Canada’s e-commerce sector still underdeveloped, report says

Although Canada’s consumers are among the most connected in the world, our businesses lag behind their U.S. counterparts in fully harnessing the power of e-commerce, a federal government report suggests.

Smartphone use penetration shouldreach 100 per cent in Canada by 2014and more than half of Canada’s connected households used more than onetype of device to go online in 2010, according to a new report by thestanding committee on industry, science and technology. And the valueof Canada’s e-commerce market hit $$15.3 billion in 2010, nearly doublethe 2005 level, the study found.

Canadian businesses themselves are big e-commerce users, with 71 percent of SMBs making online purchases in 2011. Yet only 18 per cent ofSMBs reported selling goods and services online. Among SMBs who didreport Web-based sales, most (72.5 per cent) said onlinetransactions made up 25 per cent or less of their overallsales.

“Despite the growth on the consumption side, we punch well below ourweight in creating global online companies,” Michael Geist, Canadianresearch chair in Internet and e-commerce law at the University ofOttawa, told the committee last fall according to the report.

One of the reasons for Canada’s lagging e-commerce sector is that weinvest far less in technologies than our large foreign competitors, thestudy suggests.

Low IT spending a factor
“Selling products online is not yet popular among Canadian (SMBs),” thereport states. “The underdevelopment of online sales by (SMBs) mirrorsthe fact that Canadian businesses generally tend to invest less in ICTsolutions than do their U.S. counterparts.”

In the second quarter of 2011, U.S. businesses invested four times morein software than they did in 1995, while Canadian companies investedjust 3.3 times more, the report says.

The report makes several recommendations to strengthen Canada’se-commerce sector, including:

– the federal government should ensure consumers and retailers are“suitably protected by a code of conduct” with regard to online, mobileand “other emerging transaction technologies.” (The report adds thatthis goal will be met “in part” through recent changes to the PersonalInformation Protection and Electronic Documents Act (PIPEDA), updated anti-spamlaws, and changes to copyright legislation.)
– that the feds explore ways to “reduce red tape and costs ofcross-border business and shipping for businesses and consumers.”
-Ottawa should look for ways to make costs associated with e-commerce(including cross-border transactions) more transparent so businessesand consumers are aware of total costs prior to purchases being made.

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