E-commerce stagnating among smaller firms

The e-commerce phenomenon has not yet caught on with small- and medium-size businesses (SMB) in Canada, and according to a report published by Evans Research Corp., it doesn’t appear it will anytime soon.

Of the 500 SMBs who responded to the study, conducted last summer, 40 per cent said they were dissatisfied with e-commerce economic performance. A meagre five per cent or less of total revenue was derived by organizations that were conducting business via the Internet last year.

There are several reasons why, according to Evans. First, while Canada does lag behind the U.S. in terms of SMBs that are conducting e-business, be it business-to-business or business-to-consumer, Canadian consumers remain fixated on security concerns.

“Security is something of an issue on the consumer side. Canadians traditionally have been more reticent about giving out credit card information over the phone and the same applies to the Internet,” said Ivar Kangur, a senior market analyst for Evans Research in Toronto.

While consumers remain reluctant to buy online, businesses are facing challenges of their own, including high infrastructure costs, finding staff who are capable of implementing the technology itself, and nearly non-existent demand from consumers.

The results from the two past reports are similar – only one of five SMBs in Canada are currently selling products or goods online; also, total revenue from online sales remains virtually unchanged over the same time period. Twenty per cent of respondents said their spending is expected to increase this year, while four per cent of businesses are projecting a decrease.

There is a plethora of security tools available to businesses – Secure Sockets Layer, firewalls, antivirus software and encryption are some of the most common. However, consumer perception concerning security is valid, but only for very specific reasons, say experts.

“The public, en masse, don’t participate in e-commerce because of security concerns, they’re worried about hackers stealing their credit card (number),” said Joey Roa, chief information office for Intuitive Technologies in Calgary. He added that consumers are being conservative and should be given more incentive to engage in e-commerce. Businesses are becoming more proactive in using technologies like firewalls to protect transactions, but Roa said he’d like to see organizations move beyond the minimum requirements.

While intrusion detection software (IDS) can be an expensive alternative for companies, it can be used in conjunction with antivirus software, a firewall or even as a stand-alone tool to help beef-up security. Roa said the software looks for threats to, or attacks on the system. But the real benefit is that IDS can simulate attacks on a network, so organizations can better protect themselves from viruses or other types of attacks.

And while most systems generally only use a password for user authentication, consumer confidence can be improved by adding two-factor authentication such as the use of smart cards combined with some type of biometrics technology, he added.

Security issues aside, Roa said unless businesses make the financial commitment in infrastructure costs towards e-commerce, consumer demand will remain stalled.

Evans Research Corp. in Toronto can be reached at http://www.evansresearch.com

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