E-commerce: Household shopping on the Internet

Canadian households spent just over $2.4 billion shopping on the Internet, on everything from airplane tickets to books, according to the 2002 Household Internet Use Survey. This represents a 35% increase from $1.8 billion spent online in 2001, a growth rate that far exceeds the 4% increase in the number of households that accessed the Internet from any location in 2002.

An estimated 2.8 million Canadian households actively participated in e-commerce in 2002, up from 2.2 million in 2001. These households accessed the Internet from various locations, not just home. In total, they placed 16.6 million orders.

Direct comparisons with data for 2001 can be made, but not for previous years. The 2001 electronic commerce component of the HIUS was redesigned to capture Internet shopping from households that regularly used the Internet from various locations, solely for household purposes. Previously, household e-commerce data were collected only if the Internet shopping was conducted from home. This constituted a break in the data series.

Internet shopping only small fraction of total personal spending

The $2.4 billion in orders placed over the Internet represents only a tiny fraction of the $656 billion in total personal expenditure in Canada last year. However, the new figures confirm that households are increasingly using the Internet as a method of purchasing products from Canadian and foreign vendors.

For every $10 spent by households on Internet purchases in 2002, $6.36 was spent on Canadian websites. In 2002, Canadians spent $884 million of their e-commerce dollars at non-Canadian websites.

The survey's electronic commerce component indicates that during the year an estimated 4.5 million households, or 37% of the total, were Internet shoppers. That is, they had at least one member who used the Internet to support purchasing decisions, either by window shopping or by placing online orders.

Of these 4.5 million households, an estimated 2.8 million, or 62%, went beyond window-shopping and placed orders online. About four out of five paid for their purchases online, similar to 2001.

About 1.7 million households reported that they used the Internet only to window-shop, virtually unchanged from 2001. This group browsed online catalogues to narrow their purchasing decisions, but did not place orders or make purchases online. They represented 14% of all Canadian households.

Of these window-shoppers, almost one-half indicated that they later made purchases directly from vendors, indicating that online catalogues are an effective means of obtaining walk-in or telephone orders.

Many households still reluctant about paying online

More Canadian households were paying for their goods and services online in 2002. However, data showed that many of them still had reservations about doing so.

More than three-quarters of the 2.3 million households that paid online indicated that they were concerned, or very concerned, about financial transactions conducted over the Internet. Still, the total number of households that paid online increased nearly half a million, or 28%, from 2001.

In fact, the proportion of households that paid for their Internet orders online rose from 15% in 2001 to nearly 19% in 2002.

Books, magazines still most popular purchase

Reading materials such as books, magazines and newspapers were still the most popular online purchases in 2002. About 27% of e-commerce households reported purchasing these items, virtually unchanged from 2001.

However, consumers are increasingly using the Internet to make travel arrangements. In 2002, it became the second most popular item ordered online, taking over from clothing, jewelry and accessories, which slipped to third place.

In 2002, 18% of households reported making travel arrangements over the Internet, up from 16% in 2001. More than half a million households did so in 2002, up 39% from 2001.

Clothing, jewelry and accessories captured the attention of just under 18% of e-commerce households, followed by computer hardware at 14%.

The number of households that ordered music online remained unchanged from 2001.

Ontario accounted for majority of increased e-commerce spending

On average, e-commerce households spent $876 annually online, with an average dollar value per order of $146 in 2002. The average expenditure per household and the average dollar value per order were above the national average for all provinces west of Quebec.

Households in Ontario accounted for the lion's share of the increase in e-commerce spending in 2002. They represented nearly one-half (49%) of the $2.4 billion total in e-commerce spending in 2002, up from 47% in 2001. They also placed nearly one-half of all orders made online.

Households in British Columbia were Canada's second largest market for electronic commerce. They spent about $424 million on Internet purchases, almost 18% of the national total.

Definitions, data sources and methods: survey number 4432.

Additional data tables related to the information presented in this series are available online. From the Our products and services page, under Browse our Internet publications, choose Free, then Communications, then Internet use in Canada.

The 2002 Household Internet Use Survey conducted in January 2003, for January to December 2002 (56M0002XCB, $2,140) is now available on CD-ROM. The survey provides information on the use of the Internet by Canadian households within the 10 provinces. This is the sixth cross-sectional microdata file to be released in the series beginning with the Household Internet Use Survey for 1997.

For more information, or to enquire about the concepts, methods or data quality of this release, contact Jonathan Ellison (613-951-5882; fax: 613-951-9920; jonathan.ellison@statcan.gc.ca), Science, Innovation, and Electronic Information Division.