National broadband strategy would benefit Canadian Etailers and consumers

  • National Newswatch

According to AmeriCommerce, an online marketer of website software, ecommerce has become a $220 billion industry in the U.S. and is growing at almost 20 per cent annually. In Canada, Forrester Research has estimated the value of orders at $21 billion in 2013 and is predicting that sales will climb to $34 billion by 2018.This growth on both sides of the border is attributed mainly to advances in technology that is enabling consumers to find and buy products online faster, to use more payment options and to conduct foreign currency transactions with ease. Simultaneously, technology is empowering merchants to sell online with greater security and less effort.Although Canadian ecommerce is growing, businesses are investing less, on average, than merchants in the United States. When Industry Canada released its “Pursuing the Promise” report in Canada in 2012, it depicted Canadian ecommerce in a way that was not a surprise to most Canadians – Canadian businesses are not doing as much online as their American counterparts. Canadians' weaker activity has been attributed to lack of capital and technical resources, high shipping costs and customs issues. Moreover, access to the Internet has not been strongly supported by government policy or funding. Two years have passed since the Industry Canada report was released and Canada still does not have a broadband strategy.Canada's vast geography and sparse population means that insignficant returns on  investment accrue to carriers which build infrastructure in rural and remote areas. Rural areas also have lower rates of adoption due to socioeconòmic factors, which make it even more uneconomic for carriers. In 2010, MTS Allstream told the CRTC it would cost $7 billion to bridge the urban/rural digital divide. Canada's expansive geography and low population, however, should not be seen as an insurmountable hurdle. Other countries with similar characteristics have risen to the challenge. For example, Australia faces a similar divide between urban and rural populations, but spent $43 billion to connect the country digitally. China, a country with an even greater urban/rural differences has announced plans for national broadband coverage by 2020. It should be noted that all G7 countries, except Canada, have such a national broadband plan in place.Lower online activity cannot solely be attributed to less investment by businesses. Private sector reports reveal that a smaller portion of Canadians are enamoured with online shopping than Americans. Research firm e-Marketer forecast that in 2014 only 54.4 percent of Canadians will buy something online compared to 62.5 percent of Americans. This report also noted that Canadians tended to be digital browsers rather than buyers.In addition to the shortcomings of government policy in Canada, the challenges of geography   and the lukewarm reception of consumers, potential online shoppers are still concerned about security issues. At a time when major retailers such as Target, Home Depot and Apple have all experienced major security breaches, many people are still reluctant to provide their personal and credit card information.Given these circumstances, the growth of Canadian businesses' ecommerce offerings and those companies that provide payment platforms for these businesses has been hampered. An exception is Canadian-managed Optimal Payments, which successfully provides online payment platforms for well known and established Canadian retailers such as Rona as well as emerging Canadian online retailers (Etailers) such as Beyond the Rack. Expanding from a standing start to more than $100 million in sales, Beyond the Rack was recently recognized as North America's fastest growing Etailer. Last year, another Canadian Etailer, Mackage, implemented a fully-integrated payment and fraud management solution. Mackage has since increased its revenues and provided its customers with an enhanced checkout experience.The success of Beyond the Rack, Mackage and Optimal Payments is evidence that Canadians can be successful in the ecommerce world and, in fact, can offer some of the best digital payment technology in the world.  It is clear, however, that all Canadian etailers and consumers would benefit from the development and implementation of a national broadband strategy.Beverly Brooks is a communications expert and an economist who has advised federal government Ministers and senior executives of major private sector companies on financial transactions in various sectors including energy, manufacturing, mining, health care, biotechnology, telecommunications and financial services. As a Senior Associate of Zenergy Communications, she provides communications advice to Optimal Payments. She has a Masters of Arts (Economics) and a Masters of Business Administration.