Report: Canadian E-Commerce Gaining Ground

While Canadian e-commerce still has a long road to travel before catching up with the U.S., a study released Wednesday by the Canadian e-Business Opportunities Roundtable shows that the divide is steadily closing.

“We’re pleased to see the gap narrowing as Canadian businesses increasingly embrace the digital tools that will keep them competitive,” said John Wetmore, chair of the roundtable’s e-Business Acceleration Team and president of IBM Canada.

Growing Up Fast

Through 2004, the Canadian e-business sector will grow at an annual rate of 75.5 percent, with total Canadian e-business spending reaching $100 billion (US$) by 2004, the report said.

In contrast, the U.S. e-business sector is growing at the slower rate of 67.9 percent, though it is expected to reach a whopping $1 trillion by 2004.

“There’s more work to be done to close a gap that remains too large,” Wetmore said, “especially in the small business sector.”

More Than E-Mail

The disparity between the size of the Canadian and U.S. e-commerce markets is troubling for Canadian business leaders. However, of greater concern is the fact that many small businesses in Canada do not realize that e-business is critical to their competitive success.

“Too many small business operators believe that having e-mail and a basic Web site is enough, but it’s not,” IDC Canada vice president Joe Greene said. “E-business is the way of the future that will enable them to meet the challenges of local and global competitors.”

The roundtable report concluded that educational opportunities and e-business tax incentives are critical to helping Canadian small businesses take advantage of the Net.

Consumers Jumping In

Due to the robust growth of Canadian e-business markets, opportunity is available for ready takers, large and small. The roundtable found that Canadian firms are making a strong showing in the business-to-consumer (B2C) sector, where they have an annual growth rate of 67.8 percent, compared to growth in the U.S. of 44.1 percent.

The Canadian business-to-business (B2B) sector is also growing at a rate of 67.8 percent, but in the U.S. the B2B sector is growing at an even faster pace of 72.9 percent.

Connections on the Rise

Even if Canadian firms have yet to take full advantage of the e-business revolution, they are starting to get their storefronts online.

In 1999, 13 percent of Canadian small businesses — businesses with less than 100 employees — had a Web presence, up from 6 percent in 1998.

The number of small Canadian firms with Web connections is also growing. In 1999, 35 percent of small firms were connected to the Web, compared to only 15 percent in 1998.

The roundtable’s research was conducted by IDC Canada and its U.S. parent IDC.