Virus fuels e-commerce growth
The coronavirus crisis is giving Quebec’s nationalist government an excuse to attempt what may be impossible.
The Canadian province is embarking on an uphill battle to chip away at Amazon.com Inc.’s position. Reckoning that weeks of confinement will permanently accelerate the growth of online shopping, Premier Francois Legault wants to boost Quebec retailers’ digital sales, and is urging the population of 8.5 million to buy from local firms.
His government took a first step by building an online directory of retailers called Le Panier Bleu — or Blue Basket, a reference to the colour of the French-speaking province’s flag. To run it, the government recruited a board including the former president of Lowe’s Cos. Inc. in Canada and Alexandre Taillefer, a private equity partner who years ago floated the idea of a Quebec response to Amazon’s dominance.
“People will be able to see what’s available in their region,” Economy Minister Pierre Fitzgibbon said in an interview. “There’s a solidarity developing, I want to capitalize on that.”
Quebec’s nationalism, which is rooted in the 1960s economic and political emancipation of its French-speaking majority, predisposes the population to close ranks behind local businesses, according to Andre Lecours, a professor in the School of Political Studies at the University of Ottawa. The province has a number of sizable homegrown retailers, such as Simons department stores, and has produced a few international players.
Amazon is fighting stronger opponents in other countries, including France, where it lost a court fight to sell the whole range of its products. France has restricted the company’s deliveries to food, health items and computer products to protect workers from the coronavirus.
The track record of Canadian-made alternatives to Amazon is not good. One of most famous failures was a site called Shop.ca, backed by several big names in business and former hockey star Eric Lindros. It flopped and wound up in bankruptcy court in 2016.
Few Quebec companies are known for their online retailing success. According to a survey by CEFRIO, a digital research and innovation group backed by the government, more than a third of Quebec adults make at least one purchase per month on Amazon. Yet in another report published in 2018, only 14 per cent of the Quebec firms surveyed said they sold products online.
“There’s probably a greater mobilization potential in Quebec than in the rest of Canada because of nationalism,” Lecours said. “Still, let’s be honest, Quebecers too shop at Costco and Walmart, because it’s cheaper. If a Quebec purchase is 10 per cent, 15 per cent, 20 per cent more expensive, at what point do they give up?”
Efforts to drive money from national sentiment were already in underway before the Blue Basket launch — including an online store called Ma Zone Quebec, a tongue-in-cheek reference to Amazon. Local media also joined in, suggesting Quebec substitutes for groceries such as Kraft Heinz Co.’s barbecue sauce or Heineken NV’s beer.
When Legault and Fitzgibbon unveiled the Blue Basket during an April 5 press conference, they described it as a non-for-profit organization that aims to make both merchants and Quebec richer — an overarching goal for the premier, who often says he wants to close the wealth gap with other provinces.
“An initiative to promote local commerce isn’t an initiative against free trade,” Fitzgibbon said then. “It’s a unified communication approach to enable our small retailers to do well against companies that have huge marketing resources.”
The Blue Basket website, put together in two weeks, doesn’t do transactions yet and was derided by critics for being too basic. The team running it says it’s in its early stages and will become more sophisticated. About 13,000 businesses were referenced as of April 24.
Andree-Anne Julien, who runs online bedding and decoration store Espace Deco + Idees Cadeaux, said being listed initially drove more than 1,000 Blue Basket visitors to her site, giving an additional boost to a business that has thrived since brick-and-mortar competitors were forced to close a month ago. The flow has reduced to a trickle since, though she still credits the government for the effort and expects the “Buy Quebec” movement to stay.
“No one can compete with Amazon,” she said. Yet because her Quebec suppliers don’t sell on the behemoth’s platform, “we have some exclusivity they don’t have.”
‘I Made No Money’
Online shopping has been slowly taking off in Canada and accounted for 6.8 per cent of retail sales last year, compared with 11 per cent in the U.S., according to researcher eMarketer.
The pandemic may accelerate the conversion. In a Deloitte survey conducted March 16-18, early on in the crisis, about half of Canadians said they were more likely to buy online. This month, Shopify Inc.’s chief technology officer tweeted that the e-commerce software company is handling “Black Friday level traffic every day” to bring thousands of businesses online.
Logistics are a major hurdle to Legault’s plans. Louis Corriveau, who specializes in work and hunting clothes on his e-commerce site CoriBouTik, said that even though he will register on Blue Basket, shipping costs in a vast country are a problem for small businesses like his. He recently sold a cap for $12 that cost $14 to mail to a remote region of Quebec. He charged his client $8.75 in shipping fees to make it palatable.
“I made no money,” he said. Shipping costs “is what’s hurting everyone.”
Taillefer, the entrepreneur on Blue Basket’s board, has been mulling solutions for retailers to lower their operating costs, mostly by combining forces on warehousing or delivery to save money. For now, the focus is on getting shoppers’ attention.
“Our goal is to shift some of the searches Quebeckers do on Amazon or Google to a search engine presenting essentially 100 per cent Quebec content,” he said during a webcast of the Chamber of Commerce of Metropolitan Montreal. If just one per cent gets diverted, “it will have been worth it.”