Holiday rush has taken on a whole new meaning for retailers with an Internet presence, and IT departments across the country are readying their systems to accommodate the increase in Web traffic during the Christmas shopping season.
Sears Canada, for example, adds an additional two servers onto its existing two to handle the extra load placed on them during the fourth quarter. The fourth acts as an emergency server.
“Sears Canada has had significant growth in online business for the past couple of years,” said Paul Cathcart, national manager of e-commerce for Sears Canada, which reaches about 93 per cent of the Canadian population through its Web site and catalogue. “It has been steady double digit increases.”
Sears’s online sales last year accounted for between $150 to 200 million out of the company’s $6.2 billion total revenue.
Sears.ca was ranked as the No. 1 online retailer by Canadians who shop online, with 41 per cent of respondents indicating they plan on purchasing from the department store’s Web site. Futureshop.ca followed closely behind with 40 per cent. Indigo.ca, Amazon.ca and Canadiantire.ca rounded out the top five.
These were the results of a TNS Canadian Facts survey released Thursday that polled 3,000 Canadians (out of which 1,135 responded) on their online holiday shopping habits. The annual survey, titled, “State-of-the-Net: Holiday Shopping Online,” estimated total online holiday spending in Canada to total $1.9 billion – significantly more than last year’s $1.5 billion.
Richard Jenkins, vice-president of TNS, a marketing research firm, said most retailers are ready for the onslaught of online shoppers once the holiday season hits.
“Given that’s where spending is most likely to take place, I would expect the retailers are prepared,” said Jenkins.
Likewise, Derek Szeto, founder of RedFlagDeals.com, which also released a report Thursday on online holiday shopping, said most online retailers forecast their e-commerce demands based on how their site has done at other times of the year.
“They get a pretty good sense throughout the year as to how much traffic they’re going to get throughout Christmas,” said Szeto.
Not all online retailers are as prepared for the flood of shoppers, however. While consumers aren’t able to purchase anything from Sportchek.ca online, when ITBusiness.ca visited the site earlier this week, the sports retailer made the following warning to its customers: “Due to heavy holiday season traffic we are experiencing slow webpage loading. We apologize for this inconvenience. We are upgrading our systems to serve you better.”
Sportchek.ca was not available for comment at press time. Sportchek.ca, owned by the Forzani Group Ltd., also owns Sportmart.ca, which features online shopping.
Jenkins said Sportchek.ca’s message is a pretty good indication that some retailers may need to ensure their online presence can accommodate the deluge.
The RedFlagDeals study found that over 86 per cent of respondents intend to do some, if not all, of their holiday shopping online this year with 91 per cent of males and 85 per cent of females planning to shop the Internet this holiday season.
As to where people are shopping, the RedFlagDeals survey’s results varied a little from TNS, with eBay.ca/eBay.com placing first, followed by Futureshop.ca and Amazon.ca.
In terms of the Canadian online retail market in general, the total value of Canadian online spending from May to November 2005 is estimated at around $3.6 billion versus $3.5 billion in 2004, according to TNS.
While consumer comfort with shopping online is increasing, online retailers still face a few barriers when it comes to adoption. One of the biggest ones remains security. Twelve per cent of respondents in the TNS study said they mistrust Web shopping because of fear of credit card fraud with another 12 per cent citing general mistrust in the security of the whole procedure.
To ensure customers can place their trust in Sears.ca’s Web site, the department store devotes an entire team of technicians at a North Toronto office to monitor servers and encryption of data.
While some customers still prefer to shop by catalogue — Sears.ca also allows consumers to make a list online of the items they want and fax, mail or drop it off at a Sears location to order – confidence levels are increasing, said Sears Canada’s Cathcart.
“That is changing as online payment companies become more aware of what’s going on and are taking dramatic steps to improve the confidence of the shopper.”
Despite measures companies take to reassure customers, the biggest threat to an online retailer is a system failure of some kind that gets a lot of publicity, said Jenkins.
“That’s likely to drive people away who are taking tentative first steps towards online shopping,” he said.