Online sales are falling and the investments that small businesses have made in e-commerce are in jeopardy as the Canada Post strike stretches on, business advocates say.
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Online sales are falling and the investments that small businesses have made in e-commerce are in jeopardy as the Canada Post strike stretches on, business advocates say.
According to Matt Poirier, vice-president of federal government relations for the Retail Council of Canada, brick and mortar still makes up a significant portion of sales for most small and medium-sized retailers.
But, in the past few years, he said those businesses have become increasingly reliant on online sales.
“What we’ve been finding is that smaller retailers have been gravitating towards investing massively into their online presence, because they're selling more that way,” Poirier told OBJ. “Unless they’re strictly an online shop, (brick and mortar) is still dominant. But it’s not 70 or 80 per cent anymore. It’s 30 or 40 per cent, and the rest is online.”
Many of those online sales rely on postal services such as Canada Post to complete the transaction and deliver the products to the consumer.
While some businesses with e-commerce platforms have found alternative carriers, Poirier said those services can cost an extra three or four dollars per package. He added that some alternate carriers have become so overwhelmed that they’ve started turning away business due to capacity issues.
And, as the strike stretches on, Poirier said businesses are seeing a dip in online sales as frustrated customers shun e-commerce altogether to avoid weeks of waiting for delivery or additional shipping fees.
“We’ve already reached the point now where the alternative delivery models for online shopping were expensive, but now they’re basically shutting down,” said Poirier. “We’re really worried that’s going to start impacting online sales, which is where everyone’s been moving.”
For companies that are heavily or completely reliant on online sales, the consequences could be significant, he said.
“We put out a statement last week because we’re sort of at the end of our rope,” said Poirier. “We’re going to start to see business failures in the new year if this isn’t resolved soon. We’re at that point, unfortunately.”
Overall, the strike has already had significant ramifications for small businesses, according to the Canadian Federation of Independent Business (CFIB).
Corinne Pohlmann, executive vice-president of advocacy, told OBJ that 75 per cent of Canadian small businesses rely on Canada Post and the strike has so far resulted in an estimated $1 billion in losses for them.
“Most of them are not really keen on passing the extra cost on to their customers, because they’re trying to compete with Amazon and other big online retailers,” she said. “I have one anecdote of a business that ended up closing its doors because it was purely an online, very small independent business. They were giving refunds, because they couldn’t get the products to (customers). People were basically saying, no, we’re not buying it now. They essentially made the decision that they can’t get through the holiday season.”
She added that while holiday spending has remained relatively steady, it’s the extra costs to ship products that are eating into revenues. This is following an already rocky year for retailers.
“The holidays are one of the worst times for this to happen,” she said. “This could be 40 to 50 per cent of their revenue. If that’s only half of what it was, that can have a significant impact. And it’s not like we’re coming out of a prosperous time in a pretty tough year.”
Mississippi Mills business Dockmasters Inc. is in its off-season, so it doesn’t typically expect many sales this time of year. But joint CEO Chris Otis said the business is still noticing effects.
“Now we have to use other means like UPS and FedEx and it adds on to our cost of doing business,” he told OBJ. “At this point, I think most of our customers prefer to come to the manufacturing location to pick up the parts and pieces, versus having to wait for it through Canada Post.”
