Strong dollar driving e-commerce  |  October 31, 2007  

E-commerce may finally be taking off in Canada, but not for the reasons long touted by 'net proponents. It is Canada's strong dollar, and not the convenience and selection of the online world, that is driving an e-tail boom here.

Our upcoming November issue has a big feature which reviews e-tail sites. We found a lot to like about the e-stores Canadians visit and in general Backbone is a magazine that supports the idea of online shopping. But our take is still not that of the majority: although online shopping grew at a whopping 45 per cent from 2003 to 2004, it accounted for only one per cent of revenue among private companies in April of 2005, according to Statistics Canada.

But Canada's lukewarm uptake may be turning around, at least temporarily. With the dollar at par or better and with prices still substantially higher in Canada, shopping in the U.S. can land big savings. This cross-border opportunity has created a flood of packages that has overwhelmed the capacity of three international mail sorting centres run by Canada Post and the Canadian Border Services Agency.

Packages are reportedly being delayed for weeks.

While it would be patriotic to assume the dollar will now be strong forever, its relative value will likely drop at some point. When that happens, let's hope that the taste of online shopping Canadians are getting now will create a long-term hunger for e-tailing. And that once U.S. stores no longer offer far better prices we will start to buy once again from Canadians.

Peter Wolchak