At a recent e-commerce seminar in Toronto, a representative from Bell Canada displayed some enticing statistics on the current state of e-commerce, and its projected growth over the next few years.
Bell cites the successes of companies like Dell, which Bell says is doing $4 million worth of business every day on the Internet - a whopping 30 per cent of its total revenue. Indeed, Anderson Consulting says the number of people using the Web is doubling every 100 days. There are already more than 50 million Internet users in the U.S. - a massive market segment developed in only five years. Compare this with the 38 years it took radio to reach 50 million users from 1922 to 1960, or the 25 years between 1920 and 1945 it took the telephone to reach 50-million mark.
With half of Canadian households already equipped with a PC and modem, we're ahead of the U.S. in Internet usage, where 21 per cent of adults use the Internet.
The Billion-Dollar Balloon
Cisco, International Data Corp. (IDC), Forrester Research and the U.S. Dept. of Commerce all agree that projected Internet e-commerce growth is expected to balloon from its 1.1 billion point in 1996 to about $300 billion by 2002. In fact, Forrester Research sees sales climbing as high as $327 billion by 2002 as people gain comfort and expertise in exchanging money, goods, services and information in the new e-Economy.
However, this lucrative landscape is fraught with perils, too. Consider the case of Iler Networking & Computing, which was forced to halt mail order sales after it lost over US$28,000 from people ordering computer equipment with stolen credit cards. The company says all of this happened between the first incident in 1997, and one month later when it implemented an Address Verification System. Iler says it struggled for almost a year carrying this debt, and was forced to pay the full amount out of pocket.
One Per Cent Margin
And if you think the retail or wholesale business is tough, wait until you see the razor-thin margins offered by some of the purveyors of Web goods. Iler, for example, boasted the lowest-cost items on the Internet, with only a one per cent markup. These kind of "virtual wholesalers" make the Web a tough place to compete, whether you are a multinational corporation or home-based company.
Nevertheless, Bell Canada says it believes that as the e-Economy grows and the industrial economy declines, the e-Economy will become the dominant component of our gross national product. Certainly, there are areas where the improvements in business efficiency are compelling. Consider, for example, the $150 cost of a full-service brokerage transaction (trade). Even the discounters offering trades at rates as low as $69 can't hold a candle to the $10 price of an e-Trade transaction on-line.
Revelling in Bargain-Land
Bell says the initial hesitance of consumers fearful of security issues is fading as "shopping newbies" hear about the positive experiences of others. Couple this with an increasingly cooperative regulatory environment, an expanding technology infrastructure in terms of bandwidth and processing power, and it adds up to a compelling business value, with on-line price/performance roughly following Moore's Law, as it doubles every 18 months.
E-commerce offers the potential for revenue enhancement, cost reduction and expansion in terms of product, customer base and available channels. Just don't forget to take off the rose-colored glasses.
Attracting On-line Shoppers
Considering advertising on the Web? A little research can help your investment pay off. According to Starnet International's Alan Poole, the old real estate adage was right: it's location, location and location. Various sites on the Web, plus magazines and newspaper articles, will list high-traffic or top-rated sites.
To find out how effective your Web site or on-line advertising is, tracking software is a must. Some organizations rely on their own programmers and devise a proprietary system. However, off-the-shelf solutions are available to track "hits," including a tool called IISA from MediaHouse, a Windows NT utility called MarketWave, a Mac-based program called FunnelWeb and a number of others, of both commercial and shareware varieties. Most are available as "trialware," and run right on your site. And, of course, some ISPs provide logs as part of their service.
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