It could very well be what saves Canadian retailers this holiday season. Whether it's for the convenience, to avoid crowds, or to gain access to more products and special Net-only deals, shopping online is more popular than ever.
"It's really a trend in the right direction and I think it reflects the ease of the online shopping experience," says Raj Krishnamoorthy, a security expert and partner at Deloitte in Toronto.
"It reflects the fact that people have that much more familiarity of the online shopping process and are able to take advantage of it."
New numbers from Statistics Canada show that Canadians are taking advantage of e-tailing like never before. Online shopping has increased by more than 61 percent in two years, ringing up a record $12.8 billion in sales in 2007.
A total of 69.9 million orders were placed online in 2007, up from 49.4 million in 2005. Overall, more than 8.4 million Canadians aged 16 and over purchased something online last year, compared to 6.9 million in 2005.
All this e-tailing is also helping traditional retailing, with many Canadians logging on to research products and window shop before hitting the mall.
In 2007, 43 percent of us surfed store sites before buying. Of these window shoppers, the majority - more than 64 percent - said they subsequently made a purchase directly from the store.
In a year where every holiday shopping dollar counts, both retail and marketing experts are predicting that the internet will play an even more pivotal role this Christmas.
"In light of the slumping economy, competition will be stiff and the companies that provide people with the most relevant experience will get the business," says Adam Froman, president and CEO of Delvinia, a Toronto-based interactive design and digital marketing firm.
"More than ever, the choice and control is now firmly in the hands of the consumer - especially with internet shopping."
A new holiday survey by AskingCanadians.com commissioned by Delvinia found that 86 percent of Canadians are planning to research gift ideas online this year, with six in 10 people planning to purchase gifts over the net.
The survey also found that poor navigation features, cluttered webpages with too much information, lack of relevant product information and too many ads were the quickest ways to turn customers off their websites.
By far, full-page pop-up ads promoting another product or service were the most annoying experience for consumers, with 43 percent saying pop-ups were the most frustrating part of online shopping.
"When people go online to check out a store and then get bombarded by other products - 'Do you want this?' 'Do you want this?' - it's a really annoying experience for people," Froman points out.
"They're just trying to hit you with too many things and trying to shove stuff down your throat that they'd never do in a store. You wouldn't go up to people in a store and throw things in their face to try and get them to buy it! There's a level of respect that happens in the store that doesn't always happen online."
Another common mistake many retailers make is trying to do too much. An overabundance of special features, downloads and website "clutter" can overwhelm customers and make them want to shop somewhere else.
"You get companies that are throwing everything but the kitchen sink at their customers - 'Hey, you can download a widget, wouldn't that be great!' " says Froman.
"People get too wrapped up in all the cool things they can do on a website, but it's not necessarily going to make for a better shopping experience and if it isn't a good experience, it will turn people off the entire brand."
The best way to boost your brand and increase sales - both online and in the store - say marketers, is to know your customer. Do they prefer a self-serve experience? Or do they want lots of support and assistance? Do they like to touch and feel things before they buy? Is price a big factor or will they pay more for certain things?
"Every retailer knows their customer base and it's going to be the same customer online, so you need to figure out what they want online and give it to them," advises Froman. "You need to know what kind of experience they want in your store and then duplicate it online."
With a retail revolution clearly underway, experts say that not taking advantage of online shopping to boost sales this slumping season could be a big mistake for retailers.
"The use of the internet is much larger than just people shopping online," says Brent Houlden, a partner and national retail practice leader at Deloitte.
"If you go to a mall, you'll see people walking around with discount coupons from the internet and that's being used very, very aggressively this year."
Cross-promotion is one of the hottest trends for driving sales this holiday season. Special sale, discount and promotion information that can only be found online is getting customers into bricks-and-mortar stores.
"The classic way to discount was to write everything in the store down 30 percent - that's the old-fashioned way to merchandise," Houlden says.
"Now, shoppers willing to do the work and go online (to get coupons) get the deal, and the people who don't care about price point pay full price. It really works for the retailer to figure out who wants a discount and to just give it to them, instead of offering it to everyone."
Retailers are also targeting loyal customers with e-mails, inviting them to take part in special customer-appreciation offers.
"There are also lots of secret sales going on this year that you won't see advertised and that's really helping to drive up sales," Houlden says.
With more consumers looking for deals this year, offering clearance items online can be a good way to clear out old merchandise. Far more cost-effective than shipping items to a clearance centre, online-only deals are also a win-win for space-strapped retailers year-round.
Yet, despite the growth in online shopping, security concerns still persist.
According to the Statistics Canada survey, half of all Canadians reported being very concerned about online credit-card use. That number dropped to 34 percent among people who had actually ordered something online, indicating that security concerns may be keeping some Canadians from buying online.
"It's fair to say that security is one of the biggest concerns for consumers," says Krishnamoorthy.
"Survey after survey that comes out, like the Stats Can survey, are all finding that consumers still have serious concerns over security so, even though we have seen big increases in online shopping, is it increasing as much as it should?
"We lead busy lives and we don't have the luxury to go to the mall and browse so, that being the case, are we seeing enough of an increase in online shopping and if not, why not? I would say concerns or lack of understanding of how security is dealt with is a big impediment."
To improve online security and protect credit-card information, Krishnamoorthy advises businesses to request the three-digit security code on the back of cards, participate in Visa and MasterCard's new PIN programs, and adhere to the new national payment card industry data security standard, or PCI.
The PCI standards were recently developed by the credit-card companies to safeguard consumers' credit-card information from hackers and thieves.
Non-compliance can result in fines, restrictions or possible expulsion from card-acceptance programs. Yet, a November survey of senior Canadian business executives says that many websites aren't compliant.
The Ledger Fusepoint Managed Services survey found that only 27 percent of those conducting e-commerce transactions are PCI compliant. It also found that of those who had heard of PCI but not yet adopted the standard, more than three-quarters said their business would see an increase in customer confidence once they did.
Customer confidence can also be increased by posting privacy information online, ensuring credit-card information is only transmitted using SSL, a secure socket layer with a higher level of encryption to protect information, and regularly testing website vulnerability.
"I believe that as retailers take security concerns more seriously and react to these concerns, they have the ability to make online shopping that much more impactful on the bottom line," Krishnamoorthy says.
With the Conference Board of Canada reporting consumer confidence at recession levels and the Prairie region, in particular, experiencing the largest one-month decline in consumer sentiment on record in November, boosting the bottom line this season won't be easy.
Online spending was down in the third quarter, dropping 13 percent from the same period last year, according to the latest Ipsos Reid survey tracking consumer activity on the internet.
"While we actually noticed the decline in online spending occur in the second quarter of this year, the year over year figures confirm that Canadians have significantly reduced their discretionary spending on the internet," notes study author Mark Laver.
"Ultimately, this data points to a challenging environment for retailers - online and offline. With a recessionary mindset prevalent, many Canadians may search around for the best deal for their holiday shopping dollar."
Indeed, Deloitte's annual holiday survey on retail spending trends has found that 83 percent of consumers plan to buy more items on sale this year and 40 per cent say they'll spend less than last year.
The good news for Canadian retailers is that much of the spending slump may be at the expense of U.S. retailers.
Last year, a strong dollar and big deals stateside caused a cross-border shopping boom.
"The reason internet sales are down is because people aren't buying on the U.S. sites like they did last year when the dollar was close to par," Houlden says.
"We'll see fewer people spending their holiday budget south of the border this year and that will help Canadian retailers," he says.
"It won't be a great Christmas for retailers, but it will be better than last year - not much better, but not worse."
(Tess van Straaten can be reached at tess@businessedge.ca)
