Canadian Firms Seeing Benefits of B2B E-Commerce

Online business trade in Canada is expected to reach $272 billion (Canadian) in 2005, according to Forrester Research, accounting for 18 percent of all business-to-business transactions.

On a provincial basis, Ontario and Quebec will emerge as online leaders, according to Forrester’s report “Canada’s B2B Future.” In 2005, more than 92 percent of Canada’s online B2B trade will occur in the provinces of Ontario, Quebec, Alberta, and British Columbia.

“Although only 16 percent of Canadian companies have a clear B2B strategy, they will increasingly recognize the benefits if the Net and come to depend on it to plan, source, distribute, and sell products over the next five years,” said James Sharp, Forrester analyst. “Ontario and Quebec will take the lead in online business trade, accounting for C$193 billion of the total C$272 billion in 2005.”

Each Canadian province will be led by certain industries toward more widespread adoption of B2B trade. Second only to Michigan in North American automotive manufacturing, Ontario will see C$69 billion of motor vehicle trade shift online by 2005. Twenty-nine percent of Quebec’s total online B2B trade will come courtesy of its computing and electronics supply chains. Alberta’s online petrochemical trade will hit C$23 billion by 2005, and the rapid adoption of online B2B trade by electronics and automotive firms will account for 45 percent of British Columbia’s 2005 online B2B trade.

Canadian online business trade growth will vary across industries, dominated by automotive and petrochemicals. Thanks to tight links with the U.S. auto industry, Canada’s automotive supply chain will sell C$91 billion online, with petrochemicals generating C$46 billion. By 2005, 40 percent of Canadian computing and electronics trade will go online, followed by maintenance, repair, and operations (MRO) supply chains, which will account for 24 percent of trade in paper and office products. Shipping and warehousing firms will help drive C$13 billion in online trade by 2005, while food and agriculture face slow adoption with only C$12 billion.

“By 2005, transacting business online will feel as natural as picking up the phone to call a supplier or hopping into a cab to visit a customer,” said Stuart Woodring, vice president, research for emerging Internet economies at Forrester. “Astute Canadian executives will recognize the need for a scalable, nonstop e-business infrastructure, as well as the need to react to the unrelenting change pervasive in today’s dynamic Internet economy.”

For its report, Forrester interviewed 50 Canadian executives about B2B e-commerce and analyzed the 13 industrial supply chains that make up the overall Canadian B2B market.

eMarketer’seCommerce: B2B Report” predicts that worldwide B2B e-commerce will grow to $2.7 trillion, an increase from the $226 billion reported at the end of 2000.

As a priority, most companies are planning to use the Internet to strengthen ties with their customers, but supply chain management and the improvement of relationships with key suppliers were also among the top priorities for large corporations’ e-commerce strategies. According to eMarketer, most businesses were still considering plans to participate in either public or private Internet exchanges, with several companies planning to do both.

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