Canada: The Online Enigma: eMarketer

December 06, 2004

A new eMarketer report explores the question why Canada is a world-leader in Internet connectivity, but a laggard when it comes to e-commerce.

Canada is among the top countries worldwide in Internet usage and broadband adoption rates. What’s more, Canada is a leader in Internet services such as online banking, in which a significantly higher percentage of Canadians than Americans do some of their banking online. So it is hard to believe that according to eMarketer’s new report, Consumer E-Commerce in Canada the country’s enthusiasm for the Internet has not translated into e-commerce leadership.

In fact, last year Canadians spent only $3 billion shopping online, less than 1% of the $688 billion in total personal spending for the year.

PricewaterhouseCoopers notes that Canada is the only country where broadband overtook dial-up access in 2003. That year, eMarketer ranked Canada fourth worldwide in terms of broadband households as a percentage of total households. The US held the tenth position with a 22.5% penetration rate.

This year, eMarketer estimates that 5.2 million Canadian households will have a broadband connection, accounting for 66% of online households.

By 2007, 81% of the online households in Canada will have a broadband connection, and that translates to 58.6% of all households.

Since conventional wisdom holds that an Internet broadband connection is an enabler of online buying � because with a dial-up connection, pages load slower and transactions take more time to complete � what gives? According to eMarketer estimates, this year only 8.4 million Canadian consumers will buy goods over the Internet.

Why are Canadian consumers so hot for broadband � and the Internet � and so cool to shopping and buying online?

“There is no single source to the problem,” says Jeffrey Grau, eMarketer Senior Analyst and author of the report, “and no single solution.”

Explaining, he continues. “Canadian consumers have been overly cautious in their online purchasing habits. Retailers have been slow to invest in Internet technology. And, finally, the government has been complacent about introducing strategic initiatives that could stimulate Canada’s e-commerce economy. Firing up the Canadian e-commerce engine will require a coordinated three-pronged effort by the federal government, the business community and higher educational institutions.”

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