The Surf's Up News

Ecommerce In
Grim Statistics
Volume 1, Issue 7
May 2001

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Ecommerce in Canada:
Grim Statistics

There seems to be a prevailing attitude among Canadian business owners that the Internet will not affect their business. It is puzzling that they continue to take this stance in lieu of the evidence indicating that is in their best interest to get their business online.

On April 3 the Statistics Canada Daily reported "that the total value of private sector sales over the Internet, with or without on line payment, rose dramatically in 2000, while the proportion of businesses selling on line fell.

Canadian businesses received $7.2 billion in customer orders over the Internet in 2000, up 73.4 per cent from $4.2 billion in 1999. However, only 6 per cent of businesses reported selling goods and services on-line in 2000. These 6 per cent of businesses selling on-line accounted for one quarter of all gross business income."

What was even more disturbing in the Statistics Canada report was that of the businesses that had responded to the survey for every two that had started selling over the Internet in 2000, five had stopped doing so.

Why are Canadian business owners continuing to fight the Internet trend? Are they tired of the constant changes, the learning curves and the struggle to be like the Americans? Has the Internet inspired a renewed distain for our aggressive neighbours? Are commercials like "I am Canadian" and satires like Rick Mercer 's, "Talking to Americans", a result of this techno saturation backlash?

Or has the Internet created a global paradigm shift that Canadians business owners are refusing to accept?

In his video, The Business of Paradigms, Joel Barker said that when a paradigm shifts everyone goes back to zero. It doesn't matter that you have been successful in business for 25 years, your past success guarantees nothing.

Expounding on Thomas Kuhn's theory of the paradigm and applying it to business, Barker said that it is our existing paradigm that prevents us from seeing new ideas.

In The Structure of Scientific Revolution, published in 1962, Kuhn maintained that, contrary to popular belief; typical scientists were not objective and independent thinkers. Rather, they were conservative individuals who accepted what they have been taught and applied their knowledge to support existing theories. As a result scientists ignored new research that might threaten the existing paradigm.

Barker used the example of the Swiss watchmakers to show what happens in business when people ignore a shifting paradigm.

When the Swiss invented the quartz watch, the new design didn't fit with their existing idea of the way watches should be made. In fact it seemed so insignificant to the Swiss that they didn't even bother to get a patent on the design.

The Japanese, on the other hand, weren't blinded by an existing paradigm and were able to see the potential of the design and manufactured the new watches. Barker reported that as a result of the paradigm shift, the Swiss watchmakers market share fell from 80 per cent in 1968 to less than 10 per cent today.

The small window of opportunity that has existed on the Internet for the past several years is beginning to close. Every year things tighten up online and if Canadian businesses don't get moving soon it will become completely out of their reach. Several years ago it was unheard of to think of paying to get placed on a search engine, yet today most engines charge a fee.

The Statistics Canada Daily reported in March that, the 56 per cent of businesses that did not buy or sell over the Internet believed that their goods or services did not lend themselves to Internet transactions. Thirty-six percent preferred to maintain their current business model.

The Surf's Up News
The Surf's Up NewsEcommerce in Canada

On April 18 Forrester Research reported that 88 per cent of US businesses saw the Internet as important to their buying plans and over a quarter said they had saved money by doing business online.

Business to Business (B2B) sales have been a driving force of the Internet economy. According to the US Census Bureau, in a report that came out in March, B2B sales may have accounted for 90 percent of all ecommerce activity in the US in 1999.

The report found that USD485 billion of manufacturing shipments were made online.

The good news is Forrester Research reported in February that Canadian online B2B revenues would reach CAD272 billion (USD180 billion) by 2005, accounting for 18 percent of all business to business transactions.

Ontario and Quebec are expected to be the leaders with transactions being made primarily in the automotive and petrochemical industry. The bad news is that Forrester also reported that only 16 percent of Canadian companies currently had a clear B2B strategy.

The Statistics Canada Daily reported in March that an estimated 13 million Canadians, or 53 per cent of those aged 15 and over used the Internet in 2000. A further 27 percent of non-users expressed an interest in getting online.

This means that if Canadian businesses can't offer online services to Canadians they will buy their products from US businesses.

"The combined forces of globalization and the Internet revolution mean all businesses will have to become e-businesses. For Canada, there is no more business as usual. The Internet revolution has changed everything - not just for dot-coms, but for all parts of the economy," John Roth, CEO of Nortel Networks stated in February. Roth co-chairs the Canadian E-Business Opportunities Roundtable, a private sector led initiative formed in 1999 to develop a strategy for accelerating Canada's participation in the Internet economy.

In the March report issued by the Roundtable initiative, "A lack of information and education was stated as the number one reason that businesses did not go online." This general lack of knowledge seems to be a major problem to not only running a successful online business in Canada but to making the plunge in the first place.

Even those businesses who go online don't seem to know how to market their site once they get there. Not only do they seem unaware of the amount of traffic going to their sites but oblivious to the fact that it is critical to track this information.

There seems to be a general misconception that if you put a site on the Internet that business will just happen. This is akin to opening a brick and mortar business and not doing anything to attract clientele.

In other instances business owners have not even had their sites submitted to search engines. Forrester reported in June that 81 per cent of consumers find Websites using a Search engine.

If Canadians are to survive in the new global order they must open their eyes to the shift that is going on in every sector of our economy. If they don't understand the concepts then they must make it their business to find out about them. Things are moving quickly and time is becoming a critical factor.


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