Private Sector Educational Services in Canada - E-Commerce Overview Series

Publication Date: February 2002

View and print this section in PDF format.
To read the PDF version you need Adobe Acrobat Reader on your system.

Private Sector Educational Services (PES) in Canada

This sector comprises privately owned or operated, either for profit or not, establishments primarily engaged in providing instruction and training in a wide variety of topics.

E-commerce Definition

E-commerce is defined as sales or purchases over the Internet, with or without online payment, excluding private networks.

E-commerce Overview Series

Learn about the various technologies used by PES firms; how they are using the Internet to buy and sell goods and services; and the barriers to buying and selling over the Internet.

Canada’s E-commerce Market ¹

Canadian businesses posted e-commerce sales of $7.2 billion in 2000, a 73% increase over 1999. E-commerce sales to businesses were 80% of this activity. Online export sales were 17% of the total. Canada captured about 4% of global e-commerce revenue in 2000. The forecasted annual growth rate through 2005 is 64% for online business purchases and 57% for online consumer purchases.

Canada’s PES firms had e-commerce sales of $71.4 million in 2000, about 1% of Canada’s total e-commerce market. Business customers accounted for 46% of these sales, and consumers for 54%. Online export sales were 15% of total PES e-commerce sales, a 1% share of Canada’s international market.

E-commerce sales contributed an impressive 2.6% to total operating revenue, the highest share posted by a private sector industry, and 6.5 times greater than the average reported for the "All private sector" category.

Accessibility of the Internet has reached impact levels

Use the Internet

• Private Sector Educational Services Firms: 89%
• Private Sector: 63%

Use E-mail

• Private Sector Educational Services Firms: 84%
• Private Sector: 60%

Have a Web Site

• Private Sector Educational Services Firms: 70%
• Private Sector: 26%

Source: E-commerce and Technology 2000 Survey, Statistics Canada

The use of the Internet as a strategic business communications tool by Private Sector Educational Services firms continues to outpace that of the rest of Canada’s private sector. Seventy-five percent of the employees of Private Sector Educational Services firms have direct access to the Internet, up from 66%, in 1999. Thirty-three percent of Web sites offer interactivity.

Leading users of business applications over the Internet

• For Collaborative R&D;: 43%
• For Education & Training: 43%
• Access Databases of Suppliers: 38%
• Use Intranets: 29%
• Access Client Databases: 12%
• Use Extranets: 10%

Source: E-commerce and Technology 2000 Survey, Statistics Canda

Private Sector Educational Services firms are taking good business advantage of the benefits offered by the Internet, outperforming most other private sector industries on a number of key uses (e.g., collaborative R&D (+10%), education and training (+19%)). As other sectors take steps to close the gaps, particularly in the area of education and training, new market opportunities will likely emerge.

E-procurement activities outpacing online selling activities

Buy Goods & Services Online

• 2000: 41%
• 1999: 27%

Sell Goods & Services Online

• 2000: 16%
• 1999: 17%

Source: E-commerce and Technology 1999 & 2000 Surveys, Statistics Canada

Private Sector Educational Services firms posted the largest percentage increase in online buying activity in 2000, followed by Wholesale Trade (+9%) and Administration Services (+9%).The economic activity attributable to online buying almost doubled in 2000 to 66% the highest among private sector industry.

Trends

E-learning is an e-commerce trend that is expected to have a significant impact on Canada’s Private Sector Educational Services firms and their customers. It involves the use of technology (e.g., the Internet) to help deliver learning programs (e.g., online courses, e-performance support).

Globally, the e-learning market is expected to grow from $3.5 billion USD today to upwards of $25 billion USD by 2003 ². The US accounts for about two-thirds of this global market.

It has been suggested that Canada will provide the most stable adoption rates for e-learning in the world ³ . By the end of 2002, it is expected that almost two-thirds of Canada’s medium and large companies will have e-learning available to their customers ⁴.

In 2000, Canada’s corporate e-learning industry was valued at $145 million CDN, a healthy 59% increase over 1999 ⁵ . Forecasts are that this market  will grow to $1.2 billion CDN by 2005, posting a compound average annual growth rate (CAGR) of 54% ⁶ .

Content is expected to continue to be the dominant e-learning market segment in Canada. It currently accounts for about two-thirds of the total market. Its expected growth rate will keep pace with that of the overall market for e-learning.

The e-learning market segment that is worth watching is services. It currently accounts for just over 21% of the market in Canada. It’s expected to post a CAGR of 70% through to 2005 ⁷ .

US firms are reporting savings of 50%-70% when replacing instructor-led training with e-learning ⁸. A majority of US firms are satisfied with e-learning’s ability to solve business problems.

In Canada, it is estimated that 90% of all new training will occur over the Internet by the year 2005 ⁹ . E-learning allows training firms to diversify their revenue streams and to capitalize on the business potential of the Internet.

“The two great equalizers in life are the Internet and Education. E-learning eliminates the barriers of time and distance creating universal, learning on-demand opportunities for people, companies and countries…” ¹⁰.

Online buying tops the list of e-commerce activities

• Buy Online:  41%
• Electronic Funds Transfer:  24%
• Sell Online:  16%
• EDI* not on the Internet:  10%
• Web site has O/L payment:  4%

Source: E-commerce and Technology 2000 Survey, Statistics Canada

The level of online buying activity reported by Private Sector Educational Services firms is more than two times that reported for the private sector as a whole.This suggests that they are able to realize significant cost savings by using the Internet. It is worth noting that a relationship between online sales or purchases and operating margins was not found in the research.

Barriers to using Internet powered e-commerce

Goods do not lend themselves to Internet transactions

• Private Sector Educational Services Internet Users:  60%
• All Internet Users:  59%

Prefer to maintain current business model

• Private Sector Educational Services Internet Users:  21%
• All Internet Users:  33%

Security Concerns

• Private Sector Educational Services Internet Users:  11%
• All Internet Users:  16%

While Canada’s Private Sector Educational Services firms are emerging as leaders in e-commerce both in terms of their own business applications, and in the delivery of services to clients via e-learning, barriers still exist. They will be overcome as the technology options, and industry expertise, for content integration and deployment of e-learning improve. Presently, Internet sales are skewed towards the larger firms.

To learn more, you can visit these sites:

• Canadian Society for Training & Development (CSTD)
• Commercial Education and Training
• Ebiz.enable

OR you can contact:

Ontario Society for Training & Development
E-mail: info@ostd.ca

Reference Sources

1. E-commerce & Technology 2000 Survey, StatsCan
2. Merrill Lynch (01/26/2001)
3. Highlighted Research Offering (01/22/2002), http://www.idc.ca
4. Ibid
5. Canadian Corporate eLearning Forecast & Analysis, 2000-2005, International Data Corporation (IDC)
6. Ibid
7. Ibid
8. OSTD, The Knowledge Exchange Conference 2001
9. J. Kaufman/ IDC, Ottawa Business Journal (01/22/2001)
10. John Chambers, President & CEO, Cisco Systems

Published in partnership with the Ontario Society for Training & Development (OSTD)