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Business-to-business dominates Canadian e-commerce

Perceived benefits of private firms conducting business over the internet

Data released today by Statistics Canada show continuing growth in sales over the internet, but most of the money is being exchanged between companies. Sixty-eight per cent [C$31.4 billion] of e-commerce sales by private firms last year were business-to-business, the same percentage as in 2005.

The chart above shows the growing recognition of supply-chain benefits, which is now virtually on par with “reaching new customers” as the top reason for being online.

Total online sales by private firms increased 42 per cent to C$46.5 billion, while those by the public sector rose 17 per cent to C$3.4 billion, says Stats Can.

Retail trade was one of the fastest growing sectors. Retail firms sold goods and services online worth $4.7 billion last year. This was nearly double the revised figure in 2005, and it accounted for 10% of all private sector online sales.

However, this level was just slightly over 1% of the total retail market. In fact, e-commerce still represents a small fraction of the overall economy.

About 8% of Canadian firms conducted e-commerce last year, up slightly from 7%, where the proportion had stagnated for the past three years. However, in the retail sector alone, more than 15% of firms sold online in 2006, up from only 10% in 2005.

So, sales are up but e-commerce is still a drop in the bucket of total sales – maybe not so surprising when you realise that most Canadian businesses haven’t yet embraced Web 1.0, let alone Web 2.0.

Stats Can reports that only 40 per cent of private firms have a website, and “the vast majority of firms are using these websites simply to provide information about their company and the products and services that they have available”.

E-commerce may not be suitable for every business, but surely there can be very few companies that wouldn’t profit from having a website to communicate with their customers and potential customers.