CCentral-Main-logo-EN-trans

Convenience Central
Join our community
extra content
Shutterstock

Consumers flocked to online shopping as pandemic hit, with e commerce sales up 99%

Canadian consumers flocked to online shopping as the measures to combat the COVID-19 pandemic were enacted, according to a Statistics Canada report.

A new report from the agency found that total retail sales fell by 17.9% as Canadians increasingly sheltered in place between February and May and brick-and-mortar stores closed their doors.

Even so, shoppers rushed to make online purchases, with sales surging 99.3% during the period.

Statistics Canada says e-commerce sales hit a record $3.9 billion in May, a 2.3% increase over April and 99.3% increase over February.

E-commerce sales more than doubled year over year, with a 110.8% increase compared with May 2019.

Kostya Polyakov, partner and national industry leader for KPMG’s consumer and retail practice in Vancouver, says that “the split between e-commerce purchases and in-store purchases has changed forever,” but that it won’t always be as extreme as the numbers reported by Statistics Canada on Friday.

“I spend a lot of time with all the top retailers in the country,” says Polyakov. “I think the consensus is certainly you will see a return (of shoppers) to stores.”

The report from Statistics Canada found that all 11 retail subsectors with e-commerce sales saw those sales increase.

The record gains in e-commerce occurred as total retail sales experienced record declines, the report says, with April data showing the most stark contrast. Retail sales that month plummeted to $33.9 billion, down 29.1% from February and 26.4% from the prior year. Meanwhile, e-commerce increased 63.8% in April.

From February to April, only the food and beverage subsector saw an increase in in-store sales, which were up 3.3%, while e-commerce sales surged 107%. In-store sales declined for general merchandise stores, building material and garden equipment and supplies dealers, and health and personal care stores.

Other retail trade subsectors such as furniture and home furnishings stores, sporting goods, hobby, book and music stores, and clothing and clothing accessories stores saw much sharper declines in in-store sales from February to April 2020. As in-store sales decreased for these subsectors, e-commerce sales increased.

Marty Weintraub, national Retail leader at Deloitte Canada, says that not all retailers face the same level of challenges when it comes to the move to online shopping. For example, consumers may still be delaying large purchases on some types of items, out of fear that unemployment may still be around the corner, said Weintraub.

“We don’t believe the e-commerce rates we have seen will stay at the levels we have seen them. We are already starting to see a little pulling back, most notably in apparel,” said Weintraub. “But (e-commerce rates) will be higher than where it was before the pandemic, absolutely.”

Statistics Canada said it will continue to update the e-commerce data to assess the long-term changes after the pandemic, noting that as stores reopened in May, the proportion of e-commerce sales was 10%, down from a record high of 11.4% in April.

“Will the COVID-19 pandemic have a lasting impact on the retail trade sector? Small businesses are increasingly turning to e-commerce platforms, and are using these platforms in innovative ways,” the report said.

Brick-and-mortar stores, particularly small ones with little online presence, may scoop back some of the recent online sales by making sure their inventory is up-to-date, Polyakov says.

“If you need a new pair of ice skates for your kid’s hockey practice tomorrow, (retailers) want you the consumer to say, `You’re better off running out to Sport Chek, because we will for sure have those skates for him,’ rather than waiting, you know, two, three days for Amazon to ship them to you,” says Polyakov.

Polyakov expects there is a group that bought something online during the lockdown that they’d rather try in store, such as shoes or a tent. Second, a group of consumers have had to learn e-commerce systems, and were previously less accustomed to online shopping technology, such as some members of Baby Boomers or Generation X. These two groups helped push online sales higher during the lockdown, said Polyakov.

Some, particularly older generations, may keep taking advantage of the convenience of online shopping, says Polyakov, especially as some shopping malls are prioritizing appointments over browsing. The bigger questions, says Polyakov, is whether people will continue to buy items online that they prefer to try in the store, such as winter coats.

The new data from Statistics Canada is the latest peek into a changing retail sector, also reflected in two other recent data releases.

Overall retail sales data for May, released on July 21, indicated that while about 23% of retailers were closed during the month, for an average of five business days, sales are 80% recovered from the worst of the pandemic period.

The consumer price index, released on July 22, suggested that consumer behaviour has shifted so much that it has thrown off the inflation index.

“Where we settle will depend on how the pandemic unfolds,” said Weintraub. “The longer we are in this state of being, the greater the likelihood that this (online shopping) behaviour will stick.”

This report by The Canadian Press was first published July 24, 2020.

Canadian consumers flocked to online shopping as the measures to combat the COVID-19 pandemic were enacted, according to a Statistics Canada report.

A new report from the agency found that total retail sales fell by 17.9% as Canadians increasingly sheltered in place between February and May and brick-and-mortar stores closed their doors.

Even so, shoppers rushed to make online purchases, with sales surging 99.3% during the period.

Statistics Canada says e-commerce sales hit a record $3.9 billion in May, a 2.3% increase over April and 99.3% increase over February.

E-commerce sales more than doubled year over year, with a 110.8% increase compared with May 2019.

The report found that all 11 retail subsectors with e-commerce sales saw those sales increase.

The record gains in e-commerce occurred as total retail sales experienced record declines, the report says, with April data showing the most stark contrast. Retail sales that month plummeted to $33.9 billion, down 29.1% from February and 26.4% from the prior year. Meanwhile, e-commerce increased 63.8% in April.

From February to April, only the food and beverage subsector saw an increase in in-store sales, which were up 3.3%, while e-commerce sales surged 107%. In-store sales declined for general merchandise stores, building material and garden equipment and supplies dealers, and health and personal care stores.

Other retail trade subsectors such as furniture and home furnishings stores, sporting goods, hobby, book and music stores, and clothing and clothing accessories stores saw much sharper declines in in-store sales from February to April 2020. As in-store sales decreased for these subsectors, e-commerce sales increased.

Statistics Canada said it will continue to update the e-commerce data to assess the long-term changes after the pandemic, noting that as stores reopened in May, the proportion of e-commerce sales was 10%, down from a record high of 11.4% in April.

“Will the COVID-19 pandemic have a lasting impact on the retail trade sector? Small businesses are increasingly turning to e-commerce platforms, and are using these platforms in innovative ways,” the report said.

The new data from Statistics Canada is the latest peek into a changing retail sector, also reflected in two other recent data releases. The consumer price index, released on July 22, suggested that consumer behaviour has shifted so much that it has thrown off the inflation index.

Overall retail sales data for May, released on July 21, indicated that while about 23% of retailers were closed during the month, for an average of five business days, sales are 80% recovered from the worst of the pandemic period.


Unknown

Shopify and Walmart team up to take on Amazon

UnknownShopify Inc. is upping the ante in its battle against Amazon.com Inc. by aligning itself Walmart Inc. in its fight with the Seattle online retailer.

The Ottawa-based e-commerce giant, whose software powers online stores for more than one million companies, on Monday announced the partnership, which will allow U.S. merchants to sell their products on Walmart’s website.

By the end of the year, Shopify expects 1,200 of its merchants to be selling products through Walmart’s marketplace, which is visited by more than 120 million Americans every month.

Amazon had more than 2.01 billion visits in February alone and is the most visited e-commerce property in the United States, according to Statista. Walmart holds the number two spot.

The partnership is their latest swing at Amazon, a behemoth that has revolutionized the world of e-commerce with its online marketplace, massive warehouses and speedy delivery services.

Amazon has been eating into Walmart’s low-cost model by enticing customers with equally affordable prices and the added convenience of quick delivery.

Asked whether the Walmart deal was signed with Amazon in mind, Shopify’s vice-president of product didn’t single out any one company. “Anything that reduces the barrier to entrepreneurship is good for merchants, good for consumers, and good for Shopify,” said Satish Kanwar.

His company, however, tweeted a graphic on Monday based on an image used with a recent story in the Guardian newspaper about the Shopify-Amazon rivalry. Shopify animated the graphic to zoom in on a frowning character apparently made of Amazon boxes that was being towered over a shopping bag bearing Shopify’s logo.

Walmart has been trying to keep up with Amazon, which has undercut retailers with its algorithms and in-house brands and hastened the speed of online shopping, sending competitors scrambling to keep up.

“If you have a common enemy then the idea of forming an alliance to try to counteract your common enemy makes a lot of sense,” said David Soberman, a University of Toronto marketing professor.

“Shopify doesn’t benefit from the growth of Amazon. The stronger that Amazon is, the less likely it is that an independent merchant wants to set up an online store with Shopify.”

The Walmart-Shopify partnership could work well, Soberman said, because it matches Walmart – still the world’s biggest retailer – with one of Shopify’s strengths: inventory management.

Lisa Hutcheson, managing partner at consulting firm J.C. Williams Group, said the two are also a good fit for each other because Walmart is keen on digital growth – an area where Shopify has long focused.

Walmart.com’s sales surged 74% in the first quarter of its fiscal year as the brand experienced increases in demand for curbside sales and online orders during the pandemic’s early days, when details of the Shopify partnership were being worked out.

But even together, Walmart and Shopify are unlikely to beat Amazon, Hutcheson said.

“Amazon is always one step ahead of everyone in terms of where they are going to pivot next,” said Hutcheson.

“I think (Shopify) will be able to give it a run, but not catch up.”

Shopify, which temporarily topped RBC as Canada’s most valuable publicly traded company earlier this year and counts among its customers Kylie Cosmetics, Budweiser and Nestle, has been in more direct contention with Amazon since last year, when the company announced plans for a network of fulfilment centres meant to help merchants lower shipping costs and ensure timely deliveries.

The centres will focus first on the U.S., one of Amazon’s strongest markets, with the door open to expansion in other regions.

The Walmart partnership comes a month after Shopify teamed up with Facebook Inc. to allow merchants to create a customized online storefront for Facebook and Instagram.

 


CCentral-Weekly-insights-online-purchasing01

Shopify unveils new products aimed at entrepreneurs grappling with COVID-19

Entrepreneurs who are struggling to keep their businesses alive amid the demands of COVID-19 or feel underserved by the country’s financial institutions are about to get a helping hand from Shopify Inc.

To help entrepreneurs “futureproof” their companies, the Ottawa-based e-commerce giant said Wednesday that it is launching a handful of business management and sales tools, including giving its merchants the ability to let customers “buy now, pay later” and tip.

Craig Miller, Shopify’s chief product officer, said some of the new features and products were in the works long before the pandemic, but others were dreamed up or accelerated as entrepreneurs scrambled to pivot their businesses to online models while experiencing lost income, furloughs and layoffs.

“It almost became 2030 overnight,” he told The Canadian Press. “Some of the things we were anticipating as being important over the next coming years became super important basically overnight, so we’ve been trying to equip our merchants as much as possible to deal with this kind of situation.”

Shopify’s launches were shared at Reunite, a virtual event the company put on in lieu of its annual Unite conference, where the company’s top executives usually unveil major product announcements. Unite, which was due to be held in Toronto in May, was cancelled in March because of COVID-19.

The pandemic has proved to be a boon for Shopify, which passed Royal Bank of Canada to become the most valuable, publicly-traded company in Canada in May.

Its stock now regularly reaches more than $1,000 in trading and the company boasts that more than one million businesses _ Shopify calls them merchants _ now use its offerings.

“It sounds a little weird at first glance, but we’re seeing some grocery stores and restaurants use Shopify,” said Miller.

He’s also noticed the number of local orders Shopify merchants received each day on average spiked by 176 per in the six weeks leading up to April 24, just as physical distancing and work-from-home orders were put in place in several countries.

Shopify believes companies may see an additional boost from its Wednesday announcements, revealing merchants will be able to collect tips and set fees, minimum order prices and distance radiuses for deliveries.

The company began allowing merchants to sell gift cards in recent weeks and teamed up with Facebook Inc. on Tuesday to unveil a new and free tool helping companies create a customized online storefront for Facebook and Instagram.

Later in the year, those in the U.S. will be able to offer a “buy now, pay later” and get access to Shopify Balance, a business account that promises a clear view of cash flow and an ability to pay bills and track expenses. It will come with a “balance card” with cashback, discounts on shipping and marketing and no monthly fees or minimum balances. Merchants can use it to make purchases or withdraw from ATMs.

Shopify did not say when the service will be available to Canadian merchants.

Balance is targeted at the two in five merchants that Shopify has discovered are using their personal bank accounts and cards for business and others who find banking products aren’t designed to meet the needs of or flexibility required by entrepreneurs.

“It becomes very tricky for them to separate their business from their own personal bank accounts and that causes all sorts of problems, for example, when they need to get financing… and in some cases, it affects their credit score,” said Miller.

Despite Shopify partnering with Facebook, it’s still positioning itself to take on other tech giants, including Amazon.com Inc.

Shopify’s network of fulfilment centres, which launched last year to help U.S. merchants lower shipping costs and ensure timely deliveries, has been going head-to-head with the Seattle-based behemoth.

Shopify’s network has just begun accepting merchant applications after completing an early access stage.

“The response was almost bigger than anticipated,” Miller said. “We’ve just gotten bombarded with merchants that want to use it.”