Canadian companies reported online sales of almost $50 billion last year, a 40 per cent surge from the previous year, according to a Statistics Canada report released Friday.

But while online sales grew for the fifth consecutive year, the 2006 Survey of Electronic Commerce and Technology found e-commerce was still mostly conducted between businesses and represents a small fraction of the overall economy.

E-commerce accounted for slightly over one per cent of total retail sales in Canada.

Retail trailed the wholesale trade, manufacturing and transportation and warehousing sectors in online sales, all of which conducted the bulk of their online transactions between firms.

Business-to-business transactions accounted for 68 per cent of all online sales.

Private and public sector online sales grew from $35.8 billion in 2005 to $49.9 billion in 2006, with the private sector accounting for most of that growth.

Retail trade was one the fastest-growing sectors, with sales of goods and services online worth $4.7 billion, with more than 15 per cent of firms selling their products online, up from only 10 per cent in 2005.

The report also found that retailers are changing their attitudes about what kind of products can be sold online. In 2005, 50 per cent of retailers that used the internet claimed their goods or services didn't lend themselves to internet transactions. Only a year later, that number had fallen to 39 per cent.

The number of Canadian retailers with websites also increased to 46 per cent from 42 per cent.