This week Canadian Tire announced it will no longer sell its products online after 8 years of ecommerce operations — even after boasting itself one of the top 3 busiest ecommerce sites in Canada. So what went wrong?
Though it enjoyed high traffic, spokeswoman Lisa Gibson claims the decision was made because the site is used mostly as a research tool — especially for heavy and expensive-to-ship items like patio sets — and is not making enough money to justify its expense.
Canadian Tire also uses a dedicated warehouse to fulfill online orders. Tack on expensive cross-country fulfillment costs and you understand why the whole ecommerce division is bleeding.
I found an email that Canadian Tire issued an email to customers in a Canadian online shopping forum:
“Dear Valued Customer,
Over the past few years, canadiantire.ca has experienced exceptional growth in traffic, making it one of the busiest e-commerce sites in the country. Our research indicates that the overwhelming majority of the traffic to the site is focused on products that are heavily researched, but not necessarily suitable for home delivery (patio sets, tires, etc). This, coupled with the fact that we have an extensive store network with 473 stores located within a 10-15 minute drive of 90% of the Canadian population, led us to the decision to discontinue direct home delivery and to deploy our resources to development of capabilities and features that will significantly enhance the online experience for the millions of customers that visit canadiantire.ca every month.
To continue to deliver on our commitment to provide customers with the best retail site experience, we will continue to invest resources to dramatically enhance the site. In addition to re-launching the site with a brand new look, new navigational functionality and even more ‘how-to’ information for our customers, we will also be testing in-store pick-up of online orders in a couple of test markets later this spring.
Effective January 29th, 2009 online sales of product (excluding gift cards) from Canadian Tire’s website, www.canadiantire.ca, will be suspended. All orders placed before this time will be processed until delivered. The eFlyer program will continue without interruption.
Our records indicate that as a “My CT” account holder (username: ——–), you currently have a balance of $XX.XX in online Canadian Tire “Money”. Your Canadian Tire “Money” can be used for online purchases of all available products until January 29th, 2009. After this date and until June 1st, 2009, all unspent Canadian Tire “Money” will be valid towards the online purchase of gift cards only (available in denominations of $10, $25, $50 and $100). If by June 1st , 2009 you have not used your remaining Canadian Tire “Money” balance, please contact Customer Service at 1-866-746-7287 and arrangements will be made to mail the equivalent in paper Canadian Tire “Money” to your home.
You may also choose to donate your online balance to Canadian Tire JumpStart , a charity that helps kids in financial need participate in organized sport and recreation. An electronic tax receipt will be issued for any donation over $20.
To access your “My CT” account and make a purchase, please visit click here and login with your username and password.
We appreciate your understanding in this matter and apologize for any inconvenience this change may cause. Should you have any questions or concerns, please call 1-866-746-7287.
We look forward to serving you in 2009,
Canadian Tire Online Team
1-866-746-7287
Questions for Canadian Tire
1. In light of this economy, how many of your 473 retail stores make economic sense to keep up-and-running? Home Depot recently closed 15 flagship stores, halting expansion plans for 50 more stores and massive layoffs — this could easily be your next cost-cutting move.
2. If stores close, your proposition of research online and purchase offline (with investment in better site content and navigation without the option to purchase online) suffers. Your investment into your site is useless for customers who can no longer drive a reasonable distance to purchase from you.
3. When I land on your home page, I am forced to enter my postal code. I assume this is taken into account when showing me products online and that I’m not viewing items I couldn’t find in local stores. Wouldn’t it make more sense to fulfill from local stores than to have one warehouse for online orders with all skus held in that warehouse? This would also help local store inventory turnover.
4. According to the press release, you will explore social media avenues on your site. Social media features require a critical mass of engaged users to make useful to anyone — it’s not a “we build it and they will come” task. Plus it’s harder to measure direct ROI, especially in the short-term. Why invest in social media rather than fixing your e-store’s usability and merchandising problems?
Reactions
Canadian Tire is an ex-client for Internet marketer and author of Winning Results With Google Adwords, Andrew Goodman, is “gobsmacked” by the move.
In the news release about this, a company spokesperson referred to the cost of shipping heavy items such as patio sets. (!) Come on. Patio sets were never on anyone’s radar as an item to buy from Canadian Tire online. Instead there is a long, long tail of attractive items that people might indeed buy. But the online presence didn’t make it easy to buy , and needed a total overhaul. I’m not close to the situation, but just over a year ago, one of their most senior and savvy execs left the company — one assumes out of frustration.
Canadian tech blogger Chris Glynne comments:
Canadian Tire did little in the way of driving customers to the website. A little footnote at the bottom of the page on a flyer is insufficient to advise subscribers that they can buy online. There was also no incentive to purchase online. I can’t recall ever seeing a “Web Only” deal that required a customer to purchase an item through the website to get some great deal. Most successful online store have a daily door crasher that can only be purchased from the web. Dell, Newegg, Home Depot, The Source, The Bay, FutureShop, Best Buy, etc… It keeps people coming back for more. Canadians love a good deal and with Canadian Tire’s penchant for taking that 3000 piece socket set that you absolutley must have and marking it down by 75% to the low low price of $67.95 there had to be some opportunity to leverage this daily deal mania…
…There are many opportunities for companies with an online presence to advertise such presence via traditional media to drive traffic. The old guard at Canadian Tire forgot to include the online presence in these media spots when placing the million dollar ad buys. I guess that Canadian Tire did what so many Canadian companies are so great at. They built a great product/service but didn’t tell anyone about it and then stood by scratching thier heads wondering why it was not a great success.
And some customers have expressed their disappointment through social media:
NO!!!!!! say this isn’t so!!!! Canadian Tire will NO LONGER be offering home delivery for online purchases. Here is the email I got from them…Has anyone else heard about this? I think we need to write and beg them to keep home delivery. When the weather is bad like it is now, I depend on home delivery. What’s the point of shopping online if you have to go out to the store to pick it up? I’m so sad. I love Canadian Tire shopping online. I hate change.
Will Canadian Tire bounce back?
Andrew Goodman predicts “Canadian Tire e-store will be back, after a couple of years of rethinking and hopefully, recruitment of specialists…It’s easy to give up too soon. (Doom was predicted many times for Amazon itself, by Wall Street pundits and “retail analysts”.)”
Recommendations for Canadian Tire
1. Admit your mistakes.
Instead of blaming the product line and what you think customers prefer to do (shop in store), admit that warehousing and fulfillment is poorly managed and the website is a pain to use.
Hire a good web analyst and conversion optimization consultant. And ask yourself if you would enjoy shopping on Canadiantire.ca as-is. Exhibit A: the category page for “House and Home”
And that’s not the full length of the screen! It’s got You pet items and personal care and lighting and Debbie Travis product all under one category. It’s a mess. Compare your site to Home Depot and Wal-Mart.
2. Look at more efficient distribution channels: fulfillment from physical stores or drop-shipping.
Keeping a dedicated to online warehouse full of bulky patio sets while the majority of Canadians’ patio furniture is buried under 6 feet of snow half the year is ludicrous. As is keeping an online only warehouse when you have nearly 500 physical stores is ludicrous. Canadian Tire already requires you to enter your zipcode before you can see its store, so one assumes all products in the catalog will be available nearby. I wouldn’t expect my snow blower to come from Ontario if I order online after entering my zipcode.
3. Close unprofitable physical stores and invest in online channel.
Invest in ecommerce usability, SEO, PPC, email marketing and promoting your online store in TV ads, print flyers and in-store (URL on signage, shopping bags and receipts). And don’t forget to nurture your affiliates, they attract the shoppers that do purchase online.
4. Leverage customers who prefer the online channel.
Bless the customers who have bought online. Segment them and re-market to them, offering special deals and rewards. Understand you do have customers who will “write to you and beg to keep home delivery.”
“Over 40% of the Canadian public is of the Baby Boomer generation. This group has begun to embrace e-commerce, but they’re coming into their retirement with a “living on a strict budget in case I live to 100” mindset. In light of this, what group should a new e-tailer target to get good sales?” asks Canadian marketing maven Kate Trgovac.
Discover who your online shoppers, develop personas and create marketing strategies to grow online sales to new customers that share the same world view.
What do you think? Is this a bad move for Canadian Tire or a wise one?
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I think a big part of running a successful online business is having 1) great products and 2)good service when things go wrong. If you have ever had to return anything to Canadian Tire – which you have if you have shopped there because they sell a lot of crap – you would know that their customer service is terrible. I can’t imagine what would happen if you had to return something you bought on the web site. I would think that the web site would be unprofitable in part because like the rest of the organization and product quality can be second rate and the return process can be so painful. This company assumes the customer is wrong and needs to prove otherwise. Compare to Costco, Home Depot, Rona.
As an ebusiness strategist myself, and having worked with online Canadian retail sites, I smell bad decision.
“Online purchase” shouldn’t be viewed as “I pay online, they ship to my door”. Online purchase is about “taking the decision online”: drive to store, pick from store, deliver from store, however the customer wants it. I’m clueless about the postal code requirement if they were shipping from a central warehouse anyway, they should definitely ship from local stores.
Picking in store is also a great way to increase the size of sales. Anyway, we could go on and on about this… In the end, I sounds like HiPPO being wrongly advised!
Stéphane Hamel
http://immeria.net
Great write-up as always Linda. Had no idea they did this until I read your post.
I agree with the previous post. I betting it was a snap decision by someone completely disconnected from online buyers and needs. Probably someone very high up that just looked at overall numbers for overall decision making.
No doubt a company like CT needs to have an online store in some capacity.
Yeah, Canadian Tire has now alienated 2 major channels for the customer – online and print catalog which they moved entirely online in May. This catalog has gone cross-country for almost a century and while Canadian catalogue shopping is not what it is in the US, with 40% of Canadians in the baby boomer category, the move to the online version was also a questionable decision.
Go check out Candaiantire.ca and try to first find the catalogue link, then try and find catalogue content. It’s just not there.
Their retail channel is the only one left (other than ship-to-store experiments forthcoming) and it will be interesting to see if Canadian Tire survives this economy and changing shopping preferences.
It’s ok to be passionate about e-commerce and highlight the issues with the site that are fixable.
However if the companies board has neither the energy (or possibly capital) to invest in the people to run the trading arm it will never fly. Probably where they are are sat this was a tough public decision to make, and to them is the right one.
There are plenty of sites that have learnt that people like to buy items that are marginal profit when sold as an online product. Also when cash is tight, companies do strange things to keep the lights on.
I would suggest if CT does want to do an online tyre service it should glance at a company like http://www.blackcircles.com
Why don’t a bunch of us rally together and offer to take it over for them? We’ll cut them in on the action. I believe a handful of us could turn this into a mighty profitable machine in 4-6 weeks.
Ok, ok, I know they won’t bite on that, but what if we took it over and only took a percentage – like an affiliate?
I guess I’m still dreaming.
@Mitch, are you willing to get paid in patio sets and/or Canadian Tire “Money”?
Joking aside, I do think that’s a good idea. If we could salvage this and turn it around, it would make an amazing story and set a precedent for other Canadian retailers who have the same frustrations that CT does or have reservations about selling online in the first place. We know that ecommerce needs more traction in this country (sorry for the tire pun). We need to prove it works, and get more online shopping options for us Canucks!
In tough economic times many retailers will try to figure out how to cut costs where they can hurt the business and their customers less. E-commerce being such a very low percentage of their sales, it makes sense to stop it if it’s costs don’t provide a good return on investment. I applaud their decision. I rather see improvements in their in store support and customer service. That can do more to drive sales than an e-commerce shopping cart. Too bad they can’t please everyone.
Great post. Some strong points.
Definitely seems like a backwards, retreat move on their part. Considering the margins one can find in selling online (especially locally via by requiring a postal code up front), you’d thing the folks at Canadian Tire would be able to make this work.
I’ve never purchased from Canadian Tire online, but i can imagine it would be frustrating if i needed to, and found they had no online sales. For an organization this size, it will quickly seem odd that they do not offer online sales.
Stephen
I am a marketing student and oddly enough we just had an online discussion regarding this very topic of shopping online. We compared 3 sites, Sony, Sears, and Canadian Tire. Many of the comments Im making on this are being pulled directly from my post on that discussion.
First off I have to say I think one of their biggest problems was the clutter on the site and the poor design and content. Look at the list that is shown above, it instantly turned me off, even as an avid internet user. Consumers who are shopping online do not want to read lists of products, they want to see those products! Just as if they were shopping in-store. A company has to plan their website to be as enganging to the consumer as possible.
Another note on the consumer perspective of this. Why would their first page be one blank page asking you to put in your postal code. I can see this as a way to differentiate based on geographics but think of it in another sense, how many of us like giving out personal information to a company before weve even developed any trust. Thats like having a worker outside a brick-and-mortar store asking to please “write down where you came and maybe even your address so we can better serve your needs.” I know I certainly wouldnt want to waste my time.
I have to agree with the posts regarding their channel and distribution choices and how they would probably profit more from store shipping rather than from a national centre but that is not my expertise. All in all i would have to say to the corporate kahunas that they have to start thinking in perspective and engage the consumer don’t annoy them and waste their time.
LOL the postal code splash page reminds me of this Crazy Messed Up World of Ecommerce video:
http://www.youtube.com/watch?v=OAuwMGQCOCw
Thanks for reminding me about those videos. They’re just great!
admit the mistakes is the first thing to be taken of.
Wow- yes, retreat, while Overtock.com, Walmart-soon to launch .ca and just about every other major US brand encroaches as the ecomony south of the border moves them North.. sound business stratgey. Online is the highest growth area for almost every major retailer, and the most profitable… guess mobile is about a decade away… way to lead. Try capturing the next generation of buyers with this brillant move.
There are plenty of sites that have learnt that people like to buy items that are marginal profit when sold as an online product. Also when cash is tight, companies do strange things to keep the lights on.E-commerce being such a very low percentage of their sales, it makes sense to stop it if it’s costs don’t provide a good return on investment.