December, 2006
EXECUTIVE SUMMARY
The purpose of this report is to present analysis and findings with respect to a cost/benefit analysis of the ECBC E-Commerce Initiative. The E-Commerce Initiative provided non-repayable assistance towards the eligible costs of developing or upgrading a website with E-Commerce capabilities. Consideration was given to sustainable entities operating in the tourism industry. Eligible costs included training, hardware, software, consulting fees, and licensing. ECBC may assist up to 50% of the total eligible costs to a maximum of $7,500.
Canmac’s approach to this project involved, 1) primary data collection, 2) cost/benefit model and 3) cost/benefit analysis. The survey methodology included mail-outs with telephone follow-ups. Canmac attempted contact with the clients at least three (3) times, if a response was not forthcoming on the third try the response was recorded as a non-response.
The cost/benefit analysis was conducted following guidelines established by the Federal Treasury Board. Project costs and benefits were identified and categorized and a spreadsheet model was developed to quantify and assess cost/benefit ratios.
The main findings of this report are:
1. ECBC e-commerce clients were asked to rate their satisfaction with respect to the success of the e-commerce project on a scale of 1 to 5, 1 being very dissatisfied and 5 being very satisfied. The average score for this questions was 4.2.
2. Clients were further asked to rate their satisfaction with ECBC’s role in assisting with their e-commerce project on the same scale (1-5) as was used in rating the project. The average score regarding ECBC’s assistance was a not surprising 5, as all respondents were very satisfied with ECBC’s assistance.
3. Over the 2007 to 2011 period, average total sales per client are expected to grow slowly reaching $1,028,278 by 2011, growth of 20.1% or 4% per year. However revenue from e-commerce as a percent of total sales is expected to grow from 27.11% in 2006 to 44.0% in 2011, growth of 62.3% or 12.5% per year.
4. Every $1 spent on e-commerce generates $50.7 in sales.
5. Over the period 2004 to 2011, we estimate on a present value basis, the program generated benefits as follows:
- $26.7 million in sales;
- $7.9 million in wages; and
- $2.2 million in business profit.
Clients estimate that 44.4% of these benefits would not have occurred without ECBC assistance.
In the new economy, access to the information highway is as important as access to the physical highway is in the old economy. The ECBC e-commerce program has demonstrated that e-commerce is a positive investment for tourism sector participants.