Canada falling short in online sales

Statistics Canada’s latest figures on Canadian online sales point to troubling signs that too many companies, especially smaller ones, are missing out on the advantages of Internet-based business.

At first glance, the numbers look encouraging. Canadian businesses sold over C$136 billion worth of goods and services online in 2013, an 11 per cent increase over the $122 billion sold in 2012. Online sales also accounted for a greater proportion of sales, with companies that sold online reporting almost 25 per cent of overall revenues came from Internet-based customers.

Tepid engagement

But other data suggests growth isn’t as robust as it should be, and the benefits of online commerce aren’t being evenly distributed. In 2013, 13 per cent of companies surveyed reported selling goods and services via the Internet, up from 11 per cent in 2012, while almost half, or 47 per cent, of Canadian businesses said they had purchased goods or services online sometime in 2013.

Perhaps I’m missing something, but an economy where 87 per cent of all businesses fail to sell anything online seems more than a little anachronistic. Then again, with StatsCan’s latest numbers suggesting 54 per cent of all Canadian companies don’t have a website, perhaps the sluggish penetration of online commerce shouldn’t be too much of a surprise. Either way, we’re more offline than we should be.

A question of size

A closer look at who’s doing the selling reveals another depressing fact: Small companies aren’t fully represented. According to the StatsCan figures, year-over-year growth in online sales was mostly driven by large companies, with 61 per cent of all wholesale trade, manufacturing and retail trade being recorded by organizations with 100 or more employees. Those same larger companies took in $87 billion in total online sales, about 64 per cent of the total. Considering the relative over-representation of small businesses in the Canadian economy, their comparative absence from online sales is troubling.

The lukewarm shift toward online transactions stands in stark contrast to Canada’s position as one of the most wired countries in the world. According to StatsCan’s Internet Retailing in Canada report, over 80 per cent of households in urban areas and 70 per cent in rural regions have access to the Internet, with 78 per cent of Canadians subscribing to broadband service and a further 81 per cent using wireless. If so many consumers already have wireless connections, why aren’t businesses of all sizes shifting more aggressively online?

Too difficult?

Part of it could be complexity. Many smaller businesses lack the in-house expertise and requisite budgets to build and maintain an e-commerce-enabled presence. StatsCan reports 30 per cent of companies cite a lack of skilled staff as a barrier to deeper use of technology, while another 30 per cent say it’s just too expensive. The longer they wait, the worse it gets, as rapid development of online commerce technologies can make it difficult for less technically-inclined businesses to keep pace.

A similar psychology is playing out around the growing use of mobile devices, with the StatsCan penetration figures suggesting many businesses are simply choosing to remain on the sidelines until the dust settles. With Goldman Sachs estimating global sales via mobile devices expected to hit $638 billion by 2018, roughly the same size as the entire world e-commerce market in 2013, companies both inside and outside of retail can’t afford to ignore the rush.

The StatsCan data should serve as a national warning that we’re failing to keep pace. The numbers foreshadow a future where Canada risks falling further behind other nations that have chosen to deliberately invest in helping businesses of all sizes overcome obstacles to technology adoption. In the absence of a big bang number that reinforces the urgency, however, expect the current slow erosion of Canadian e-commerce competitiveness to continue.

Carmi Levy is a London, Ont.-based independent technology analyst and journalist. The opinions expressed are his own. carmilevy@yahoo.ca