It has become fashionable these days to view the online market as a wreck. News about the demise of this or that online superstar have dominated the financial pages the last two quarters. And the online retailers that are still hanging in are having to deal with the reality of share prices that have dropped by as much as 98 per cent from their heady days in the late 90s.

The Internet naysayers, of course, have been quick to say “I told you so.” But carriers would be wise not to abandon their plans for addressing the needs of shippers looking to the Internet as a viable sales channel. I think those plans will still prove essential to future growth. As an article in a recent issue of The Economist noted, just as you should never confuse a bull market (which the dot.coms enjoyed till their bubble burst about a year ago) with brilliance, you should also never confuse a bear market with idiocy. The carnage among the dot.coms in recent months is not an indication of a failed experiment in creating a new type of company but rather a natural maturing of an industry that was carrying far too many naive entrepreneurs.

I poured over some of the results from Statistics Canada’s Survey of Electronic Commerce and Technology, 2000 before writing this column. The comprehensive survey (the sample size was about 21,000 businesses) found that the number of businesses selling online is actually going down. Only six per cent of businesses reported selling goods and services online in 2000, down from 10 per cent in 1999. The survey also found that among the businesses that responded in both 1999 and 2000, for every two that started selling over the Internet in 2000, five stopped doing so.

But the survey served a few more choice morsels of e-commerce statistics that are worth digesting. It found that the total value of private sector sales over the Internet, with or without on-line payment, rose dramatically in 2000. Canadian businesses received $7.2 billion in customer orders over the Internet in 2000, up 73.4 per cent from $4.2 billion in 1999.

Large businesses in particular have embraced the Internet as a sales channel. In 2000, 31 per cent of businesses with more than 500 employees sold goods or services over the Internet and they accounted for 43 per cent of the sales volume.

And corporate Canada’s appetite for buying on the Internet is also increasing. Eighteen per cent of firms bought goods or services over the Internet in 2000, up from 14 per cent in 1999.

Perhaps more important than the sales growth statistics is the continuing expansion of the online infrastructure in Canada. According to the Statistics Canada survey, 63 per cent of businesses used the Internet in 2000, up from 53 per cent in 1999. And the proportion of businesses using the Internet advanced in almost all industry sectors. Of the businesses that used the Internet in 2000, 43 per cent did so to access databases of suppliers, 23 per cent did so for education and training, and 16 per cent did so to access databases of customers. In addition, a higher proportion of enterprises had a website in 2000: 25 per cent, compared to 22 per cent in 1999.

All the numbers point to one, I believe, unarguable fact: The e-commerce model of conducting business may not replace all face-to-face selling but it will offer companies another sales channel. If your shipper customers aren’t leveraging this channel yet they probably will be within the next few years. And you will need to understand the consequences of such a move and be ready to adjust your operation to meet shippers’ new needs.-

Lou Smyrlis

Editor

lsmyrlis@corporate. southam.ca