Why Retailers Should Care About Digital Trade Statistics
Before the pandemic, e-commerce was already growing. The last year and a half have accelerated that growth. Statistics Canada estimates that domestic retail e-commerce sales increased by 70.5 per cent in 2020. Estimates from McKinsey Global Institute suggest e-commerce will add up
to US$2.1 trillion to international trade by 2030.
It’s critical that Canada and its trading partners have the right data to make informed decisions on digital trade and e-commerce—decisions that will greatly impact the retail industry.
Defining Digital Trade and E-commerce
Digital trade is a broad term that refers to international transactions that are either digitally enabled or digitally delivered. E-commerce is a subset of digital trade and refers to digitally ordered goods and services that can be digitally or physically delivered.
The Worrying State of Measuring Digital Trade
Today, data on the value of cross-border e-commerce is fragmented and limited. Official statistics struggle to capture and reflect the size of exports and imports of digital trade facilitated through large intermediaries to track the cross-border movement of data.
Incomplete data about the size, trends, and impact of cross-border digital trade means that governments do not have the full picture. Tax and business policies are being made with partial information at best. And it’s not limited to domestic policy. Increasingly, bilateral and regional trade agreements have digital trade clauses around e-commerce or cross-border digitally delivered services.
The Opportunity for Canadian Retail
With e-commerce increasingly critical for the retail sector, the Canadian government has an opportunity to design policies that promote the interests of both Canadian consumers and businesses.
Our research indicates that while Canada is doing better on measuring digital trade and e-commerce than some of its trading partners, there is a long way to go.
For Canadian retail businesses to remain competitive and find opportunities in an increasingly digital—and increasingly global—market, the government must:
Official statistics are accurate
While Canada’s official statistics are evolving, there’s a gap in measuring the non-monetary aspects of digital trade, such as the data that underpins most cross-border digital transactions. One of the challenges is capturing information from households and small businesses as they increasingly purchase goods and services from around the world.
Evolve with the times
The digital world is always changing, and how digital trade and e-commerce are conducted will change too. Examples of innovations that could influence consumer behaviour and affect retail are blockchain and artificial intelligence. The government has to constantly evolve its measurements and policies to keep up with these innovations.
Influence global standards
Canada, with its relative head start, is in a good position to influence the development of global standards. Influencing shared frameworks that accurately reflect the true nature and value of digital trade and e-commerce will ensure Canadian retailers aren’t losing out because others have crafted definitions that better suit their businesses. Clear definitions will lead to better policy and better trade negotiations.
While the pace of change is easing from the frenzied tempo of the last 18 months, online shopping is here to stay. As governments develop common standards for measuring this part of our economy, there is a once-in-a-lifetime opportunity for Canada to influence official global definitions.
Retailers have a stake in these definitions. Individually and through their associations, retailers will want to have their voices heard and work with government to help them make good decisions on digital trade, invest in the right infrastructure for the future, and shape better policies.
The responsibility for the findings and conclusions of this research rests entirely with The Conference Board of Canada.