Business

Clicking all the way

A small but rapidly growing number of Canadians are doing their holiday shopping online

Danylo Hawaleshka December 13 1999
Business

Clicking all the way

A small but rapidly growing number of Canadians are doing their holiday shopping online

Danylo Hawaleshka December 13 1999

Clicking all the way

A small but rapidly growing number of Canadians are doing their holiday shopping online

Business

Danylo Hawaleshka

What little experience Laura Jo Gunter has had with Internet shopping makes her want to stick to the stores. The first time she went online, Gunter, 38, wasted hours searching for a 3-D version of Snakes and Ladders for her two young children. She eventually ordered the game from a Sears catalogue. Gunter, the Vancouver Film Schools director of programming, fared no better in her next online attempt. “I was going to order a CD for my son,” she says. “The CD cost

$18 and the delivery cost another $10. That’s ridiculous.”

Gunter, like many Canadians, will do her holiday spending of line, in malls and other traditional retail outlets. In fact, the Toronto-based Retail Council of Canada predicts in-store holiday sales will be up at least five per cent over last year. The robust economy is helping drive the seasonal surge. Unemployment was 6.9 per cent in November, an 18-year low, while the economy grew at an annualized rate of 4.7 per cent in the third quarter. But while traditional stores are still drawing the bulk of customers, the landscape—or, the cyberspace—is changing. Analysts say the 1999 holiday shopping season will be a watershed for e-commerce in Canada, with sales expected to more than double from 1998 to $370 million.

That boost is largely attributable to the phenomenal growth in the number of companies selling online. In the past three months alone, the number of retailers on the AltaVista Cana-

dian Shopping Guide, a Web portal, grew by 60 per cent to 320. Until recendy, says Retail Council vicepresident Randy Scodand, there were too few Canadian sites to build shopping momentum. “That is radically changing,” he says. “Its gone from solely bricks and mortar to clicks and mortar.”

The numbers are even more dramatic in the United States. There, Boston-based technology analysts the Yankee Group forecasts the 1999 online holiday shopping market to reach $12.3 billion— up 324 per cent in a year.

Understandably, no one wants to be left behind. That’s why retailers such as Sears Canada have expanded their offerings. Others, such as Montrealbased hardware chain Rona Inc., have jumped in with new Web sites. And Roots has just launched roots.com. Like many new online entrants, the Toronto-based firm opted to limit its selection of athletic wear, leather goods and casual clothing as it learns the ropes. Sales were at first limited to Canada, but company co-founder Michael Budman says the United States will be added before Christmas, with overseas markets targeted for some time in 2000. “Our brand has a global following and we have limited distribution as far as bricks and mortar go,” Budman says. “It’s going to be a huge benefit.”

As with anything new, there are obstacles to overcome. Analysts expect some companies to be overwhelmed and unable to deliver their products in time for holiday celebrations. And, Steve Johnson, co-director of the e-commerce program at Andersen Consulting in Chicago, says consumers have concerns

over providing personal information online or being able to return items, while many enjoy shopping in stores. With retailers counting on the holiday season to earn half or more of their annual revenues, it is critical companies do not make mistakes. “Basically,” says Johnson, “it’s make hay while the sun shines.”

The shifting shopping patterns are causing more than a few headaches. This is especially true for the owners of shopping malls, which typically charge a percentage of their tenant stores’ sales, as well as rent. In mid-November, Hycel Partners 1 LP sent the 170 tenants of their Galleria Mall in St. Louis, Mo., a letter ordering them to stop promoting online sales. After most of the retailers ignored the letter, Hycel backed down. Ron Peddicord, senior vice-president at Cadillac Fairview Corp. Ltd., which operates 52 malls across Canada, says he does not see how malls can ever monitor online sales. “It’s impractical and I would characterize it as unfair,” he adds.

As analysts, retailers and mall owners strive to make sense and money out of a chaotic situation, shoppers like Judith Ryan in Halifax quiedy mull over their options. Ryan, a writer and researcher, plans to spend about the same on Christmas gifts as last year. But her shopping will not be online. “I’m still a little worried about giving out my credit card number,” she says. “I’m sure I’ll get over that with time.” If she and others do that, the sound of Christmas future could be a resounding click-click.

With John DeMont in Halifax and Ruth Atherley in Vancouver

John DeMont

Ruth Atherley

Big woes for some small \X/eb vendors

Four thousand dollars to have a Web site designed; $100 to register the name; $40 a month for the Internet service provider. Factor in other online costs and book publisher Shannon Rose of Greensville, Ont., has spent more than $6,000 on her Web site over the past year—and no one has bought a single thing yet. “I’m going to have to sell about 12,000 books to make up for that,” says Rose. “And that’s not going to happen.” Rose’s misfortune illustrates the perils small businesses face when rushing to cash in on electronic commerce. When Rose launched Greensleeves Books from her home 10 km west of Hamilton, everyone told her she needed a Web page. While her books on entertaining sell well in stores, and online through the

U.S. giant Amazon.com, Rose says coundess hours spent tinkering with greensleevesbooks.com have been ffuidess.

That comes as no surprise to Randy Scodand, a vice-president at the Retail Council of Canada, which represents 8,000 large, midsize and independent retailers. He cautions that several factors go into making a site successfid, especially creating buzz through advertising. Then there are the not so simple mechanics of selling online: warehousing (Rose’s basement, den and spare room are filled with books), ensuring prompt delivery, offering secure payment and processing returns. “The misconception is that all one needs to do is hire some whiz-bang computer firm to design a really attractive Web site and Bob’s your uncle,” says

Scodand. “Well, it’s not quite that easy.” Complicating matters are the intangibles. Jim Okamura, a senior partner at retail analyst J. C. Williams Group, notes there are three basic retail strategies: one driven by low price (think Wal-Mart); another by in-demand merchandise (Pokémon, for example); and one by service. Small businesses usually opt for exceptional service, albeit for a bit more money. But there’s a problem with cyberspace, where there are no helpfid, smiling clerks. “Online, we don’t feel that the service strategy has been figured out yet,” says Okamura. That leaves entrepreneurs like Rose scratching their heads. “There’s a pile of money to be lost,” says Rose. She’s right, of course, but the Web’s intoxicating allure is that there’s also a pile of money to be made.

D.H.