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Strong B2B growth forecasted - John Milne (8/02)

Last year’s meltdown of the dot-com industry tricked a lot of people into believing business on the Internet is a dead issue.

Last year’s meltdown of the dot-com industry tricked a lot of people into believing business on the Internet is a dead issue. Recent studies and surveys indicate business activity is not only lively, but growing faster than even the most optimistic forecasts.

Industry Canada pegged worldwide e-commerce in 1999 at $195 billion (Cdn) with Canadian companies reaping a $11.5-billion (Cdn) slice of the total pie. I-Can predicts that in two years the global pie will be worth $3.9-trillion (Cdn) with this country accounting for a $151-billion (Cdn) portion.

IDC, a Canadian company specializing in technology intelligence, published a report using statistics gathered from several reliable sources, which indicates Canadian industry is right out there when it comes to Internet-based commerce with a forecast compound annual growth rate of 57 per cent for business-to-consumer (B2C) sales, and more than 64 per cent for business-to-business (B2B), and our growth rates match favourably with those forecast for the U.S.

In 1999 13 per cent of small businesses in Canada had public-accessible commercial Web sites, while the rate for medium-sized businesses was 58 per cent, and an astounding 80 per cent for large-scale operations. Another survey indicated a large portion of Canadian business, currently without Web sites, intends to appear on the Net in the near future. Canadian companies, however, lag behind their U.S. counterparts with Web sites which can accept and process electronic orders. The gap has widened since 1999, although we are almost on a par when it comes to being able to accept online payment for goods. We are way, way behind though, in Web-based revenue generation. Revenue generated from Web sales for Canada’s largest businesses only accounted for about two per cent of total sales, while the average for similar U.S. firms was more than 10 per cent in 2000. Web site integration with order processing and fulfilment is expected to be a major growth area in Canada.

The Conference Board of Canada ranks our country consistently second or third among the top 10 Internet-using countries in availability, price, reach and use of connections.

While the success of B2C commerce is subject to consumer whims, price and fashion, experts suggest we have only begun to realize the ultimate potential of B2B transactions.

The federal government has moved a huge portion of its procurement for goods and services onto the Web, as have General Motors, Chrysler and a host of other major players, which cite cost, speed and reach as major factors for success with their ventures.

Business hubs trading in one commodity or a highly targetted group of goods or services, are beginning to appear. Two energy trading Web sites specializing in electricity, oil and gas already exist in Canada with more expected in the wake of deregulation of the electricity market in Ontario.

The federal government appears to be committed to revising legislation and regulations, where required, to facilitiate the growth of Web-based commerce. In conjunction with Industry Canada, companies with a vested interest in growing the online portions of their businesses have been getting the government’s undivided attention in critical areas such as data encryption, copyright and international trade issues.

Though nearly 80 per cent of our country’s total trade is with the U.S., there are still many barriers - as evidenced by the softwood fiasco - to further expansion by traditional, B2B or B2C means.

Though the Internet has made the Global Village a reality in many ways, important differences in currencies, regulations on trade and investment and many other hurdles remain in place. The future looks promising, but much has to change before Canada realizes its full potential in the world of e-commerce.

John Milne is the owner/proprietor of All Outdoors Productions in North Bay and can be reached