Canadian e-commerce catching up with the U.S.
Long forced to ship products from the U.S. and pay taxes, Canadians now have many homegrown issues to choose from.
When Yona Shtern and Robert Gold started to explore the idea of launching an online shopping club in Canada, one of most appealing things was that there weren't any online shopping clubs in Canada, particularly ones catering to consumers who wanted high-end designer brands.
"They realized there was a void in the market and that there was nothing like it in Canada," said Dara Fleischer, Beyond the Rack's marketing director. "Canadians like to shop, and everyone is looking for bargains so it was the perfect time to launch a new business like it."
Beyond the Rack's success reflects how the Canadian e-commerce market is still developing, and that Canadians will shop online if there are Canadian stores to do it.
Up-and-coming small Cdn. businesses
How Twitter is helping small business
Solving the top five e-mail problems
How to keep customers coming back
Yoga studio stretches ahead
Blog: Haggling back with a vengeance
When e-commerce started to emerge in the late-1990s, the Canadian market saw slow growth because many of the large retailers such as Canadian Tire decided not to step into the fray. Meanwhile, the U.S. market was booming, not only large retailers but fast-moving startups such as Amazon.com that realized there was a huge opportunity to serve the needs of consumers.
For Canadians who wanted to shop online, it often meant they had to buy products from U.S. retailers - if they shipped to Canada - and then be willing to pay taxes and duty at the border. In many cases, these additional charges made cross-border shopping unfeasible.
Fortunately, the Canadian e-commerce market has been gaining a lot of momentum as new local retailers open for business, and U.S. retailers launch Canadian versions of their e-commerce sites.
According to eMarketer, Canadian e-commerce sales will climb to $16.6-billion in 2009 from $15.5-billion in 2008, and they are expected to hit $22.8-billion by 2012. In comparison, U.S. e-commerce sales are forecast to decline 3.1% in 2009 to $128.2-billion, before climbing to $166.3-billion in 2012.
Among the new breed of companies driving the Canadian e-commerce market is Wishabi.ca, which operates a one-stop shopping destination featuring hundreds of Canadian and U.S. retailers.
MSN.ca Money's editorial goal is to provide a forum for personal finance and investment ideas. Our articles, columns, message board posts and other features should not be construed as investment advice, nor does their appearance imply an endorsement by Microsoft of any specific security or trading strategy. An investor's best course of action must be based on individual circumstances.