although amazon began selling books — B u s i n e s s F i n a n c e

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Amazon.com
Amazon Sets the Pace in Online Retailing in Canada
In the world of online retailing, Amazon is king. Not only does the company report the largest
revenue of any pure-play online retailer- that is, an e-commerce website that does not have
physical stores-but it is also the clear leader in customer satisfaction. Moreover, online retail is
now widely believed to be the major driver of growth in decades to come. While physical retail
struggles to grow at a pace exceeding inflation, online retailers are increasing their year-over –
year sales at a double-digit rate.
Yet, although traditional bricks and mortar retailing in Canada has become extremely
competitive, Canadians are sadly underserved-at least in comparison with our American
neighbours- in consumer e-commerce. Major retailers like Canadian Tire, The Hudson’s Bay,
Shoppers Drug Mart, and Holt Renfrew have no e-commerce presence to speak of. Indigo
Books and Music has been a Canadian leader in the product categories it sells, as well as in ebooks, but retailers in this country lag well behind the internet’s leading retailers. Even
amazon.ca offers only a small selection of what is available at the main shopping site
amazon.com.
Although Amazon began selling books—a product category particularly well suited to online
sales and mail order delivery, it now competes in most major retail categories. In fact, the
company recently announced that it is entering the high-end fashion business. According to the
New York Times, the company is now shooting 3,000 fashion images per day to sell clothes from
designers who include Michael Kors, Vivienne Westwood, Catherine Malandrino, Jack Spade
and Tracy Reese. Even a decade ago this would have seemed foolhardy. Who is going to buy a
$1,000 skirt before trying it on? But Amazon now has a lot of experience in selling clothes
online and gained even greater expertise when it purchased zappos.com (the web’s leading shoe
retailer). And, of course, the economics of shipping make sense to Amazon because the fee to
send a skirt to a customer is the same whether it retails for $10 or $10,000.
Interestingly, as much as online retailing has changed since Amazon launched in 1994, the
company’s website has remained remarkably consistent in its design and approach to online
sales. The personalized recommendations have improved, and features such as wish lists and
one-click purchasing have become a common part of the Canadian shopping experience. At the
same time, Amazon continues to expand the products it offers to Canadians through both its local
.ca and its global .com stores.
As Canadian retailers work to close the gap with Amazon, other competitors ranging from Apple
to Facebook are poised to make major waves in consumer e-commerce. Ultimately, however, it
is the consumer who will decide how fast online shopping will grow and which companies will
benefit from that growth. The ability of online retailers to serve and assist shoppers in their need
recognition and search will play a critical role in determining the value that consumers perceive
in electronic commerce.