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CANADA CREATES E-COMMERCE CLIMATE

Posted on November 27, 2002

      Canada has the potential for high e-commerce growth but e-tailers and consumers aren't taking full advantage of the environment, according to research.

      A Booz Allen Hamilton study identifies Canada as one of the nations with the best environment for e-commerce, yet an NFO Cfgroup report found that roughly 40 percent of Canadian Internet users abandoned at least one virtual shopping cart on a Canadian retail Web site.

      According to Booz Allen Hamilton, Canada has emerged as a leader in government policies and other key factors that combine to create the optimal e-commerce landscape.

      "A supportive environment is the single most critical factor for a successful e-economy," said said Booz Allen Vice President Barrie Berg. "It is the foundation for all other aspects of the e-economy. This includes a country's regulatory system, political leadership, and communications infrastructure."

      The nation strives to integrate computer training into the educational process, while also stimulating investment in the e-economy. Furthermore, the price of Internet access is regulated and the population is involved with the e-economy, combining high levels of readiness with high uptake and emerging impact.

      A total of $2 billion spent by Canadians in the first half of 2002 comes as a result of the e-commerce environment but high shipping fees account for 17 percent of the online transactions that aren't completed.

      "With six-in-ten online Canadians believing that the shipping fees they pay are inflated, it would seem that shipping charges are an irritant for a number of online shoppers. Perhaps they believe that e-tailers have lower operating costs than their offline counterparts, and so should be able to absorb shipping fees into the product cost," said David Stark, public affairs director of NFO CFgroup.

      Other abandonment factors include browsing or comparison-shopping, poorly designed Web sites and privacy concerns.

      Despite the incomplete transaction rate, Ipsos-Reid noticed a slight increase in planned online spending among Canadian Internet users this year -- an average of $320 compared to 2001's $297 -- totaling $1.1 billion dollars when the 2002 holiday shopping season concludes.

      Of the 72 percent of Canadian adults with Internet access, 43 percent have made at least one online purchase, compared to the 62 percent of American Internet users who have shopped online.

      Chris Ferneyhough, vice president of Technology Research at Ipsos-Reid, comments on the ratio: "We are certainly not as geared up about online shopping as Americans are. But with each passing year we find more and more Canadians who have waited on the sidelines start to join in, and those who have already bought online look to buy more. However, there are still a significant number of Canadians who for one reason or anther, are not interested in online shopping."

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