What is this metric and why is it important?
E-commerce is a key innovation that allows firms to reach more customers, and customers to access a wider variety and quality of goods and services. Its adoption is an indicator of a firm’s willingness to embrace new technology and innovations. We measure it here as the percentage of firms receiving orders over computer networks.
How is Canada doing?
- In 2017, 18.5% of Canadian firms reported taking orders over computer networks.
- Canada’s e-commerce rate is below the OECD average of 23%, and far behind leading countries New Zealand (50%) and Australia (46%).
- 16.5% of small Canadian firms reported taking orders online, versus 21% of small firms in the OECD overall.
- Although large firms in Canada (29%) are more likely than small firms (16.5%) to report taking orders online, Canada’s large firms are further behind large firms in the OECD generally (44%) and leading countries Slovenia (62%) and Ireland (62%).
E-commerce allows firms to reach more customers, and customers to access a wider variety and quality of goods and services, than was possible when brick-and-mortar stores were the only means by which to sell goods and services. Online buying and selling has become increasingly sophisticated in order to keep up with large and rising volumes of transactions and has enabled a number of businesses to grow much faster and larger than would have been possible in a pre-digital environment.
Firms and economies that are more engaged in e-commerce position themselves to take advantage of larger markets by eliminating the physical limitations of people and firms connecting. To be sure, robust supply and delivery chains are necessary to fulfill online orders. But the ability to take orders online is both a reflection of past innovation and an enabler of future innovation across a wide variety of sectors. Moreover, a case can be made that e-commerce is beneficial not only to consumers generally—allowing them to order and receive a wider variety of goods—but especially for people with disabilities whose access to brick-and-mortar retail may be more limited due to transportation and other issues.