New research has revealed that there are more barriers to e-commerce in Canada than previously thought, with many Canadians still reluctant to shop online due to fears about security and the cost of shipping. We know all this because of a recent study by the Retail Council of Canada and The Boston Consulting Group, which found that as many as 70% of Canadian consumers are “unlikely or very unlikely” to shop online due to concerns over shipping costs and potential fraud. While it’s true that shipping can be expensive for smaller businesses selling online, these conclusions seem somewhat reductive and even misleading. After all, we live in a digital age where convenience is often the primary selling point for virtual stores. So why is free shipping so uncommon in Canada? Read on for the truth behind free shipping in Canada…
The truth behind free shipping in Canada
At first glance, it would seem that the truth behind free shipping in Canada is that e-commerce just isn’t very popular among Canadian consumers. In fact, Amazon announced they were dropping free two-day shipping for Canadians, citing “increased costs” as the reason behind the decision. But when you look a little deeper, there are several other factors that are likely holding back e-commerce in Canada. These include increased privacy and security concerns, very high shipping costs, and a lack of digital adoption among Canadian small and medium-sized businesses, partially due to the cost of doing business online (i.e. shipping costs).
Free shipping and e-commerce in Canada
One of the main reasons why so many Canadians shop at physical stores is that shipping costs are often prohibitive for online retailers. This is especially true for smaller merchants who can’t depend on economies of scale to keep their costs down. Because many of these smaller businesses have a limited customer base, they can’t rely on volume to offset shipping fees. To boost sales, many retailers try to offer conditional free shipping as an incentive to spur purchases. Due to Amazon and the like, Canadian online shoppers have come to expect free shipping as the cost of doing business and often decide where to shop based on this factor alone.
Why is free shipping so rare in Canada?
Because free shipping is an easy way for online retailers to differentiate themselves, one might assume that it would be the standard. In fact, a poll conducted by the Retail Council of Canada found that only 14% of online shoppers had ever paid for shipping. Given that the majority of Canadian consumers say they’re unwilling to shop online due to shipping concerns, it would seem logical for e-commerce retailers to offer free shipping. Unfortunately, retailers have a lot of costs to cover, and shipping is one of the biggest. Plus, around 60% of people surveyed said they would only buy something if it cost less than $5 to ship. This suggests that retailers who want to offer free shipping would either have to raise their prices or accept significant losses.
Why doesn’t everyone offer free shipping?
Of course, there are other reasons why free shipping is so uncommon. Some e-commerce retailers have found that offering free shipping can actually backfire, driving up customer expectations so they only buy from them when they offer free shipping, which is not always possible. Not surprisingly, customers who receive their orders for free tend to be more satisfied than people who paid for shipping. Others have found that offering free shipping can hinder sales – for example, customers will order items “just to try them out”, because shipping was free, and then try to send them back for a refund. Customers expect that they will be able to send their purchase back and get a refund for the product and the shipping, and get very angry when told that the shipping charges will be deducted from their refund. (most stores do this, including Amazon)
Free shipping is one of the most common incentives for e-commerce shoppers, yet it’s virtually non-existent for small businesses in the Canadian marketplace. Why? It appears that many retailers are reluctant or mostly unable to offset shipping costs, leading many consumers to avoid local online shopping altogether.
Canadians are flocking to huge American online retailers like Amazon to make their purchases. They use their size to their advantage, securing very low shipping charges from the major carriers. Even so, Amazon’s retail arm is not profitable(or barely).
Canadian small businesses cannot compete with these monopolies. Making the espousing of “Buy Canadian” by governments and others, a mockery. Shipping charges in Canada are some of the highest in the world.
What A Jewel is a Canadian Gift Shop offering low shipping rates with Free Shipping available on qualifying orders.