Canadian retailers saw their online sales grow at nearly double the rate of U.S. online retailers in 2017, according to an Internet Retailer analysis of data recently released by Statistics Canada and the U.S. Commerce Department. That growth has Canadian e-retailers nibbling at the sales of U.S. online retailers.
Canadian online retailers’ sales grew 30.6% last year, according to Statistics Canada, which tracks the web sales of merchants based in Canada—it does not take into account where buyers are located.
That’s nearly double the 16.0% growth rate of U.S.-based online retailers, per U.S. Commerce Department figures released earlier this month. The U.S. Commerce Department says U.S. e-retailers generated $453.46 billion on the web for retail purchases in 2017.
Canadian sales are growing from a much smaller base: Statistics Canada says 2017 online sales were C$15.65 billion, roughly $12.64 billion at current exchange rates. Taken together, total sales of North American online retailers in 2017 were $466.1 billion, with Canadian online retailers accounting for 2.7% of the total.
In 2016, Canadian online retailers generated C$11.98 billion ($9.44 billion) and accounted for 2.4% of the total sales of North American online retailers.
A 0.3 percentage point gain may not seem like much, but the dynamic is thrown into starker relief when looking at the composition of Canadian e-retail sales. Based on the best available data from Statistics Canada and a Canadian online spending forecast from eMarketer Inc., Internet Retailer estimates Canadian retailers accounted for 40.4% of Canadian online retail sales in 2017. That’s more than a five percentage point gain from 35.2% in 2016.
The rise of domestic Canadian e-retailers is a significant development, and it is only gaining momentum as more merchants develop their digital capabilities and broaden their selections, giving Canadian shoppers greater opportunity to shop with Canadian companies online. Canadian consumers have to pay duty on online purchases of C$20 or more made with retailers outside of Canada, and given the growing shopping options available domestically, the percentage of Canadian consumers shopping cross-border is declining, according an annual research report on cross-border shopping activity from PayPal Inc. and research firm Ipsos. In 2016, 63% of Canadian online shoppers said they shopped cross border, down from 67% who said they did so in 2015.
Echoing the e-commerce storyline in the U.S. and elsewhere, online sales in Canada are accounting for a greater share of total Canadian retail sales. Statistics Canada data shows online sales accounted for 2.7% of total Canadian retail sales in 2017, up from 2.2% in 2016.