The Panier Bleu is Dead
Developing your own online platform to sell local products is really hard.
One of the first articles that I wrote on the food system in this space was about the Panier Bleu, or — loosely translated — the Blue Basket.
It was 2020 and the pandemic had just landed with all of its gnarly unpleasantness. With mobility restrictions in place, it was the death knell of many retail businesses who rely on customers walking through their doors.
The Panier Bleu was an attempt by the Quebec government to counter this new retail reality with a vehicle designed to not only massively shift consumer buying habits online, but also, focus their attention on products designed and manufactured by Quebec business people.
The idea was straightforward: provide an ecommerce platform that would essentially be a giant catalogue of Quebec-produced goods for sale. The platform would only highlight businesses from the province (stimulating loyalty in the population to support their local entrepreneurs) but also, widening the potential buying audience for small businesses from their local community to the entire province, and perhaps, beyond.
There was one problem and it was a big one: the site was not transactional when it launched.
Consumers could browse to their heart’s content all of the various products available to them. It was like the Sears Catalogue (remember those?) of products produced in Quebec. They just couldn’t purchase anything directly from the site itself. For that, they needed to click through to the business web site and hope they had access to transactional capability to process their online order. An adjacent government programme provided funding for small businesses to update their online presence and transactional capabilities. Revenues for Lightspeed (a Montreal-based ecommerce and Point of Sale company that was a partner in the Panier Bleu) skyrocketed as a result.
Little covered in Quebec by newspapers or visual media was that, at the same time, private entrepreneurs had developed an identical online service, called Ma Zone Quebec, that was fully transactional out of the gate and went to market at about the same time as the Panier Bleu. I argued in 2020 that having two services essentially trying to do the same thing — one private, the other government-owned or funded — was essentially an attempt by government to pick a winner, a strategy that rarely works. At the very least, the government should’ve worked with Ma Zone Quebec and de-risked both the private and public investment.
The Panier Bleu finally went fully transactional in 2023, after being spun out of the government into a non-profit enterprise to be run by a bunch of e-commerce companies (including the aforementioned Lightspeed) based in the province.
And then after pouring $40 million of taxpayer dollars into the venture, the provincial government pulled the plug in early 2024. The principal reason? The main body that certifies and labels products manufactured in Quebec reached an agreement with Amazon where the online shopping giant would provide greater visibility for Quebec-based products and access to the platform’s tools for businesses.
So, was it all for nothing?
Yes and no.
Yes, the investment was worth the time and money spent, if for nothing else than to provide a springboard for smaller businesses in Quebec to make the transition from bricks and mortar to online ecommerce.
Before the pandemic, Quebec businesses were lagging in their adoption of ecommerce platforms for a number of reasons: slower adoption rate for new technology; less of an entrepreneurial culture compared to other provinces in Canada; a lack of knowledge about what ecommerce platforms could bring to smaller businesses; a more local or regional focus for businesses in the province, due — in part — to language.
The push by the government to create the Panier Bleu made it clear that even for locally-based companies, enhancing their online presence, and their ability to process orders online, would only be of benefit.
In addition, the slower adoption of ecommerce platforms in the province provided an opening for Amazon. As the King Kong of online shopping platforms, Quebecers flocked to the service for all sorts of products, regardless of where they were sourced. Quebecers, like others in Canada, became adept at using online platforms to acquire goods they did not want to purchase from local retailers, whether because of price, inconvenience or availability.
As part of the rollout of the Panier Bleu, the Quebec government also provided funding and access to ecommerce expertise to small businesses to:
- better differentiate themselves in the ocean of products available online;
- better position their products in a manner that was attractive and compelling for online consumers;
- better refine their Search Engine Optimization, or SEO, of their products online; and
- simplify the online payment and fulfillment process for online consumers.
For Quebec-based businesses unfamiliar with the online world, it was a much-needed boost to bootstrap them into the digital age. When you have little understanding of the domain, it’s always good that someone steps in and offers you assistance, particularly for better exposing your products to a wider audience. For many small business owners, their expertise is the product they make, not the marketing and sales of it in an online world.
I can attest to the fact that, very quickly, a lot of the local retailers that I shopped at suddenly had pretty effective online store fronts, making it much easier to shop and buy from them. For restaurants, it was a lifesaver in many cases, as ordering direct from your favourite hangout became that much easier.
Where it fell down was in not properly understanding the scope of the investment required to make the Panier Bleu stand out in an ecommerce world dominated by Amazon. The back-end infrastructure (servers, data centre space, transactional software, connectivity to those data centres, etc.) is relatively straightforward but complex to set up.
Then there is scale. In order to reduce the cost for merchants to use the service (yes, they all have to pay Panier Bleu for the privilege of being on the platform), you have to build up your transactional space to achieve a certain scale. Without it, you’re pricing yourself out of the market, and Amazon is a pretty hard competitor to match.
Let’s take a simple example. Say you want to sell a unit of something on Amazon. I will pick a product that I buy semi-regularly: Organika Electrolytes (Extra Strength). Let’s also say that you want to leverage Amazon’s expertise and eyeballs to sell more of your products. There are a number of costs to consider:
- Selling fees — because you want to sell more than 30 units, take the professional plan at CAD$29.99/month. It includes the ability to advertise your product, have it placed at the top of its category on the site and gives you access to sales reports and APIs;
- Category Referral fees — these are organized by product category, but generally, are CAD$0.40/unit sold;
- Fulfillment fees —if you don’t want to bother with arranging your own fulfillment infrastructure, then Amazon can do it for you. For base products, it’s CAD$4.46/100 grams. The fulfillment fee varies from there based on weight and size of the unit sold;
- Storage fees — if you want Amazon to maintain inventory of your unit, then there is a fee depending on the size of the space in their fulfillment centres. For standard sized items, it’s CAD$35/cubic metre of space. And that goes up to CAD$64/cubic metre of space during the months of October-December.
For one tub of the Organika product, the retail price through Amazon is CAD$42.99. The cost for Amazon to take care of all the elements noted above: CAD$12.84/unit sold. If you choose to outsource only the sales element of what Amazon offers (and take care of inventory storage and fulfillment), your per unit costs through Amazon drops to CAD$6.45/unit sold.
I have no idea what the manufacturing cost is for that tub of Organika electrolytes. But forking over almost a quarter of the selling prize to Amazon is quite a chunk out of your revenue stream that has to be considered in addition to all the other costs associated with that product (production, general, admin, salaries, etc.).
I cannot imagine that Panier Bleu, even with all the subsidies attributed to it, would have been able to match that cost for merchants, given the significantly reduced market reach, the lack of dedicated infrastructure (both back end and fulfillment) and the lack of a dedicated ecommerce team whose sole business is to sell more product, cheaper and faster, than anyone else in the world.
The Panier Bleu was a noble experiment. At a time when it looked like the pandemic would cause the collapse of businesses all over the place, it was a concrete measure by the government to assist retailers who would otherwise simply died.
Now, with the experiment completed, and the new deal with Amazon (which provides an extra level of visibility if the product being sold through the Amazon platform is a product of Quebec, manufactured in Quebec or conceived in Quebec), customers should be able to still make a buying decision on the basis of their loyalty to locally-based products.
I checked a few products on the Amazon site that I know come from Quebec. So far, no visible certification symbols appear. However, the other measures announced in February, 2024 — including the creation of product and landing pages for Quebec products — are up and active, although the selection is fairly small for the moment.
One can hope that this new initiative will further stimulate sales of Quebec-based products — not just within the province, but across the country, as is the hope of Amazon Canada. It will all come down to whether or not retailers are willing to pay the cost of giving their product greater exposure on a platform such as Amazon.
