E-commerce stats suggest barriers breaking down

A Statistics Canada survey suggests the Canadian e-commerce boom shows no sign of stopping.

“Online sales recorded their fifth consecutive year of double-digit growth in 2006,” according to the Statistics Canada report. “Private and public sector online sales combined surged to 40 per cent to $49.9 billion. Online sales by private firms increased 42 per cent to $46.5 billion, while those by the public sector rose 17 per cent to $3.4-billion.”

Eight per cent of Canadian firms now use e-commerce in their businesses.

Mark Uhrbach an economic analyst with the business e-commerce unit and co-author of the survey, said that he was not surprised with the results, as they merely continue the trend of the last few years.

The use of online retailing is soaring, coming in with $4.7-billion worth of business last year. This is double the amount made in 2005, and now accounts for 10 per cent of the private sector’s online sales. B2B sales continue to dominate the market, though, due to online consumer retailers buying wholesale and the sale of things like plane tickets to businesses.

Uhrbach said that certain barriers to people and businesses using e-commerce are being broken down. Many businesses, according to Uhrbach, used to be under the impression that only certain products leant themselves well to the online selling environment. Now, he said, they’re coming around to the idea that they need to conform themselves to the e-commerce model, rather than expect the Web to fit their product or business model.

A shift in thinking is also present in the business and consumer mindset, as more and more consumers feel more comfortable purchasing online. They are loosening up in terms of their comfort level with things like using their credit card to make purchases online, said Michael Brown, president and CEO of Vancouver-based comparison shopping engine HealthPricer Interactive .

Businesses are also tuning in to this influx of customers, according to the survey: “At the outset, there were many perceived benefits to e-commerce, one being that e-commerce would result in cost savings for firms as they would be able to scour markets throughout the world and reduce overhead costs associated with traditional business.” But now, the survey states, only one in four businesses believe this anymore. The emphasis now lies on customer satisfaction.

Thirty-six per cent of responders said that e-commerce offered them a way to gain new customers, while 35 per cent of private firms wanted to enjoy better coordination with their customers and suppliers. Brown said, “The biggest thing won’t be new customers, but people who buy more and more things online.”

They could be attracted to the greater ease of that “better coordination,” according to Scott Lake, co-founder of Ottawa-based e-commerce site-builder software vendor Shopify . He said that the infrastructure of e-commerce has benefited from this coordination, resulting in next-day service that customers like. “As this integration (within the e-commerce functions) becomes more efficient, we’ll see even more new customers,” he said.

Brown sees the upswing in e-commerce as attributable to another reason: better marketing initiatives. “They’re getting more aggressive in promoting themselves,” he said, which has also resulted in cleaner, attractive, and user-friendly Web sites.

However, the demand for these Web sites is surpassing what the IT market can supply, he said. The greatest dearth of talent is for infrastructure architects to plan the front-end of the Web site, with Webmasters and IT support staff for the back-end trailing closely behind that. Said Brown: “Without a doubt, there is a talent shortage. It’s really difficult to find people on the leading edge (of e-commerce).”

Regardless of the talent shortage, he said that the e-commerce trend will only continue to grow. It may represent, according to the survey, just one per cent of Canada’s total retail market, but Brown, Lake, and Uhrbach all expect the boom to extend into the foreseeable future.

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Jim Love, Chief Content Officer, IT World Canada

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