Everybody agrees that electronic commerce will fuel expansion of the Net. For evidence, look no further than the vast resources heavyweights like Microsoft and IBM are pumping into making online transactions simple and safe. But exactly how much e-commerce will grow over the next few years - that's another matter entirely.
Two reports issued this week offer widely different projections: International Data Corp. says that Web-based transactions will grow to more than US$220 billion by 2001, while Forrester Research sees e-commerce ballooning to no less than $327 billion by 2002.
Either way you slice it, of course, it's clear that the Internet represents an incredible opportunity to businesses, and that businesses in turn will drive growth and acceptance of online dealmaking. Such acceptance among both business people and consumers can only lead to the Net playing a more practical role in daily life.
But the almost $100 billion difference in the latest e-commerce projections indicates the relative adolescence of the industry. Whatever else, the future of online business remains uncharted territory.
"If we could nail it down, we'd all be millionaires ourselves," Carol Glasheen, research director at IDC, said Wednesday. "It's definitely growing. How much is hard to say."
IDC's report essentially concludes that e-commerce will explode simply because there will be more people buying and selling online. No-brainer, right? But IDC goes further, estimating that the number of devices accessing the Net - PCs, NCs, Net TVs, whatever - will grow from about 32 million worldwide as of the end of last year to more than 300 million by the close of 2001. The number of users of these appliances will mushroom from approximately 28 million last year to some 175 million.
Most growth in Web usage will come outside the United States, IDC believes, as more people in developing countries embrace information technology. The percentage of users buying goods and services over the Web is projected to grow from 25 percent in December 1996 to 39 percent in December 2001. Electronic commerce totaled $2.6 billion last year, the report says.
For its part, Forrester says e-commerce now amounts to $8 billion annually, but new efficiencies will see this number skyrocket to more than $300 billion within five years. As for why Forrester's projections differ so much from IDC's, the author of the Forrester report figures the two outfits were looking at apples and oranges.
"They seem to have focused on sales from businesses to consumers," said Blane Erwin, director of the company's Business Trade and Technology Strategies unit. "Our report is more on business-to-business commerce."
Forrester is especially bullish about the Net's commercial prospects because it foresees a huge increase in online ordering and bid-taking. Larger companies will hawk their wares with elaborate, highly trafficked Web sites, while smaller concerns will flock to those sites to place orders or vie for contracts.
"The growth in Internet trade will mean a marked decrease in use of phone and fax for orders," Erwin said. "It's tempting to say that business-to-business commerce will outstrip business to consumers, but the two are really related. It's just that businesses are already used to dealing anonymously through phone and fax. Consumers will have to go through a larger behavior change."
Growth in online transactions between firms will be led by manufacturers, primarily those in the electronics and airplane parts industries, Forrester believes. These will be followed by middlemen and computer suppliers, and then services and utilities.
Security concerns - to date, the chief roadblock to expansion of e-commerce - seem to be fading. IDC's Glasheen was surprised to even be asked about the matter. "It hasn't shown up in our research that it was a large concern," she noted.
