Back in June, Shop.ca raised $27 million dollars in funding through private investors to become Canada's leading e-commerce marketplace. In just under half a year, Canada's largest online shopping mall has partnered with more than 3,000 retailers with millions of products that service diverse Canadian shopping appetites across 24 major department categories.
Shop.ca's approach was to build an "e.volution"—an online shopping destination created by Canadians for Canadians. 67% of Canadians had said that cross-border shipping duties were discouraging them from shopping online. As a result, the company partnered with US retailers that also ship to Canada while offering shipping free of charge with free returns and no cross-border duties.
Cofounder Trevor Newell was outspoken at the Mesh Marketing Conference Wednesday on a panel that also featured Beyond the Rack's Yona Shtern and Frank & Oak's Hicham Ratnani. I sat down with Newell on Thursday in an exclusive interview.
Shop.ca has embraced transparent customer service and pricing, and has adopted the policy of teaching consumers how to transparently use e-commerce. That's because just 57% of Canadians had at least one online purchase in 2011, according to Google. That was well behind counterparts like the United States at 70% and the United Kingdom at 82%.
E-commerce is an industry that is expected to continue to grow in Canada. $22 billion dollars in e-commerce sales are projected for 2012. That number could grow 50% to $33 billion by 2015.
Newell said that in addition to transparency that clear visuals and videos on e-commerce sites are further incredibly important so that the customer can see what they are buying. An e-commerce site has to look high quality for consumers to trust what they are buying from online unlike Alibaba.
Success came right away for cofounders Drew Green and Trevor Newell, though. They were ranked 28th out of the top 100 Canadian e-commerce sites, and fifth as an e-tailer, just two months after launching in August.
Shop.ca has soared all the way to the 1,200th most popular site in Canada for the last three months, according to Alexa. Beyond the Rack ranked 233rd and Frank & Oak 2603rd, putting Shop.ca in good position. "The findings in comScore's report demonstrate that Canadians are looking for a distinctive e-commerce experience that is home grown here in Canada," said Drew.
Shop.ca's blazing fast success is largely attributed to having one of the most generous loyalty programs in the country. The program offers $25 in Shop.ca rewards credit for everyone you can get to sign up through sharing.
Shoppers can also get 1% of a product's purchase price added to their Shop.ca rewards account if friends and family buy through their shared content. If shoppers keep sharing, and the people they know keep buying, they can collect badges and move up the Social Loyalty Network Rewards ladder.
Members will then be able to earn badges and move up the ladder from sharer to influencer to trendsetter. If a user manages to get the trendsetter badge, they will get 2.5% in Shop.ca rewards for each purchase made from shared content.
Just 1% of all retail commerce is online-driven in Canada. That's compared to the United States, which sits at 9%. The numbers suggest Canadians have far more e-commerce activity on US sites than Canadian ones. Newell said that for a lot of products you would have to go through two pages of Google's search engine just to find a Canadian retailer oftentimes. But that is beginning to change with Google's localization of search and some savvier e-commerce operators in Canada.
"In many ways this has become the year of e-commerce in Canada," said Green. "The retail community has embraced our marketplace as a channel focused on the Canadian consumer, and through them, we add thousands of products every week. Instead of simply building Shop.ca for Canadians, we are building it with help from Canadians and that is what is most exciting."