November 17, 2005

“Since 2001, about 95 percent of the growth in the eCommerce industry came mostly from increased sales from one company to another (B2B or Business-to-Business), not sales from companies to households" (B2C or Business-to-Consumer), says Statscan (Statistics Canada) in a new study published yesterday.

The report also revealed that the overall pattern of Internet or online sales hasn't changed much since 2001.

Last year, e-commerce sales by private Canadian companies reached $26.5-billion, with sales from business to business accounting for 75 per cent of this total, the study found. That percentage was roughly the same in 2000.

The Statscan findings were based on data from 17,000 enterprises collected in the 2004 survey of electronic commerce and technology.

The government study compared on-line sales from retailers to consumers to that of two large business-to-business sectors: manufacturing and wholesale trade. These three account for just over half of all on-line sales by private companies in 2004.

Manufacturers sold $4.2-billion in goods over the Internet in 2004, of which 94 per cent was to other businesses. Among wholesalers, business-to-business sales accounted for 84 per cent, or around $5.1 billion, of their on-line sales.

“Companies that buy and sell on the Internet may potentially be able to manage their inventory more efficiently, get goods to markets faster, reduce the cost of paperwork, and get lower prices on some supplies,” Statscan said.

The retail sales sector sold close to $3-billion of goods and services on-line last year, the survey found. The vast majority of these retail e-commerce sales, 85 per cent, were to households and individuals, a proportion that was virtually unchanged from 2003.

There are, however, signs that sales on the Internet will “become a more important facet of retail trade,” Statscan said. In 2004, on-line sales by retail firms grew by 51 per cent from a year ago.

Source: The Globe and Mail