For every five Canadian businesses that started selling online, four firms stopped – seeming evidence of a “volatile” e-commerce market, according to the latest figures from Statistics Canada.
In contrast, StatCan’s 2001 Survey of Electronic Commerce and Technology also reported that for every two firms that sold online in 2000, five stopped.
The survey reveals that while Canadian online sales of goods and services rose last year (seven per cent, up from six per cent in 2000), e-commerce sales still only account for a small slice of total operating revenue (0.5 per cent in 2001, up from 0.2 per cent in 1999).
Last year, companies received $10.4 billion in customer orders over the Internet, up 43.4 per cent from 2000, StatCan said, adding that firms selling online represented almost 30 per cent of all gross business income in Canada, up from 25 per cent in 2000.
The wholesale trade industry accounted for the highest amount of e-com sales, followed by manufacturing, retail, and transportation and warehousing – these sectors made up 58 per cent of all Internet sales in 2001, StatCan said.
Among the survey’s other findings:
Wholesalers sold $1.9 billion worth of goods and services over the Internet in 2001, up 83.9 per cent from 2000. Twelve per cent of all wholesalers’ e-com sales were direct to consumers, while 13 per cent went outside the country.
Large enterprises (more that 500 employees) were responsible for 40 per cent of Internet sales, down marginally from 43 per cent in 2000.
The dollar value of business-to-business (B2B) sales rose 39.5 to $8.1 billion, the survey found. While business-to-consumer sales rose 59 per cent to $2.3 billion in 2001, this comprised only 22 per cent of Internet sales.
Almost three-quarters of all businesses use the Internet. Among Canadian businesses that did not buy or sell online, 52 per cent felt their goods or services did not lend themselves to online transactions, with 36 per cent preferring to maintain their current business model. A minority of these firms were concerned about e-commerce security, development, and maintenance costs.
“There’s no doubt about it – the stats show that there is a slow (e-commerce) take-up. But I guess year over year, it is increasing a fair bit,” said Andy Blenkarn vice-president of digital enablement at EDS Canada in Toronto.
Added Blenkarn, “Canada’s is still a very disperse country – even though we hug that 49th parallel. We are seeing a lot more in the B2B than business-to-consumer side.”
Blenkarn noted that enterprise concerns over e-commerce security and privacy issues, along with the costs of shipping and fulfilment have slowed e-com growth.
“Just the overall bandwidth and cost to set up a full online store with back-end integration in the supply chain, it’s not small – it’s a pretty serious investment…there’s a lot to setting it up properly and doing it with a full, secure environment,” Blenkarn said.
He added that companies, particularly larger enterprises, only recently made the connection between integrating store, back-end inventory, and ERP systems.
“I think we’re going to see a lot of organizations get real serious about it and look at the whole technology platform, infrastructure required to make it successful,” Blenkarn noted, adding an emphasis on interactive e-commerce (design, graphics) is crucial to customer retention.
” A lot are underestimating the business-to-business value of entering into this technology area…a lot of enterprises are stepping back and looking at their net portal strategy,” Blenkarn said.
“I think that we will see a pick up and resurgence in the net store areas – we’ve definitely seen a lull (in e-commerce) in the last year.”
The full StatCan report can be found at http://www.statcan.ca
EDS Canada in Toronto is at http://www.eds.com