SPECIAL REPORT: Online sales show strong gains in 2002

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OTTAWA, Ont. — Combined private and public sector online sales posted another strong gain in 2002, rising 27.2% from 2001 to $13.7 billion after an increase of 46.0% in 2001, a Statistics Canada report indicates.

However, e-commerce sales still accounted for only a small fraction of total operating revenues.

The proportion of private sector businesses selling goods and services online rose marginally from 6.7% in 2001 to 7.5 % in 2002, according to the Survey of Electronic Commerce and Technology. Yet, the value of online orders rose 28.4% from 2001 to $13.3 billion in 2002. This follows an increase of 84.1% in online sales in 2001.

Despite the overall growth, e-commerce sales still accounted for only 0.6% of total private sector operating revenue in 2002, up from 0.5% in 2001 and from 0.2% in 1999.

Electronic business is concentrated in large firms. The 7.5% of businesses that reported selling goods and services online in 2002 accounted for nearly 30% of gross business income in Canada.

The e-commerce market remains volatile. Among the businesses that responded to the survey in both 2001 and 2002, 43% of those that sold online in 2001 stopped selling in 2002. In 2002, seven firms stopped selling over the Internet for every 10 that started.

For the second straight year, the value of e-commerce sales was highest in wholesale trade, followed by manufacturing, transportation and warehousing, and retail trade. Combined, these industries accounted for 70% of all Internet sales in 2002.

Wholesalers sold $3.7 billion worth of goods and services over the Internet in 2002, up 93% from 2001. This level represented 1.1% of their total operating revenue. Nearly all (94%) of the e-commerce sales by wholesalers were direct to businesses; only 9% went outside the country.

Manufacturers sold $2.0 billion worth of goods and services over the Internet, up 16.5%. This represented 0.3% of their operating revenue. More than 95% of these sales were to other businesses, and 26% went outside Canada.

Retailers attracted $1.7 billion in online sales in 2002, up 16%. Internet sales represented only 0.5% of their operating revenue, down from 0.6% in 2001.

Large businesses are still the big players in electronic commerce. Enterprises with more than 500 employees were responsible for 41% of sales over the Internet, up slightly from 40% in 2001.

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