Article: The E-commerce Pie

Can Canadian companies take a larger slice?

According to a recent survey from Forrester Research, Inc. (Nasdaq: FORR), in conjunction with Greenfield Online, total US spending on online retail sales in the US for 2001 reached $47.6 billion (US$) up 14 per cent over 2000. The US Department of Commerce reported E-commerce sales in 2001 accounted for 1.0 percent of total retail sales.

The picture in Canada according to the latest survey from Statistics Canada showed that companies received $10.4 billion (Cdn$) over the Internet, up 43.3 per cent from 2000. Although E-commerce sales in 2001 accounted for only 0.5 percent of total retail sales.

With upwards of $60 billion (US$) in N. American sales expected over the Internet in 2002 it appears US companies are establishing a clear advantage over Canadian companies in establishing E-commerce solutions.

There should be no reason for Canadian companies not to embrace the Internet as an additional marketing and sales channel. The biggest advantage they have is the knowledge of what worked and what didn't work for businesses that were up and running over the last few years.

Whilst many web design companies promote the latest technologies, animations and a plethora of automated 'Wizard' based solutions (i.e., assembly required by you), in reality, simple, content rich, quick loading, visually appealing web sites that are easily navigated and designed using standard merchandising and retailing principles are much more effective.

It must also be understood that while an offline business and its online counterpart are closely related the online version needs to be treated as a new venture and carefully planned and integrated into your existing operation and carefully reflect your corporate identity.

As such, companies need to develop a business plan with definite marketing and sales goals, and monitor them at pre-determined intervals. Small business owners who never had an original business plan should take this opportunity to create one. After the website is up and running and routinely doing business, it may be wise to develop a comprehensive business plan for both online and offline arms of your business.

While creating a website with the aforementioned attributes, it must also be secure and have access to site-traffic analysis tools, e-mail and anything else that encourages business-to-consumer interaction. The one great lesson of operating online has been that it reinforces the necessity of establishing relationships with customers as a key to building consumer loyalty.

Sites that are visually appealing and descriptive will likely attract the most attention. Online shoppers primarily depend on their sense of sight, as they cannot touch, smell or taste the merchandise. Everything the consumer does at your site must be as easy as possible. Sites can benefit by making the online shopping experience fun for visitors. Just like in the brick-and-mortar world, some consumers view shopping as a leisurely, relaxing experience. If it becomes stressful or requires long waits, shoppers will leave.

Self-promotion is a must. The sites that are consistently experiencing high traffic are those that cleverly and creatively promote themselves. Offline stores need to have their Web site address on everything with which the customer has contact, including business cards, shopping bags, store windows and anywhere else you can attract attention. Additionally, make sure your site is well optimized and listed with the widely-used search engines such as Google, Yahoo!, Lycos, Alta Vista, etc.

To realize the full potential of the Internet, business web sites need to sell in real-time from their sites, allowing customers to place orders and pay for products directly on-line with their choice of credit card. This requires a feature rich on-line merchandising and shopping cart solution seamlessly integrated into the website.

A final requirement is an Internet compliant Merchant Account to authorize, accept and process credit card payments in real-time.

This is a relative quick and painless process for US based companies. Unfortunately Canadian companies experience great difficulty in obtaining merchant accounts from Canadian banks for conducting business on the Internet. Perhaps one of the reasons Canadian companies has lagged the US in e-Commerce growth. This disparity should disappear as more and more US banks via US based merchant account providers, now accept Canadian companies as clients.

Expanding your current operation onto the Internet should be recognized as a necessary requirement for business expansion in this new millennium. Likewise if you have an E-Commerce site in operation and you are not satisfied with results, then regroup, plan and go forwards. A slice of that $60 billion (US$) pie has your name on it. - John Shenton - April, 2002