As more consumers across the country go online for their shopping needs, most Canadian businesses are failing to take advantage of the e-commerce boom, a new report says.
The Business Development Bank of Canada (BDC) report, released Tuesday, surveyed 1,485 business owners of small and medium-sized enterprises (SMEs) about their online business strategies. While most (78 per cent) of the business owners reported having an online presence that provided information about the company, less than half are selling, receiving, or taking orders online.
At the same time, the survey found that entrepreneurs that focused their strategy on pursuing growth online were more likely to post higher revenues and profit growth. According to the report, businesses that focused on online growth were 1.5 times more likely to have higher profit growth, 1.7 times more likely to have higher sales growth, and 2.8 times more likely to serve international markets.
“Too many Canadian businesses are invisible to national and global customers who shop online,” the report said.
“This is worrisome because Canadian businesses without a strong online presence could risk being shut out of global growth, leaving money up for grabs by online competitors.”
Pierre Cléroux, vice president of research and chief economist at BDC, said in an interview with Yahoo Finance Canada that Canadian businesses are failing to take advantage of the significant opportunity that comes with e-commerce, and stand to lose out on potential profits to international competitors.
“This is dangerous for businesses, because more and more people are buying things online,” Cléroux said.
“We believe that the amount of Canadians that are going to shop online is just going to increase year after year, especially with the younger generation that is much more tech savvy and...becoming a more important part of the retail market.”
Statistics Canada data also shows that Canadian small and medium-sized businesses lag behind their global counterparts when it comes to e-commerce.
The survey also found that one of the biggest challenges that businesses encounter when seeking growth online is cybersecurity. Of the businesses surveyed, 32 per cent said data protection and security was a top concern, followed by a lack of knowledge about internet technologies (25 per cent), hiring and retaining qualified personnel (24 per cent) and adapting a website and brand to meet demands of different markets (20 per cent).
‘There is value in having an online presence’
When Toni Desrosiers decided to take the company that she founded online in 2010, the payoff wasn’t immediate. Desrosiers says in the early days of Abeego, which produces and sells sustainable beeswax food wraps, the website wasn’t generating a profit.
“However, there is a value in having an online presence in the early days,” Desrosiers said. “Retailers were finding us, different shows were learning about us, the (public relations) we were getting was all a result of having an online presence.”
Desrosiers saw sales explode a few years later after more competitors began entering the space. Over the last three years, online sales have more than doubled each year. Today, Canada and the United States represent the majority of Abeego’s online sales. Desrosiers says she has future plans to expand online sales to other markets, including Hong Kong and Europe.
“I think people are underestimating the benefits of going online,” Cléroux said.
“They see the complexity of it, but don’t necessarily see that .. the revenue growth is much greater, the profit growth is much greater, and the ability to export outside the country is much greater.”