36thAnnualRetailCouncilof

CanadaConference

JamesVogtle

June19,2000

TheCanadianOnlineRetailingReport

Asurveyby

TheBostonConsultingGroup

andRetailCouncilofCanadaTHECANADIANONLINERETAILINGREPORT

ASnapshotofOnlineRetailersInCanadaJointresearchprojectofTheBostonConsultingGroupandRetailCouncilofCanadaBenchmarkingsurveyofCanadianonlineretailersAllmajorbusiness-to-consumere-commercecategoriesPure-playandmultichannelcompaniesBasedonfirstquarter2000dataConsistentmethodologytootherBCGstudies,enablingglobalcomparisonsCANADAATTHEFOREOFBROADBANDPENETRATIONSource: WinningtheOnlineConsumerinCanada:ConvertingBrowsersIntoBuyers,TheBostonConsultingGroupBroadbandUsersU.S.CanadaInternetHouseholds(Percent)CANADIANSBROWSING,BUTFEWERBUYING(Percent)Source:WinningtheOnlineConsumerinCanada:ConvertingBrowsersintoBuyers,TheBostonConsultingGroupCanadaU.S.GREATERSENSITIVITYTOSECURITYAND

PRIVACYONEREASONInternetUsers(Percent)(1)Strongly/somewhatagreewithstatement,“Iamconcernedaboutthesecurityofmycreditcardinformationandsometimesthispreventsmefrompurchasingonline”(2) Strongly/somewhatagreewithstatement,“Iamveryreluctanttogiveoutanypersonalinformationwhileshoppingonline”Source:WinningtheOnlineConsumerinCanada:ConvertingBrowsersIntoBuyers,TheBostonConsultingGroupCanadaU.S.(1)

(2)

SUPPLY-SIDEDEFICITANOTHERCONTRIBUTINGFACTORSource:WinningtheOnlineConsumerinCanada:ConvertingBrowsersIntoBuyers,TheBostonConsultingGroupCanadaU.S.98DomesticRetailers(Percent)BUTCANADIANONLINERETAILINGISGROWINGRAPIDLY($Billion)Source: FastForward:AcceleratingCanada’sLeadershipintheInternetEconomy,ReportoftheCanadianE-BusinessOpportunitiesRoundtableAverageAnnualGrowthRate:79%MAJORITYOFSALESFROMONTARIOProvincialDistributionofSalesRevenueandInternetHouseholds(Percent)%ofSalesRevenue%ofInternetHouseholdsSource: TheCanadianOnlineRetailingReport,asurveyconductedbyTheBostonConsultingGroupandRetailCouncilofCanada;StatisticsCanada;FinancialPostCanadianDemographics<1CANADASTRONGLYPOSITIONEDAMONG

DEVELOPEDCOUNTRIES1999Online

RetailMarketSize(C$Million)Source: TheStateofOnlineRetailing3.0,aSsurveyconductedbyTheBostonConsultingGroup;FastForward:AcceleratingCanada’sLeadershipintheInternetEconomy,ReportoftheCanadiane-BusinessOpportunitiesRoundtable;TheRaceforOnlineRiches:E-RetailinginEurope,TheBostonConsultingGroup;E-tailoftheTiger:RetailE-CommerceinAsia-Pacific,TheBostonConsultingGroup01,0002,00040,00050,00060,000U.S.JapanGermanyU.K.S.KoreaCanadaAustraliaSwedenNether-landsTaiwanCANADIANRETAILERSFOCUSSEDON

THEDOMESTICMARKETSalesRevenueBreakdownRestofWorld4%Canada96%Source: TheCanadianOnlineRetailingReport,asurveyconductedbyTheBostonConsultingGroupandRetailCouncilofCanadaU.S.ONLINERETAILERSPERCEIVEDAS

PRIMARYCOMPETITORSCompetitionU.S.onlineretailersCanadianonlineretailersCanadiantraditionalretailersU.S.traditionalretailersOtherPercent48291931100Source: TheCanadianOnlineRetailingReport,asurveyconductedbyTheBostonConsultingGroupandRetailCouncilofCanadaWhichoftheFollowingGroupsdoYouConsidertobethePrimary

CompetitionforYourOnlineBusiness?PERFORMANCEDRIVENBYMANYFACTORS

SimplifiedValueDriverFrameworkOperatingprofitCostsofgoodssoldOperatingcostsAcquisitioncost/customerRetentioncost/customerSitedevelopmentandmaintenanceOrderfulfillmentcost/orderTransactionalrevenueSupplementalrevenueNumberofcustomers(newandrepeat)Revenue/customer(newandrepeat)#ofuniquevisitorsBuyers/uniquevisitorsOrders/buyerVisits/buyerOrders/visitRevenue/orderSource:TheBostonConsultingGroupCustomerservicecost/orderCost/customercontactCustomercontacts/orderRevenueCANADIANRETAILERSOUTPERFORMONSOMEKEYECONOMICDRIVERS,LAGONOTHERSCustomeracquisitioncostOrderconversionCustomerloyaltyBenchmarkOutperformFulfillmentCustomercontactsperorderAlternaterevenuestreamsLagCUSTOMERACQUISITIONCOSTRELATIVELYLOWSource: TheCanadianOnlineRetailingReport,asurveyconductedbyTheBostonConsultingGroupandRetailCouncilofCanada;TheStateofOnlineRetailingFirstQuarter2000Updateand3.0;SsurveysconductedbyTheBostonConsultingGroup;E-tailoftheTiger:RetailE-CommerceinAsia-Pacific,astudyconductedbyTheBostonConsultingGroupBenchmarkCustomeracquisitioncost(C$)Marketingspend

asapercentofrevenueCanada$3932%Australia/

NewZealandn/a28%U.S.$67n/aQ11999Q1$5624%1999RELATIVELYSTRONGORDERCONVERSION(1)RelativetoCanadaandtheUS,disproportionatelyweightedbyfinancialservicesandperson-to-personauctioncompanies;withoutthese,conversion rateis1.2%Source: TheCanadianOnlineRetailingReport,asurveyconductedbyTheBostonConsultingGroupandRetailCouncilofCanada;TheStateofOnlineRetailingFirstQuarter2000Updateand3.0,SsurveysconductedbyTheBostonConsultingGroup;E-tailoftheTiger:RetailE-CommerceinAsia-Pacific,TheBostonConsultingGroupCanada(Q1)Australia/NZ

(1999)(1)U.S.(Q1)U.S.(1999)1.9%0.4%1.5%1.8%OrderConversion(Percent)CONVERSIONRATESINFLUENCEDBYMANYFACTORSCustomerAcquisitionFirstImpressionMerchandisingandSelectionCheckoutProcessTargetInappropriateAudienceUnclearMarketingMessageSlowPageLoadUnengaging“Look&Feel”ClumsySiteNavigationIneffectivePresentationNoAccesstoReal-TimeHelpIneffectiveToolstoAssistSelectionInadequateSelectionUncompetitivePriceExcessiveShippingCostsLongDeliveryTimesCreditCardValidationErrorOrderConversionRate=1.9%100%PercentofSiteVisitorsSource:TheBostonConsultingGroupCANADIANRETAILERSHAVEHIGHLOYALTYRevenuefromRepeatCustomers(Percent)Canada(Q1)Australia/NZ

(1999)U.S.(Q1)U.S.(1999)47%38%41%31%Source: TheCanadianOnlineRetailingReport,asurveyconductedbyTheBostonConsultingGroupandRetailCouncilofCanada;TheStateofOnlineRetailingFirstQuarter2000Updateand3.0,SsurveysconductedbyTheBostonConsultingGroup;E-tailoftheTiger:RetailE-CommerceinAsia-Pacific,TheBostonConsultingGroupCONSUMERSLEASTSATISFIEDWITH

FULFILLMENTANDCUSTOMERSERVICEPercentofOnlinePurchasersVerySatisfiedorSomewhatSatisfiedwithSiteAttribute(1)

PricingProductSelectionOrderingProcessEaseofLocatingSiteSiteNavigationSiteSecurityFeaturesSpeedofDeliveryCostofDeliveryRespon-sivenessofCustomerServiceReturnPolicy(1)RelatestouseoftheInternetforpersonal(asopposedtobusiness)reasonsSource: WinningtheOnlineConsumerinCanada:ConvertingBrowsersIntoBuyers,TheBostonConsultingGroupBenchmarkOrderscompletelyfilledOrderspartiallyfilledOrdersnotfilledatallCanada71%17%12%100%Source: TheCanadianOnlineRetailingReport,asurveyconductedbyTheBostonConsultingGroupandRetailCouncilofCanada;TheStateofOnlineRetailing3.0,aSsurveyconductedbyTheBostonConsultingGroupRETAILERFULFILLMENTPERFORMANCEMUSTIMPROVEU.S.83%11%6%100%Q11999CANADIANRETAILERSPERFORMMORE

FUNCTIONSIN-HOUSECompaniesOutsourcing(Percent)(1)(1) FunctionoutsourcedinwholeorinpartSource: TheCanadianOnlineRetailingReport,asurveyconductedbyTheBostonConsultingGroupandtheRetailCouncilofCanada;TheStateofOnlineRetailing3.0,aSsurveyconductedbyTheBostonConsultingGroupAffiliateProgramOrderProcessingFulfillmentCustomerServiceReturnProcessingSiteMaintenance26437154381773554422CanadaU.S.BenchmarkNumberofinboundcustomercontactsperorderCanada0.9Source: TheCanadianOnlineRetailingReport,asurveyconductedbyTheBostonConsultingGroupandRetailCouncilofCanada;TheStateofOnlineRetailing3.0,aSsurveyconductedbyTheBostonConsultingGroupHIGHCONTACTSPERORDERDRIVEUP

CUSTOMERSERVICECOSTSAustralia/

NewZealand0.4Q11999U.S.0.61999BenchmarkPercentofcompanieswithsupplementalrevenuePercentsupplementalrevenue(allcompanies)Canada22%0.3%Source: TheCanadianOnlineRetailingReport,asurveyconductedbyTheBostonConsultingGroupandRetailCouncilofCanada;TheStateofOnlineRetailing3.0,aSsurveyconductedbyTheBostonConsultingGroupSUPPLEMENTALREVENUEASIGNIFICANTOPPORTUNITYU.S.21%4%Q11999DIFFERENTCATEGORIESWILLFACE

DIFFERENTGLOBALPRESSURESMusic/videoFinancialservicesComputersoftwareEventticketsBooksCollectiblesGlobalLocalHighLowTravelCarsToysApparel

GroceryProductHomogen