Clicks vs. Bricks: Online Shopping Gaining Traction in Canada
The digital future is here, and online and digital capabilities are creating new and exciting touch points along the shopper journey. Today, online fast-moving consumer goods (FMCG) sales account for 2% of total FMCG sales, or $2.2 billion, in Canada. However, that number is expected to reach 5.3%, nearly $6 billion by 2020. On top of that, Nielsen estimates Canadian FMCG e-commerce sales to outpace brick and mortar store sales by a margin of seven to one.
As e-commerce sales grow across the country, online shopping trips are increasing but remain far behind trips to brick and mortar stores. Across Canada, consumers make 2.3 billion trips to brick and mortar stores for FMCG products, which account for nearly 99% of all trips. Comparatively, only 1.3% of trips (or 28 million trips) occur online. The good news for retailers and manufacturers with e-commerce operations is that online shopping trips have grown by 9% in the last year, while trips to physical stores have declined by 1%.
Purchasing behaviour varies from province to province, and e-commerce shopping is no different. Where consumers live in Canada affects how much they shop online. Consumers in British Columbia currently have the highest online share of any other region, with 2.6% of their FMCG sales completed online, compared to the Maritimes and Quebec with the lowest share, at only 1.7%. While the Maritimes may have the lowest share of online sales in Canada, they have the highest growth rate, with a 26% increase in online sales in the last year (52 weeks ended Dec. 30, 2017).
As consumers become more confident using e-commerce channels and online shopping options (i.e., click-and-collect or home delivery) in locations outside of major urban centres, Canadians are likely to continue to ramp up their online shopping. While e-commerce purchases for FMCG products are still largely a domestic affair in Canada, with consumers primarily ordering from retailers in their own country, cross-border e-commerce is a growing phenomenon. But with huge opportunity comes great challenge. And with more choices available to consumers than ever before, the shopping experience becomes a key differentiator between banners.