Dear Canadian businesses: time to get it together on Internet commerce

Consumers are leaving Canadian businesses in the dust

Interior of a Google data centre


A report released last week made two facts painfully clear about Canada:

1.) We love the Internet.
2.) Our businesses do not.

Canadians rank number one on the globe in terms of number of webpages visited each month and have the most social network users in the world on a per capita basis, according to a white paper produced by the Internet Association, a trade group composed of 40 tech giants like Google, Facebook and Etsy. Further, 93% of Canadians research products online before buying and more than half use the web to actually purchase goods or services. Despite these high adoption rates, the digital market is still growing. Canadians purchased $122 billion worth of goods online in 2012, doubling the amount from five years earlier. In stat after stat, the report casts Canada as a nation of early adopters.

And yet. Only 46% of Canadian businesses have a website, with the number falling to 41% among small and medium sized enterprises. Even worse, 3% of our retail economy takes place online—less than half of the United States and one-eighth of the levels in the United Kingdom. Between 2004 and 2009, the Internet contributed 10% to the country’s GDP growth, far lower than the average of 21% across other industrialized countries.

The wide gulf between consumer activity and business strategy in Canada is depressing. The Internet Association paper notes “there is no easy explanation” for why Canadian businesses don’t invest in digital technologies, but suggests part of the problem is a lack of capital for both start-ups and businesses looking to upgrade. Dithering on the part of policymakers on a cohesive digital strategy by federal politicians didn’t help either, the Internet Association suggests. Indeed, a press released issued in November 2010 promised then-Industry Minister Tony Clement would unveil a strategy by spring of the following year. It did come in April—of 2014.

MORE: How Frank & Oak built one of Canada’s most exciting brands »

One possible cause for the digital gulf between consumers and companies that isn’t mentioned in the report is obliviousness. It’s entirely possible Canadian firms just don’t realize they’re lagging behind. This has been the case in other, related areas. A 2013 Deloitte study found one-third of business executives and owners felt they were spending equal to or more than their peers on R&D, when actually they were spending far less. It’s hard to believe, but some companies look at stagnation and see innovation instead.

The best incentive for companies to embrace digital economy is, well, money. A McKinsey study found small businesses that embraced the Internet brought in twice as much money from exports compared with their peers, while 2.6 jobs were created for every one lost due to Internet-related efficiencies.

MORE: Unexpected demand turned this company into an exporter on the fly »

The business case for developing a digital strategy is clear. Which makes some of the proposals contained in the Internet Association report seem misguided. Their call to reduce barriers to foreign investment is welcome, as is the notion that governments need to “lead by example” by moving more of their own services online. But a call for a “Digital Renovation Tax Credit,” which would subsidize the creation of advertising online or construction of a website, is ludicrous. That’s not like paying a child to eat their broccoli—it’s like paying them to eat a chocolate bar.

Governments shouldn’t pay companies to do something that will make their lives easier and hike their revenue. If incentives are required, they should come from the businesses that benefit directly from the growing digital economy. Examples of this already exist. Through its “Get Your Business Online” program, Google lets any small business build a website for free. Shopify runs an annual “Build a Business” contest. Both firms benefit from a robust digital economy. Canada shouldn’t pay businesses to get online. Companies need to heed the ample evidence and existing support and do it for themselves.

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8 comments on “Dear Canadian businesses: time to get it together on Internet commerce

  1. We are in a globalized digital economy where our competition isn’t in the same city or country. Boundaries have pretty much disappeared and those companies that take advantage of the digital world will have a significant competitive advantage to those that do not. “…time to get it together…” is right.

  2. Great story, but the Google site you linked doesn’t serve Canadian businesses for free. Poetic irony?

  3. Great articlet, James. We assist companies in develooping their online presence (including websites), and even we were floored at how few Canadian businesses even have a website.

    Our experience has certainly shown that creating, or improving, a strong and strategic online presence directly pushes sales. It can also have many other positive effects, such as improve processes (ordering, nventory, accounting, etc.), bolster employee morale (with active social media accounts and creating pride in the organization), solididy existing relationships with consumers and suppliers, and strenghen band and awareness.

    I think you’re right that many business leaders are simply oblivious to the benefits and need for embracing the Internet. Hopefully Canadian manufacturers wake up, before the Canadian population turns other online sources.

  4. Yes, businesses have to keep up with the global economy but that doesn’t necessarily follow that they have to be big into digital. I like to think that they, like their customers do not need to be in a digital world to be successful. Websites are time consuming to create, maintain and expensive to operate. As a customer I don’t find them very effective either. Ordering anything on line is time consuming and tedious. Would much rather have a place to GO to and to see what I am getting rather than to have to rely on something on a web that may or may not be true and reliable information.

  5. I’d personally personally favor Google. Both FB and Google would benefit from it, but we would most likely benefit more from Google taking it over. In the case of Google+ it is just a matter of time. Facebook was lucky it didn’t truly really need to compete with something as “good” as facebook, the competition was just lacking a lot of features as well as a global approach.Google+ is outstanding to Facebook, but it surely has a bigger challenge to have popular.Just take a look at VHS and Betamax. Betamax was better but lost due to bad marketing/licensing.Danny recently posted..Black & Decker NPP2018 18-Volt Cordless Electric Pole Chain Saw

  6. My heart broke when they zoomed in on Nando’s face at the beginning in the match. He looked so sad. I honestly thought he’d come in after the 70th minute or so. I’d like for him to see some action in Munich.