Canadian Businesses Embracing Internet

The majority of Canadian businesses have embraced the use of email and the Internet, according to research by Statistics Canada. The research found that 10 percent of companies used the Internet to sell goods and services in 1999, and those sales amounted to 0.2 percent of their total economic activity.

The total value of customer orders received over the Internet, with or without online payment, was $4.4 billion in 1999. Of this total, $4.2 billion was generated by the private sector, representing only 0.2 percent of total operating revenues during the year, according to the research. In no industrial sector were estimated Internet sales higher than 1.5 percent of that sector’s total sales. Internet-based sales accounted for 1.3 percent of total operating revenue in accommodation and food services; 1.0 percent in information and cultural industries; 0.8 percent in professional, scientific and technical services; and less than 0.5 percent in all other industrial sectors.

Canadian manufacturers received orders worth slightly more than $900 million on the Internet, about 22 percent of overall private sector Internet-based sales. This represented 0.2 percent of manufacturing shipments in 1999.

Retailers, who had Internet sales worth $610.6 million in 1999, and who accounted for 15 percent of total Internet sales, were in second place. This represented 0.2 percent of total retail sales in 1999, compared to the US, where retailers sold US $5.2 billion worth of goods and services on the Internet during the fourth quarter of 1999, according to the US Census Bureau. This represented 0.6 percent of total sales in the US retail sector for the fourth quarter of 1999.

Information and cultural industries accounted for 13 percent of all Internet based-sales in Canada in 1999; the accommodation and food service sector 10 percent; and professional, scientific, and technical services sector just under 10 percent. All the other industrial categories combined accounted for the remaining 30 percent of Internet-based sales.

While the proportion of Internet-based sales is low, the proportion of enterprises that offers goods and services over the Internet is significantly higher. Ten percent of private sector businesses reported that they used the Internet to sell goods and services in 1999. These enterprises constituted 17 percent of economic activity for the private sector, as measured by total operating revenue. Leading the way was the information and cultural industries sector, in which 20 percent of businesses used the Internet to sell goods and services. The information and cultural industries account for 3.1 percent of total operating revenue in the economy. This sector includes businesses involved in publishing, broadcasting, telecommunications, and information services, and data processing.

On average, a greater proportion of businesses used the Internet to buy goods and services rather than to sell. In the private sector, 14 percent of businesses used the Internet for purchasing; these firms accounted for 25 percent of total operating revenue. Again, ranking first was the information and cultural industries sector, where half of firms reported using the Internet to buy goods or services.

Three industrial sectors reported a significantly greater use of the Internet to sell than to purchase goods: accommodation and food services, administration and support services, and finance and insurance. This suggests that enterprises in the industries that are selling over the Internet have invested resources to facilitate Internet sales, or they have some clients or suppliers who prefer Internet transactions to traditional means.

Fifty-three percent of Canada’s private sector enterprises used the Internet in one form or another in 1999. These enterprises accounted for three-quarters of total operating revenue. As well, 53 percent used email, and 22 percent had a Web site. The enterprises with a Web site accounted for 45 percent of economic activity. This suggests that larger firms are more likely to have a Web site.

In contrast, more than 95 percent of institutions in the public sector used the Internet, including healthcare institutions, education services, and federal and provincial governments. About 97 percent used email and 69 percent had a Web site.

While 22 percent of private sector firms had a Web site in 1999, some sectors were more likely to have a Web presence. The information and cultural industries sector led the way, with 62 percent of enterprises. About 44 percent of firms in the private educational services sector had a Web site, including private elementary schools, private technical and trade schools, and language schools, followed by 32 percent of the manufacturing sector. In the public sector, 69 percent of institutions had a Web site. The public educational services sector led the way; 98 percent of institutions had a site. This sector includes public elementary and secondary schools, community colleges and universities. Eighty-eight percent of institutions in the public administration sector had a Web site.

Fifty-nine percent of employees in the public sector had access to the Internet in 1999, more than twice the proportion of 28 percent in the private sector. Among institutions in the public educational services sector, 90 percent of employees had access to the Internet, while in the federal and provincial governments, 82 percent of employees had access.

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