Subjects: SVY, SBS
E-commerce increases profitability, accelerates growth and brings resilience in times of crisis: BDC study
Despite global online sales reaching $39 trillion by 2023, Canadian entrepreneurs are still slow to seize e-commerce opportunities
Key findings:
- 46% of SMEs plan to sell online after the COVID-19 crisis, compared to 43% at the beginning of the crisis. Less than 25% will prioritize e-commerce in the next year and only 15% of business owners believe that online sales will increase significantly in their sector over the next three years. Yet, 8 out of 10 Canadians having purchased online for the first time during the pandemic have said they will continue doing so moving forward.
- Businesses that conduct over 50% of their sales online outperformed others during the lockdown period. In fact, 39% maintained or increased their revenues compared to less engaged businesses (16%).
- E-commerce isn't just for retailers. While retailers generate the highest portion of sales from e-commerce (68%), businesses in most other sectors also rely heavily on online revenues, including tourism (57%), technology, information and communications (52%) and manufacturing (47%).
MONTREAL, Nov. 25, 2020 /CNW Telbec/ - Although e-commerce has exploded since the COVID-19 pandemic and nearly 85% of consumers now buy online, only 46% of Canadian entrepreneurs plan to sell virtually after the health crisis, according to a new BDC study titled, "Profit from e-commerce: How to compete in the online marketplace." The study addresses common e-commerce challenges and how to overcome them to help businesses succeed online.
E-commerce was exploding before the pandemic. According to Statistics Canada, retail sales in Canada nearly tripled between 2012 ($8.3 billon) and 2018 ($22.1 billion). The health crisis has accelerated the staggering growth in online sales and job creation. During the first four months of the pandemic, e-commerce sales exceeded those of the 2019 holiday season. Selling online has now become even more essential for Canadian businesses. It is creating new opportunities for business growth and boosting resilience.
"We know that businesses already selling online have fared better during the crisis than others. E-commerce is bringing opportunities for companies of every size and sector", says Pierre Cléroux, Vice President, Research and Chief Economist at BDC. "However, very few business owners believe online sales will increase in the next three years. This means they are not seeing e-commerce opportunities, nor are they preparing for them. Online success requires a strategic approach suited to the realities of your business."
Entrepreneurs most commonly cite the difficulty of providing a good customer experience (46%), developing the right skills (33%) and ensuring profitability (31%) as top cybercommerce challenges.
Careful planning and online marketing are the keys to success. The study offers solutions and a roadmap for getting started or taking existing online sales to the next level. The roadmap includes the following five steps to maximize e-commerce returns:
- Understand online sales in your sector, by observing the actions of market leaders and your direct competitors to understand their positioning and best practices.
- Get to know your customers and their online preferences. Identify key customers and get to know them better. What do they buy online? How do they behave on the web? Go further to understand what makes them unique.
- Review your relationships with business partners and your business model. How will the online sales initiative affect the business relationships with various partners? Develop a business model that will be competitive on the web.
- Develop new skills internally. Managers and employees will have to acquire skills in transactional website management, digital marketing and delivery and logistics.
- Define sales objectives and optimize efforts. Prepare three-year financial projections to establish the profitability of the online sales project and set financial goals. Continuously take advantage of the data collected on customers' habits.
The statistics presented in the study are based on a BDC survey conducted in June 2020 among 1,000 owners or decision-makers of Canadian small and medium-sized businesses, as well as data from Statistics Canada, Léger and Forrester.
About BDC
BDC is the bank for Canadian entrepreneurs. It provides access to financing, as well as advisory services to help Canadian businesses grow and succeed. Its investment arm, BDC Capital, offers a wide range of risk capital solutions. For more than 75 years, BDC's only purpose has been to support entrepreneurs in all industries and at all stages of growth. For more information and to consult more than 1,000 free tools, articles and entrepreneurs' stories, visit bdc.ca.
SOURCE Business Development Bank of Canada
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