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The Daily

Thursday, April 24, 2008

Online sales increased at a double-digit pace for the sixth consecutive year in 2007. Total private and public sector Internet sales hit an estimated $62.7 billion, up 26% from 2006.

Despite the continued strong growth, e-commerce still represents a relatively small fraction of total economic activity. In 2007, online sales of private sector firms accounted for just under 2% of total operating revenue, although this was still an increase from less than 1% five years earlier.

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While online sales increased, the proportion of private sector companies that sold goods and services online remained stable at about 8%. In the public sector, some 16% of organizations reported e-commerce sales.

Private sector businesses dominate online sales

Private sector businesses dominated online sales in 2007. E-commerce by private sector firms increased 25% to $58.2 billion, while public sector e-commerce rose 30% to almost $4.5 billion.

Note to readers

The 2007 Survey of Electronic Commerce and Technology covered over 19,000 enterprises across the economy, except for local governments. The enterprise is the organizational unit of a business that directs and controls the resources relating to its domestic organization. Internet transactions that occur between two companies or establishments within the same enterprise are therefore excluded.

The sample was stratified at the two digit or sector level of the North American Industry Classification System (NAICS, 2007) and by employment size category. For analytical purposes, enterprises are classified as either private sector firms or public sector organizations.

Electronic commerce is defined as sales over the Internet, with or without online payment. Included is the value of orders received where the commitment to purchase is made via the Internet. Sales using electronic data interchange over proprietary networks and transactions conducted on automatic teller machines are excluded.

The value of financial instruments transacted on the Internet such as loans and stocks are not considered e-commerce sales, but the service charges received for conducting these transactions over the Internet are included.

CANSIM table 358-0010, "Enterprises that sell over the Internet," has been revised for 2006, based on more accurate information received for the 2007 reference year.

In the private sector, business-to-business sales accounted for 62% of online sales in 2007, down from 68% in 2006. The proportion of online business-to-consumer sales climbed from 32% to 38%.

It is estimated that customers outside Canada generated almost one out of every five dollars (19%) in online sales in the private sector, similar to the last two years.

Enterprises more likely to purchase than to sell online

Firms remained more likely in 2007 to purchase than to sell goods and services online, with just under one-half (48%) of private sector firms purchasing goods and services online compared with only 8% selling online.

The proportion of private sector firms purchasing goods and services online has been increasing steadily since this survey began, while the proportion of firms selling online has remained stable.

In 2007, an estimated 82% of public sector organizations made purchases online, compared with 16% who reported selling online.

Selling or purchasing over the Internet
  2003 2004 2005 2006 2007
  % of enterprises that use the Internet to sell or purchase
Sale of goods or services online          
Private sector 7 7 7 8 8
Public sector 17 14 15 16 16
Purchase of goods or services online          
Private sector 37 42 43 45 48
Public sector 68 77 82 80 82

Among sectors, prevalence of online sales differs from value of online sales

Public organizations in the education services sector reported the highest prevalence of online sales, at almost 39%. As well, just over one-quarter (27%) of firms in the information and cultural industries sector, and 24% of firms in the arts, entertainment and recreational industries sector sold goods or services online.

Four sectors continued to account for the majority of the value of online sales: wholesale trade (17%), transportation and warehousing (16%), manufacturing (15%) and retail trade (10%).

The proportion of online business-to-business sales and online business-to-consumer sales also varied by sector. Firms in the retail trade, accommodation and food services, educational services, and arts, entertainment and recreational sectors sold mainly to consumers.

Wireless popularity increasing among information and communications technologies

Over three-quarters (77%) of private sector firms reported using wireless communications in 2007, up from 51% just seven years earlier, when this survey began.

Information and communications technologies commonly used in the private sector include Internet and e-mail. About 87% of private sector firms used the Internet in 2007, up slightly from 2006, while 81% used e-mail. However, less than half (41%) of private sector firms reported having a website.

Although a website facilitates online sales, it also supports off-line sales by providing information about goods and services. Information provision was the most common website function reported by private sector firms.

Use of information and communications technologies (ICTs)
  2003 2004 2005 2006 2007
  % of enterprises that reported using ICTs
Private sector 74 77 76 78 81
Public sector 100 100 100 100 100
Wireless communications          
Private sector 57 57 60 74 77
Public sector 74 77 82 91 91
Private sector 78 82 82 83 87
Public sector 100 100 100 100 100
Having a website          
Private sector 34 37 38 40 41
Public sector 93 92 95 94 93

Internet benefit: Improved coordination between suppliers and customers

In the private sector, over one-third (36%) of firms reported using Internet-based systems during 2007 to better coordinate with their suppliers and customers. Lowering costs and reaching new customers were also commonly reported benefits of conducting business over the Internet.

Better coordination was also most commonly reported by the public sector (59%). Almost one-half (48%) of public sector organizations also reported cost reduction as a potential benefit.

Perceived benefits of enterprises conducting business over the Internet
  2003 2004 2005 2006 2007
  % of enterprises reporting perceived benefits of conducting business over the Internet
Lower costs          
Private sector 26 26 26 27 30
Public sector 50 43 44 46 48
Reaching new customers          
Private sector 33 32 31 36 36
Public sector 35 30 35 42 46
Better coordination with suppliers, customers or partners          
Private sector 21 29 31 35 36
Public sector 36 39 49 51 59
Reduced time to market          
Private sector 17 18 19 20 19
Public sector 26 20 22 22 20
No benefits          
Private sector 11 11 11 8 10
Public sector 4 3 3 4 2

"Open source" software rising in popularity

"Open source" software is rising in popularity, according to survey data. Open source software is software for which the underlying source code is readily available for modification by any interested person or firm.

In 2007, an estimated 17% of private sector firms reported using open source software, up from about 10% just two years earlier, when this practice was first measured.

As in previous years, about one-half of organizations in the public sector reported using open source software in 2007.

An advantage of open source software is flexibility, allowing users to customize or modify the software to their specific needs. In 2007, 3% of private firms and 13% of public organizations reported customizing open source software.

Available on CANSIM: tables 358-0007 to 358-0011, 358-0015, 358-0016, 358-0121 and 358-0139.

Definitions, data sources and methods: survey number 4225.

For more information, or to enquire about the concepts, methods or data quality of this release, contact Sylvain Ouellet (613-951-2779; or Mark Fakhri (613-951-6285;, Science, Innovation and Electronic Information Division.