Ecommerce growing but still struggling in infancy

The value of private sector sales made over the Internet in Canada rose 73.4% in 2000 but still represent only a tiny fraction of the entire economy, according to a recent Statistic Canada survey on electronic commerce and technology. Using a sample size of 21,000, StatsCan reports that the value of e-commerce (Internet-based) sales in 2000 totalled $7.2 billion, up from $4.2 billion in 1999. The 2000 total represents just 0.4% of total operating revenue, up from 0.2% the year before, suggesting that the hype surrounding the coming of the dot.com economy remains just that — hype.

The survey also found that for every two business that started selling over the Internet in 2000, five actually stopped, reflecting the stock meltdown of Internet firms when sales fell drastically short of expectations. Just 6% of businesses were selling on-line in 2000, down from 10% in 1999. But the report notes that the value of sales for new on-line sellers was close to double those firms who were no longer selling on-line.

Manufacturing achieved the highest level of sales for any sector, with $1.3 billion in good and services sold in 2000, or 0.2% of the sector’s total operating revenue. Transportation equipment accounted for the largest portion of sales within manufacturing. Other sectors near the top of the list are wholesale trade, transportation and warehousing.

The all-important area of retail trade shows that retailers generated $890 million in on-line sales or 0.4% of their operating revenue. Motor vehicles, parts dealers and food retailers represent more than two-thirds of e-commerce retail sales.

While the overall number of businesses selling on-line dropped between 1999 and 2000, the number purchasing goods and services increased to 18%, up 15% from 1999. On-line purchasing advanced across nearly all sectors, with the information and cultural services industries accounting for the highest proportion. The latter includes publishing, broadcasting, telecommunications, information services and data processing.

The report also notes that while sales over the Internet remain low, more businesses are embracing the Internet, with 63% now on-line. The report can be found at http://www.statcan.ca:80/Daily/English/010403/d010403a.htm.

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