The eCommerce sector of Canada is growing rapidly due to changing customer preferences and technological advancements. This shift reflects the adaptability of Canadian businesses and consumers to handle the challenges of a fast-changing global economy.
So, let’s walk you through the factors that are driving Canada’s budding e-commerce landscape, the growth potential, and the future implications for Canadian retail and consumer engagement.
The rise of Canadian eCommerce
The e-commerce market in Canada, which is segmented into B2C and B2B sectors, has seen a remarkable evolution. According to reports by Mordor Intelligence, the market is expected to register a 14.50% Compound Annual Growth Rate (CAGR) from 2022 to 2027, driven by factors like advanced infrastructure, high internet usage, and an increase in card-based payment systems. This growth trajectory is evident in the projected rise of retail e-commerce sales, to reach $90 billion U.S. dollars by 2025.
Also, the rising trend of e-commerce in Canada is quite positive. According to data by Statista, over 27 million Canadians, accounting for 75% of the population, were engaged in online shopping in 2022, with this number expected to rise to 77.6% by 2025. The pandemic undoubtedly accelerated this trend, with retail e-commerce trade sales hitting a peak of US$3.82 billion in December 2020.
A glance at the Canadian food & beverage (F&B) sector
Despite this digital upswing, the Canadian restaurant industry faces challenges. Expected to be in a post-pandemic recovery phase, the sector instead is dealing with soaring inflation and operational costs. The Restaurants Canada (2024-25) Federal Budget Submission addresses the struggle to maintain profitability in the face of rising food prices and wages.
As the physical dining experiences become costlier, there’s an evident shift towards online food services and delivery platforms. This transition opens new avenues for growth in the eCommerce space, encouraging digital platforms to meet evolving consumer demands. This is why, despite the pressure on profits and margins, this shift is pushing restaurants and food retailers to adopt digital platforms for online ordering and delivery.
Why Canada and why now?
Digital infrastructure and high Internet penetration
With advanced digital infrastructure and one of the world’s highest rates of internet penetration, Canada presents an ideal landscape for e-commerce. This environment facilitates easy access for consumers to engage in online shopping, contributing to the sector’s growth.
Increasing preference for online shopping
The pandemic has accelerated the shift to online shopping among Canadians. This trend seems to be a lasting change in consumer behavior, with more people now preferring the convenience and variety that online shopping offers.
Expansion of mobile and digital payments
The rise in digital and mobile payment options increases the convenience of online shopping, which further encourages consumer participation in the e-commerce segment.
Adaptive retailers and digital platforms
Canadian retailers are increasingly investing in digital platforms, to meet the needs of a diverse customer base, and respond to competition from major e-commerce players like Amazon. Canadian e-commerce also has room for new players, especially in niche markets and localized offerings.
Technological advancements and innovation
Canadian businesses are increasingly adopting cutting-edge technologies, such as AI, AR, and VR, to enhance the online shopping experience. Innovations like digital try-ons, virtual showrooms, and personalized shopping assistants make online shopping more engaging and user-friendly.
Versatile and growing market segments
Canada’s eCommerce spans a wide range, from electronics and fashion to food and beverage. This diversity indicates a strong and versatile market, capable of catering to various consumer needs and preferences.
Revenue and market trends in the F&B sector
As discussed above, despite the economic and operational challenges, the shift in the F&B Sector to move towards online food services and delivery is creating new opportunities within the e-commerce space. As per Restaurants Canada, the revenue outlook for Canada’s restaurant industry is promising, with spending estimated to top $110 billion this year, a 10% increase from the previous year. However, this growth is still tempered by the rise in operational costs.
Government support
Canada’s supportive government policies for digital businesses would create a favorable environment for the growth of eCommerce. Initiatives aimed at boosting digital businesses and supporting small and medium enterprises (SMEs) are further enhancing this potential.
All in all, The Canadian eCommerce market is projected to be brimming with opportunities, driven by a digitally-savvy population, diverse market segments, technological innovation, and supportive economic conditions.
