed in the report include:

--  What is the current state of Canadian retail e-commerce?
--  How large is the market? And what is its potential?
--  What are the critical factors holding back and driving Canadian e-
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