Internet still not widely used by private Canadian businesses to sell

Luann Lasalle, THE CANADIAN PRESS
MONTREAL - E-commerce still isn't widely used by Canada's private sector businesses to sell products, even though online sales increased at a double-digit pace for the sixth consecutive year in 2007.

Statistics Canada reported Thursday that total private and public sector Internet sales hit an estimated $62.7 billion, up 26 per cent from 2006.

But only about eight per cent of private sector firms sell online and this percentage hasn't increased much since 2003, said agency spokesman Mark Fakhri.

"So that's why it's still kind of a small portion of total economic activity. It hasn't really been widely used," said Fakhri, of Statistics Canada's science, innovation and electronic information division.

The survey also tracked Internet use among private sector firms.

About 87 per cent of private sector firms used the Internet in 2007, up slightly from 2006, while 81 per cent used e-mail. But fewer than half (41 per cent) of private-sector firms reported having a website.

With online sales, businesses have reported reaching new customers and better co-ordination between suppliers and/or customers, Fakhri said.

"The Internet was predominantly used for information. It's kind of slowly expanding now into buying and selling online which is an additional tool. And this is just the beginning stages of it."

Fakhri said there's "room for growth" in online sales for private sector businesses and it should evolve over time.

Most of the online sales were in wholesale trade, transportation and warehousing, manufacturing and the retail trade, the survey found.

But almost 50 per cent of private sector firms surveyed reported using the Internet to purchase goods and services, he added.

The 2007 survey covered more than 19,000 private and public sector firms. Statistics Canada began tracking e-commerce at the beginning of the decade.

While the proportion of private sector companies that sold goods and services online has remained stable, about 16 per cent of the public sector reported e-commerce sales.

E-commerce by private sector companies increased to $58.2 billion, an increase of 25 per cent, while public sector e-commerce rose 30 per cent to almost $4.5 billion.

Fakhri said the survey doesn't identify the exact reasons why online sales have increased overall.

Analyst Gregory Antrobus said he wasn't surprised by small percentage of private sector businesses selling online because having an e-commerce business is a long-term investment.

"Canadian firms to date have not invested in that area," said Antrobus of the J.C. Williams Group in Toronto. "They're looking for a relatively quick ROI (return on investment)."

There is plenty of room for U.S. retailers to step in and fill that void, he added. E-commerce is important as consumers become "more time starved," Antrobus said.

The survey found that in the private sector, business-to-business sales accounted for 62 per cent of online sales in 2007, down from 68 per cent in 2006. The proportion of online business-to-consumer sales climbed to 38 per cent from 32 per cent.

It's estimated that customers outside Canada generated almost one out of every five dollars (19 per cent) in online sales in the private sector, similar to the last two years.

The survey also found that 77 per cent of private sector firms reported using wireless communications in 2007, up from 51 per cent just seven years earlier.

© The Canadian Press, 2008