Thursday, August 12, 2004

Global e-commerce turns 10

E-commerce has been here for a whole ten years, according to this article on CNET. A classmate of the founder of NetMarket purchased a CD online on August 11 1994, using a secure commercial transaction system for the first time, and kicked off a change in the way the world does business. This year, according to Forrester Research, online retailers in the US alone will take in $144 billion, making one dollar out of every fifteen spent an online dollar.

Whether it was NetMarket or the Internet Shopping Network that actually processed the first secure credit card purchase on the Internet in August 1994 doesn't really matter. That the US government only legally permitted commercial use of the Internet in 1995 is irrelevant.

What is significant is the pace at which this has happened, and the pace at which it is accelerating. In the US, e-commerce revenues this year will be 27 percent more than last year. In other countries the growth rate is higher. Despite anxieties about online security, the convenience of doing business online continues to drive more consumers to their browsers, and stimulates more businesses to do a better job of providing their products and services online.

The globalization of the Internet consumer base has prompted unprecedented attention to global e-commerce among sellers. American corporations are currently spending an average of $500,000 on globalizing their sites for every billion dollars of corporate revenue. How global is that Internet user base these days?

According to A.C. Nielsen and others, the US has about 139 million active at-home Internet users, followed by China with 80 million. Japan had 34 million, South Korea 31 million, Germany 27 million, the UK 21 million, France 14 million, and Brazil 12 million. The growing powerhouse, of course, is China which will have 100 million Internet users by year end. And the absolute numbers don't tell the whole story -- it is the proportion of the population that really determines how intensively the technology influences business culture.

Remember the clicks-vs-bricks arguments of a few years ago, and the assertions that retailers could never make a profit online? Mere teething troubles and learning curves. When e-commerce actually matures (if ever), those early analyses will seem so short-sighted. The same will be true of the superstitious early attitudes to most aspects of e-business and e-learning.

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