INDEPTH: INTERNET
E-commerce
CBC News Online | September 23, 2004
Shopping in the cybermall
More Canadians than ever use the internet to shop – although they haven't yet shaken their fear of making financial transactions online.
Canadian household spending on the internet grew 25 per cent in 2003, as consumers dropped $3 billion on everything from airplane tickets to books, Statistics Canada said in September 2004.
An estimated 3.2 million Canadian households bought something online in 2003, up from 2.8 million a year earlier, the agency said.
How Canadians use the internet to shop:
| % of Canadian households that used internet to window-shop or buy goods and services online |
| 2001 | 2002 | 2003 |
| Internet shopper (window-shopped or placed online orders) | 33 | 37 | 40 |
| Window-shopped only | 14 | 14 | 14 |
| Bought goods or services online | 19 | 23 | 26 |
| Paid online | 15 | 19 | 22 |
They purchased $3 billion in goods and services, compared to $2.5 billion in 2002 – but it was still just a tiny fraction of the $688 billion in annual personal spending.
That broke down to about $956 spent online per household, according to the 2003 Household Internet Use Survey from StatsCan.
"The new figures confirm that households are increasingly using the internet as a method of purchasing goods from both Canadian and foreign vendors," Statistics Canada said.
Another 1.7 million households used the web to window-shop.
Yet even as more Canadians used their credit cards online, StatsCan found they still worried about security despite laws passed to protect them.
Books, magazines, newspapers most popular
Books, magazines, newspapers and other reading materials remained the most popular online purchases in 2003, bought by just under a third of e-commerce households.
Travel ranked second on the shopping list: about 22 per cent arranged travel online.
Top items that Canadians bought online in 2003:
| % of online shoppers who bought this product or service |
| Books, magazines and newspapers | 30 |
| Travel arrangements | 22 |
| Clothing, jewelry and accessories | 17 |
| Computer software | 14 |
| Music (CDs, tapes, MP3) | 11 |
| Consumer electronics | 11 |
| Other entertainment, such as tickets | 10 |
| Videos, DVDs | 8 |
| Furniture and appliances | 7 |
| Computer hardware | 6 |
| Toys and games | 6 |
| Sports equipment | 6 |
| Health, beauty, vitamins | 5 |
| Hobbies | 5 |
The number of households buying consumer electronics, and videos and DVDs leapt most. About one in 10 households bought TVs, stereos and other consumer electronics online in 2003, roughly the same proportion that snapped up videos and DVDs.
More households ordered music online, but fewer people downloaded free tunes.
And about one in five households used the internet only to window-shop, especially for health and beauty products, consumer electronics and clothing.
Travel makes e-business fly
While StatsCan didn't say how much consumers spent on each type of purchase, an earlier analysis showed money poured fastest into the travel sector.
Canadians forked over $757 million online in the final quarter of 2003, up 20 per cent from $631 million in the same quarter a year earlier, comScore Networks said in May 2004.
Travel spending rose by half to $349 million – nearly half of total sales – but non-travel was almost flat, increasing just $5 million to $408 million, the consumer research company said.
People aged 18 to 34 drove the sales gain, followed by those over age 55, the researchers found.
Most of online purchases made domestically
Most of the online spending went toward domestic websites, StatsCan found.
For every $10 spent by Canadian households on internet purchases in 2003, $6.90 was spent within the country.
They spent almost a billion of their e-commerce dollars at foreign websites.
Security still worries most online consumers
Although more Canadians used their credit cards on the internet to buy goods and services in 2003, three-quarters of them expressed concern about security.
About one in five households – 2.7 million – paid online for purchases, but 76 per cent of them said they worried about financial transactions on the web, StatsCan said.
Canadian laws protect internet shoppers
Tips for shopping online:
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- Shop with companies you know and find out the company's physical location. If a website doesn't give the name, address and contact information, consider shopping elsewhere.
- Check for a privacy policy on its site. Find out how your information will be used and whether it will be shared with others. Give minimum information, as companies don't need your income, birth date or occupation.
- Look for seals of approval such as BBB On-line (the Better Business Bureau) or WebTrust (from the Canadian Institute of Chartered Accountants).
- Check to see if the merchant has a clear process for handling returns or complaints.
- Make sure shipping and handling charges are clearly stated, so you don't get an unpleasant surprise on your bill.
- Use a secure browser, which has the latest technology to encrypt or scramble purchase information.
- Don't send money until you see a contract and have signed it.
- Keep records of your online transactions and read your e-mail, in case merchants send you important information about the purchase.
- Review your credit card and bank account statements carefully every month to check for errors or unauthorized purchases.
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Yet they're protected in Canada by a number of laws.
The Uniform Electronic Commerce Act, or UECA, applies to all federally regulated industries. It served as a model for similar legislation enacted everywhere in Canada except Nunavut and the Northwest Territories.
The act confirms the validity of electronic documents, signatures and contracts. It makes companies disclose specific information to consumers and allows for the reversal of credit card charges under certain circumstances.
The act says for online contracts, the "I agree" button is binding once the individual clicks on it but consumers must first be allowed to review the terms of their contracts.
If people say a mistake was made or that they weren't given the opportunity to prevent or correct the error, the contract is not binding.
As well, the Personal Information Protection and Electronic Documents Act, revised in January 2004, regulates how personal information – including that collected in internet transactions – can be used.
No international regulations
Internationally, there are no common treaties concerning electronic contracts or transactions, although organizations such as the World Trade Organization are trying to forge them.
For now, any cases involving electronic transactions revert to the rule-of-origin approach.
For the most part, this means that if an individual buys a book from an online business located in Britain, the laws where the business is headquartered apply. This does not favour the consumers, who must familiarize themselves with another country's laws.
However, in Canada, a landmark court case has changed that rule. If a person is located in Canada and the web server or computer is located outside Canada but uses Canadian internet service providers, Canadian law applies.
The ruling stems from an Alberta Securities Commission decision. The commission said it could assert jurisdiction over the World Stock Exchange, an offshore online stock site that had broken the province's securities laws. The commission reasoned that although the website was outside the country, the effects were felt in Alberta.
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