The Rise of E-commerce in Canada Post-Pandemic

The COVID-19 pandemic has catalyzed a dramatic shift in Canadian consumer behavior, propelling e-commerce adoption to unprecedented levels. What was once a convenience has become a necessity, transforming the retail landscape across the country. As we move further into the post-pandemic era, this acceleration shows no signs of slowing down.

In this article, we examine the remarkable growth of e-commerce in Canada since 2020, the factors driving this continued expansion, and the strategies businesses can employ to build sustainable online retail operations in this new environment.

Canada's E-commerce Explosion: By the Numbers

The statistics tell a compelling story of transformation in Canadian retail:

• E-commerce sales in Canada reached $86.52 billion in 2023, representing a 156% increase from 2019 pre-pandemic levels.
• Online's share of total retail sales has more than doubled, from 6.7% in 2019 to over 14.5% by the end of 2023.
• According to Canada Post, residential parcel deliveries increased by 73% in 2020 and have maintained a growth trajectory of approximately 20% year-over-year since then.
• Mobile commerce now accounts for 42% of all online purchases in Canada, up from 28% in 2019.
• 78% of Canadian consumers now shop online at least once a month, compared to 51% pre-pandemic.

These figures represent not just a temporary spike during lockdowns but a permanent shift in how Canadians shop. As digital natives (Millennials and Gen Z) gain greater purchasing power, these trends are expected to accelerate further.

Key Drivers of Continued E-commerce Growth

Expanded Consumer Demographics

One of the most significant pandemic impacts was the introduction of e-commerce to previously resistant consumer segments. Canadians aged 65+ have emerged as the fastest-growing demographic for online shopping, with adoption rates increasing by 160% since 2019. This expansion beyond traditionally digital-savvy younger consumers has dramatically expanded the total addressable market for online retailers.

Category Expansion

Product categories that once seemed impervious to e-commerce—groceries, furniture, automotive parts, and prescription medications—have seen remarkable digital channel growth. Grocery e-commerce, for instance, grew by 235% in Canada during 2020 and has maintained much of that growth, settling at approximately 180% above pre-pandemic levels.

Improved Digital Infrastructure

Canadian businesses have responded to increased demand by significantly upgrading their digital capabilities. The pandemic forced many retailers to rapidly develop or enhance their e-commerce operations, resulting in better websites, more efficient fulfillment systems, and improved digital customer service. These investments have created a more seamless online shopping experience that continues to attract and retain customers.

Supply Chain Evolution

Last-mile delivery networks have expanded dramatically across Canada, with major carriers and new specialized services extending their reach into previously underserved areas. Same-day delivery is now available in most major urban centers, and even rural customers have more reliable and faster shipping options than before the pandemic.

Challenges Facing Canadian E-commerce

Despite the tremendous growth, Canadian e-commerce businesses face several significant challenges:

Rising Customer Expectations

Canadian consumers now expect the same level of service from small local retailers that they receive from global e-commerce giants. Free shipping, seamless returns, and fast delivery have become baseline expectations rather than differentiators. For many smaller businesses, meeting these expectations while maintaining profitability remains a significant challenge.

Cross-Border Competition

Canadian e-commerce businesses face intense competition from U.S. and international merchants. Approximately 38% of Canadian online purchases cross borders, with U.S. retailers capturing the majority of this spending. Competing with these larger entities, which often benefit from economies of scale, presents a perennial challenge for domestic merchants.

Logistics Complexity

Canada's vast geography, relatively small population density outside major urban centers, and sometimes challenging weather conditions create unique logistics hurdles. Shipping costs remain significantly higher than in more densely populated markets, squeezing margins for Canadian e-commerce businesses.

Technology Investment Requirements

Keeping pace with rapidly evolving e-commerce technology requires substantial ongoing investment. From website functionality to inventory management systems, payment processing to fraud prevention, the technology stack required for competitive e-commerce operations grows more complex each year.

Strategies for Sustainable E-commerce Success

For Canadian businesses looking to build sustainable e-commerce operations in this evolved market, several key strategies have emerged:

Omnichannel Integration

The most successful Canadian retailers are those that have seamlessly integrated their online and offline operations. Click-and-collect services (which grew by 250% during the pandemic) represent one aspect of this integration, but truly omnichannel retailers go further by unifying inventory systems, customer service operations, and loyalty programs across all channels.

Indigo Books & Music provides an excellent example, with their mobile app allowing customers to scan products in-store, read reviews, check inventory at other locations, and purchase for home delivery—creating a truly blended shopping experience.

Marketplace Strategies

Many Canadian businesses are finding success through strategic use of marketplaces like Amazon.ca, Walmart Marketplace, and emerging Canadian platforms like Shopify Marketplace. Rather than viewing these as competitive threats, savvy merchants are using marketplaces as customer acquisition channels, then working to migrate these customers to direct relationships.

Montreal-based Vallier Clothing maintains its own e-commerce store while also selling through select marketplaces, using marketplace-exclusive products and promotions to drive discovery while preserving margins on their direct channel.

Localization as a Competitive Advantage

Canadian retailers are increasingly leveraging their local presence and understanding of the Canadian market as a competitive advantage against global players. This includes emphasizing Canadian ownership, highlighting products made in Canada, offering region-specific products, and demonstrating superior understanding of local regulations, taxes, and shipping requirements.

Canadian Tire's e-commerce strategy has been particularly effective in this regard, emphasizing their status as a trusted Canadian brand while creating digital experiences specifically tailored to Canadian seasonal needs and regional preferences.

Subscription and Recurring Revenue Models

Subscription services have seen tremendous growth in Canada, with 52% of Canadian consumers now subscribing to at least one product or service subscription. These models create predictable revenue, improve customer lifetime value, and reduce acquisition costs through improved retention.

Vancouver-based Reusables.com has built a successful business providing sustainable household product subscriptions, demonstrating that recurring revenue models can work across diverse product categories beyond the traditional subscription verticals.

Future Trends Shaping Canadian E-commerce

Looking ahead, several emerging trends will likely shape the next phase of e-commerce evolution in Canada:

Social Commerce

Purchasing directly through social media platforms is gaining significant traction in Canada, with Instagram Shopping and TikTok Shop seeing rapid adoption. By 2026, social commerce is projected to account for 12% of all e-commerce sales in Canada, representing a major shift in how consumers discover and purchase products.

Sustainable E-commerce

Environmental concerns are increasingly influencing Canadian shopping behaviors. 67% of Canadian consumers now say they consider a brand's environmental impact when making purchasing decisions. E-commerce businesses that proactively address packaging waste, carbon emissions from shipping, and product sustainability are gaining market share.

Voice and Conversational Commerce

With smart speaker ownership in 30% of Canadian households, voice commerce is positioned for significant growth. Canadian retailers are beginning to optimize for voice search and create voice-specific shopping experiences to capture this emerging channel.

Augmented Reality Shopping

AR technologies that allow consumers to visualize products in their homes before purchasing are gaining traction, particularly in furniture, home décor, and fashion. Canadian retailers like Article and EQ3 have implemented AR features that have reduced return rates by up to 30% while increasing conversion.

Conclusion

The acceleration of e-commerce in Canada represents not just a pandemic-induced anomaly but a fundamental and permanent shift in retail. For Canadian businesses, this transformation presents both unprecedented challenges and extraordinary opportunities.

Success in this evolved landscape requires more than simply having an online store—it demands ongoing innovation, strategic adaptation, and a deep understanding of the unique characteristics of the Canadian market. Those businesses that can meet these demands will be well-positioned to thrive in the new era of Canadian retail.

As we move further into the post-pandemic period, the brands that view e-commerce not as a separate channel but as an integral component of a holistic retail strategy will be the ones that capture the greatest share of Canada's expanding digital marketplace.