Caution dogs Canadian e-business

Despite high Web usage and soaring broadband adoption rates, few Canadians are shopping online — which is strange for a country where Internet banking is proliferating.

More than 30 per cent of Canadians regularly bank online, according to research firm TNS Canadian Facts in Toronto, while Statistics Canada puts that figure even higher at 56.6 per cent. However, shopping online has yet to become mainstream. Only 25 per cent of Canadian families buy online, said Michael Leblanc, partner at Adviso Consulting Inc. in Montreal.

According to Statistics Canada, in 2003 Canadians spent about $688 billion on goods but the vast majority of those purchases were made in physical stores. Only $3 billion, less than one per cent of those purchases, were made online.

The sorry state of Canadian e-business begs a tough question: Should enterprises be all that concerned about their Web properties if no one’s buying?

The answer from industry insiders is yes. They say e-business is not simply about business-to-consumer (B2C). In fact, 80 per cent of e-business transactions are business-to-business (B2B), according to Statistics Canada. This is where e-business can help businesses save money and simplify relationships.

For example, Leblanc said one company’s salespeople spent many hours each week faxing price lists to customers. But the company built a small intranet its customers could use to view the new prices. Now the salesperson has more time to seek new business.

Jeffrey Grau, senior analyst at eMarketer Inc., a research firm in New York, said consumers who buy once on the Internet are more likely to continue conducting transactions on the Web.

However, a report released by the Canadian E-Business Initiative (CeBI) in September 2004, called Fast Forward 5.0, was not encouraging. It said Canada’s e-business competitiveness is slipping, hindered by the three Cs: Caution, Conservatism and Complacency. Businesses are cautious about adopting e-business and are not investing in technology to enable e-business. Meanwhile, consumers are too conservative in their buying habits and are fearful of credit card fraud.

Although Canadian consumers are worried about credit card fraud, the proliferation of Internet banking shows Canadians will conduct transactions online if they think the connection is secure, Grau said.

Also, because of national pride, Canadians want to buy from Canadian companies, or at least Canadian Web sites, Grau said. The trouble is, 99 per cent of Canadian companies are small firms; they lack brand recognition, which translates into lack of trust, he added.

Grau advises small Canadian firms to either partner with larger, recognized companies to sell online or create an aggressive branding and customer service strategy to build the much-needed trust.

Right now one big problem is the sheer volume of sub-par Web sites. Back in the early days of the tech boom, Leblanc said, just about anyone could call himself an e-business specialist, resulting in Web sites that weren’t exactly user-friendly or easy to find. For example, Leblanc said Web sites built with Macromedia Flash are not searchable by engines such as Google.

Before they jump into building new Web sites, businesses should figure out what they want to accomplish with their e-business strategies, whether it is to simplify business processes, increase sales, increase customer satisfaction or decrease costs, Leblanc advised.

“Many people have spent a lot of money on Web sites that have no business ROI figured out,” he said. The key is to learn what people are doing on your Web site and to devise metrics to measure how effective your Web site is. For instance, he said a company could list a different toll-free number on its Web site than on its print ads. This way, if a customer calls the number listed on the Web site, the company knows the client was online.

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Related links:

Online banking and bill pay on the rise in Canada

Holiday boom for online shopping

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