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Amazon raises the ante on Canadian offerings

Amazon is adding hundreds of thousands more products to its Canadian website, rapidly narrowing the gap between its offerings here and in the United States.

Michaela Rehle/Reuters

Amazon.com Inc. is adding more than one million products to its Canadian website, rapidly narrowing the gap between its offerings here and in the United States and putting more pressure on domestic retailers.

On Tuesday, the Seattle-based retailer launched the items on Amazon.ca in two more categories: wireless accessories and musical instruments. It brings the number of product categories that it offers in this country – more than 20 – to nearly the same number as south of the border.

In the past 12 months alone, the Canadian site has rolled out 16 new categories, including groceries and beauty items, in an unprecedented push to boost its business here amid intensifying retail competition. Rivals such as discount giant Wal-Mart Canada Corp. are racing to keep up with Amazon, setting the stage for a tough e-commerce battle.

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"We have mostly launched everything that we wanted to launch," Alexandre Gagnon, country manager of Amazon.ca, said in an interview. "But we are not done. We will continue adding a lot more."

The rapid expansion of Amazon.ca puts heat on domestic merchants, such as Canadian Tire Corp. and Loblaw Cos. Ltd., that have been slow to roll out their own e-commerce sites.

"Amazon is just not stopping," said Maureen Atkinson, senior partner at retail consultancy J.C. Williams Group. "Their intention all along is to build out a full suite of their products in each country they're in … Canadian retailers aren't there yet, in terms of what the customer wants."

She said wireless accessories, ranging from cases and headsets to Bluetooth systems, are one of the fastest-growing categories in retail. "It's become a fashion business." And Amazon.ca has the advantage of being able to stock a wide selection online, in a so-called endless aisle.

Her firm's recent research projects that Canadian e-commerce sales, estimated at $20-billion in 2013, will pick up at more than 10 per cent annually in the next five years. But it found that two-thirds of online shoppers buy from websites outside of Canada.

Mr. Gagnon said Amazon now has three large warehouses in Canada that accommodate a wide range of products. But it doesn't stock all of its inventory – some of its merchandise is sourced from third parties, which either ship the items directly to customers or store it in one of Amazon's distribution centres, he said.

It allows Amazon to get its hands on relatively obscure products that it doesn't have to keep in stock all the time, he said. "It's just another way to get products to customers."

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As a result, Amazon doesn't have as big a financial burden in holding onto inventory that may not be sold immediately, industry observers say. And it gives Amazon the flexibility to carry more items than rivals, Ms. Atkinson said.

Mr. Gagnon said the latest categories were chosen because they were among the most popular searches on the Amazon.ca web site. While it will not carry traditional pianos, it will stock digital pianos and portable keyboards and a wide range of other instruments and accessories – 75,000 musical instruments and more than one million wireless accessories.

Steve Long, chief executive officer of music retailer Long & McQuade Ltd., said he's not too worried about Amazon.ca's new offerings. He said only about 2 per cent or less of his sales are from his company's e-commerce site. "Most people that are into music prefer to come in and try the product out."

But he estimated that in the United States, where musical instruments are more widely sold online, about 25 per cent of the business is through e-commerce.

"I'm not saying they're not going to do any business – definitely they will," Mr. Long said. "But are they going to do enough to bother us? No."

Editor's Note: This online story has been changed to include updated figures provided by Amazon.

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About the Author
Retailing Reporter

Marina Strauss covers retailing for The Globe and Mail's Report on Business. She follows a wide range of topics in the sector, from the fallout of foreign retailers invading Canada to how a merchant such as the Swedish Ikea gets its mojo. She has probed the rise and fall (and revival efforts) of Loblaw Cos., Hudson's Bay and others. More

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