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New report shows Canadians
are wary of buying on-line; Internet businesses must build trust, experts say.
When Simon
McCaffrey went to buy a $15 (U.S.) book on the Internet recently, he ended up
paying $75. (Canadian) after the currency conversion, and adding taxes, shipping
and handling.
Because he is Internet-savvy, and runs a small Web development business
that develops e-commerce solutions, Mr. McCaffrey hasn't sworn off the process
entirely.
"Now I only deal with Canadian places on-line," said Mr.
McCaffrey, president of C-Seven Media, which he runs out of his Toronto home.
However, there are plenty of Canadians who would simply never buy
on-line again, and if something isn't done to improve matters, the business of
selling goods on the Internet will suffer, according to a new survey by Boston
Consulting Group (BCG).
Titled Winning the Online Consumer in Canada, the report shows that
Canadians research and browse for goods on the Internet just as much as their
American counterparts, but when it comes to buying, something just doesn't click.
About 60 per cent of Canadians and Americans have shopped around for
goods on-line, the survey shows. However, only 43 per cent of Canadians have actually
made a purchase, compared with 51 per cent of Americans.
Worse, while the typical Canadian buyer ordered five times, totaling
an average of $220 in the past 12 month, U.S. consumers averaged 11 transactions
totaling $704 over the same period.
To turn Canadians into buyers instead of browsers, e-tailers need
to do two things, said James Vogtle, e-commerce research director for BCG. First,
companies must earn customers' trust before being given access to their credit
cards.
Second, Canadians need to be able to trust that their goods will be
delivered - a difficult challenge when the majority of good shopping sites are
American, Mr. Vogtle said.
"(An e-commerce site)" has to be just bulletproof for the
actual mechanics of it," he said, adding that Canadians experience more shipping
costs because on average, they live farther away from distribution centres than
Americans.
The BCG survey results came from focus groups and one-on-one interviews
with 12,000 consumers in North America, only 600 of whom were Canadian.
The conclusions are in line with industry research, said Larry Stevenson,
chairman and chief executive officer of Chapters Online, a major Canadian on-line
retailer that sold $38 million in goods in 12 months ended March, 2000. For Canadians,
he said, the big issue to overcome is privacy.
"I do think we are more concerned about privacy, and everyone
who is selling on the Web has to be cognizant of that," Mr. Stevenson said.
"You've got to be very careful with information, more specifically, financial
information."
It's up to e-tailers to promote their own industry by giving Canadians
positive e-commerce experiences, he said.
"Just because you've built the distribution to your own stores
doesn't mean that you can solve the distribution to individual homes."
Horror
stories on television and in newspapers have scared consumers away from shopping
in online malls, said David Barcroft, who runs the CanadaRetail.com and CanadaAuction.com
Web sites out of Sarnia, Ont.
"The only stories you ever seem to hear about is how somebody
got taken by this company or that company," Mr. Barcroft said.
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