NAICS 419110Canadian industry · 6-digitnational market

Business-to-business electronic markets

SoftwareEDI & Trading Partner Integration 419

This Canadian industry comprises business-to-business wholesale electronic markets bringing together buyers and sellers of goods using the Internet or other electronic means and generally receiving a commission or fee for the service. Business-to-business wholesale electronic markets facilitate wholesale transactions without taking title of the goods bought or sold. — Statistics Canada, NAICS 2022A

Establishments · CanadaA: 179
Under 10 employeesA: 70%

Size and shape

How many businesses there are and how small they are. Fragmentation is the first thing an entrant — or anyone selling software into this industry — needs to know, and it is one of the few things that is actually measured.

Canadian establishments by number of employeesA

1–48849%

5–93821%

10–191911%

20–491911%

50–9974%

100–19932%

200–49953%

500+0—

Of 179 Canadian establishments with employees, 70% have fewer than ten — mostly small operators.

Where they areA

Ontario8749%

British Columbia2715%

Alberta2313%

Quebec2212%

Largest four provinces by establishment count. Establishments with employees only — sole operators with no payroll are not in this table, so in trades and personal services the true number of businesses is higher.

How many new establishments are still tradingA

Wholesale Trade, US · opened 2020

82.8%

1 year

64.3%

3 years

51.2%

5 years

34.4%

10 years

opened 2015

Measured, not forecast: the share of US establishments opening in one year that were still active later. It counts good operators and bad ones together, which is exactly why it is the honest answer to “what are the odds”. It is for the whole sector rather than this market, and the ten-year figure comes from an older cohort because no younger one has reached ten years.

No US figure is shown. County Business Patterns is coded to the 2017 US edition of NAICS; this code either does not exist there, names a different industry, or is outside the programme's coverage (most of agriculture, rail, postal and public administration are). A figure is attached only where both the code and the title agree.

How businesses here compete

The structural profile of subsector 419, which every industry beneath it inherits. This is analyst judgment from how the subsector is organised — not research into this industry, and not a measurement.

national competitionlow capitalUNVERIFIEDinherited from 419 Business-to-business electronic markets, and agents and brokers

Agents and brokers own relationships rather than inventory. Low capital and fragile: a principal can take the line direct once the agent has built it.

Who sets the price: Commission, negotiated per line.
The software it runs on: CRM, commission tracking and EDI.

Market screens and studies

Market-entry records filed along this branch of the hierarchy. A record at or beneath this code is about this industry; one above it is about something wider that contains it.

Screened one level up. Nothing is filed at this exact code; the screen for 4191 Business-to-business electronic markets, and agents and brokers covers it.

Operating businessScreenedfiled at 4191

Manufacturers’ Agency & B2B MarketplaceExecution decides

binding constraint: defensibility

The pre-screen called this the most interesting code in wholesale, and the numbers half agree. An agent sells a principal's line on commission and never owns the goods: no inventory, no receivables beyond the commission cheque. 3,938 Canadian establishments, 2,676 of them with fewer than five people. The federal small-business benchmark for agents and brokers shows 5,793 businesses averaging $650K of revenue and $86K of net profit — a 13.2% margin, with the top quartile averaging $2.0M and $222K and the bottom quartile losing money [A]. That is a good living reached with almost no capital. The marketplace variant is better still once liquid: Liquidity Services' GovDeals segment took $87.4M of revenue on $903M of gross merchandise volume — a 9.7% take — at a 92.7% segment direct profit margin [A]. The cut is what the business owns when it works. The agent's asset is a line held at the principal's pleasure. The agency builds the territory at its own cost; once the volume justifies a salaried rep, the principal can end the agreement on short notice and keep the customers, who were always buying the principal's product. Success is the trigger for termination. The marketplace faces the mirror problem: it is worth nothing until both sides are present, and GovDeals got its sellers through government surplus contracts, not through a launch. This is not a clean kill. It is a verdict that the agency is enterable as self-employment and weak as an asset. A full study would test, in one product category, the actual termination and post-termination commission terms principals sign, and whether any category has buyers fragmented enough that the principal never wants them direct. The EDI software on this branch is screened separately.

NAICS 41916 vendors named10 sourced figuresOpen →

Software serving this industry

The vertical software markets filed along the same branch — who sells to these businesses and who they would have to displace — and then the generic categories every business buys whatever it does.

Sold across the wider branch

Vertical softwareScreenedfiled at 419 Business-to-business electronic markets, and agents and brokers

EDI & Trading Partner IntegrationOne thing must be true

binding constraint: incumbent vulnerability

Incumbent SPS Commerce (NASDAQ: SPSC)

SPS Commerce's asset is not software but a map: thousands of pre-built retailer connections, each one negotiated and maintained, which a new entrant would have to rebuild connection by connection while the retailer keeps changing the spec. At $751.5M growing 17.8% with a $231.4M EBITDA line, it is also funded well enough to buy anything that works.

NAICS 4192 vendors named2 sourced figuresOpen →

And what every business buys · 25 generic categories

Sold to every industry rather than this one, so they are filed against the software industry's own code. The same few vendors recur across most of them.

Who works here

The occupations employed in Wholesale trade, most concentrated in it first. The share is measured against the whole sector, not this industry — the published cross-tabulation stops there.

Concentrated in this sectorA

Retail and wholesale trade managers One industry 16.6%

Retail salespersons and non-technical wholesale trade sales and account representatives Mostly one sector 9.2%

Labourers in processing, manufacturing and utilities Mostly one sector 8.7%

Managers in transportation and postal and courier services Mostly one sector 8.5%

Crane operators and water well drillers Mostly one sector 7.3%

Taxi, personal service and delivery service drivers Mostly one sector 6.8%

Supervisors, processing and manufacturing occupations Mostly one sector 6.1%

Machine operators and related workers in mineral and metal products processing and manufacturing One industry 5.8%

Machine operators and related workers in textile, fabric, fur and leather products processing and manufacturing One industry 5.5%

Machine operators and related workers in food, beverage and associated products processing One industry 5.3%

These jobs are mostly done here. An operator in this industry is competing for them against others in the same industry, not against the whole economy.

And the jobs every business has

Administrative and financial supervisors Across the economy 10.9%

Technical occupations in electronics and electrical engineering Across the economy 7.9%

Financial, insurance and related administrative support workers Across the economy 6.7%

Legislative and senior managers Across the economy 6.2%

Customer and information services representatives Across the economy 6%

Administrative services managers Across the economy 5.1%

Technical occupations in computer and information systems Across the economy 4%

Survey, statistical and data entry occupations Across the economy 3.3%

Administrative, property and payroll officers Across the economy 2.8%

Shoe repairers, shoemakers and upholsterers Across the economy 2.5%

Found across at least fourteen of the twenty sectors. But note the shape of this industry: 70% of establishments have fewer than ten employees, and at that size most of these roles are one person wearing several hats, or bought in from outside.

All 162 occupations →