Why e-commerce growth on P.E.I. isn't creating jobs

E-commerce on P.E.I. is growing rapidly, according to a new report from Statistics Canada, but there does not appear to be a corresponding growth in jobs.

The report shows e-commerce GDP grew 660 per cent from 2010 to 2017. The growth came largely in two spurts, quadrupling from 2012 to 2014, and doubling again from 2014 to 2016.

Statistics Canada measured the sales of people buying online from P.E.I. businesses to calculate the results.

But despite this growth, two of the Island's biggest online retailers don't believe they can credit online business with creating a lot of jobs.

Veseys has been selling online since 1999, and about 60 per cent of their orders are online, but John Barrett, director of sales, marketing and development for Veseys, said he would not attribute the business's growth to online sales.

"While overall sales have grown nicely over the last 20 years, web sales have basically replaced many orders that would have come through other means," said Barrett, such as by mail, fax or phone.

Barrett said a few jobs have been created in the company's IT department.

Bruce MacNaughton, owner of the P.E.I. Preserve Company, said his situation is similar. His company has also been online since the 1990s.

"It does contribute to the well-being of our business, but it's not as lucrative as one might think," said MacNaughton.

Like Veseys, MacNaughton believes the growth in online sales has come largely at the expense of sales from other sources. For example, tourists aren't buying as much when they visit his New Glasgow store, instead opting to order things when they get home, because airline restrictions are prompting people to travel with less luggage.

Getting bigger to get better

Trying to compete against online giants such as Amazon is difficult, he said. Amazon's size allows it to offer free shipping. MacNaughton can't afford that, but he does typically pay about half the cost of shipping orders, which cuts into his profits.

But MacNaughton is hopeful about the future of e-commerce, and one way he is working towards making that future happen is by expanding his offerings.

"We're in the middle of a strategy where we're actually opening up our website, enabling other Island crafters or artisans and/or people who have products for sale," he said.

Joining the P.E.I. Preserve Company website will bring an immediate benefit to the smaller business, who becomes part of an established online store with the volume to lower shipping rates.

MacNaughton is hopeful the strategy will eventually bring benefits to his company as well, by increasing the overall volume enough to bring shipping rates down for everyone.

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