ECommerce Essay Research Paper 1 Sizing the

E-Commerce Essay, Research Paper

1 Sizing the E-commerce market

IDC forecasts that the Western European market for Internet E-commerce will

rise from ECU 900 million in 1997 to ECU 26 billion in 2001. At the same time,

the number of devices accessing the Web will grow from 14.2 million by the end

of 1997 to almost 58 million by the end of 2001. NUA Internet estimates that, in

1998, the European Internet population is 22% of the world-wide population.

Other studies are confirming a huge growth in Internet access and E-commerce

applications, which began around 1996 and will continue, at a meteoric rate until

just beyond the turn of the millenium. A survey of European organisations carried

out for EITO (European IT and Telecommunications Organisation) shows that

82% of those connected to the Internet set up their connection between

1996-1998, while at the end of 1998, 29% of European businesses will be using

Internet based E-commerce applications – up from just 6% in 1996 . and, by the

end of 1999, just under a half (47%) of such businesses will be using Internet

based E-commerce applications.

The EC-financed CONDRINET study carried out by CAP Gemini predicts that

within five years, more than 80 million Europeans will become regular network

users (where .network. refers to interactive digital networks built upon open

standards, eg the Internet, some online services, and some interactive television

systems). It further suggests that 500 billion Euro in annual sales will either be

directly transacted across, or facilitated by, such networks. On a global level,

Forrester Research forecasts that 82% of large companies will trade online by

2002.

2 Types of E-commerce

The E-commerce market is conventionally divided into business-to-business

and business-to-consumer E-commerce. In future, these categories will

become increasingly blurred. Longer term, the distinction may well be between

customer-facing and supplier-facing E-commerce, where a customer may be a

business customer or consumer. The E-commerce applications . marketing,

sales and post-sales . needed to serve both types of customer are the same.

Supplier-facing applications, such as procurement (purchasing), will only apply

in the business-to-business segment, where public bodies are also included as

.businesses..

Datamonitor predicts that Western European spend on business-to-business

E-commerce solutions will grow to $11bn by 2001, from $380m in 1997,

indicating how quickly this market segment will grow. Business-to-business

E-commerce focuses on supply chain and procurement issues. Large

companies, in particular, have streamlined their own internal processes through

the use of technology and business process re-engineering and are looking to

manipulating the supply chain for further increases in profitability.

Datamonitor notes that spending on services (consultancy, systems integration)

will grow most rapidly, experiencing a 92% compound annual growth rate over

the period 1997 . 2002, compared to 66% for hardware and 85% for software.

This suggests that companies whose first experience of E-commerce was to

establish a Web presence will be revisiting their E-commerce strategy over the

next two to three years, working out a business case, re-engineering processes

onto the Web and integrating E-commerce applications with legacy systems, all

of which typically require the services of external agencies.

KPMG.s 1998 Research Report on E-commerce supports anecdotal evidence

from other European IT consultancies that companies are beginning to realise

the importance of strategy, business case and .second generation. Internet

applications: that is transactional applications, rather than first generation

marketing presence on the Web. These findings typically refer to large

companies rather than SMEs. KPMG surveyed large companies (with annual

turnover above 150 million ECUs; the majority with turnovers above 300 million

ECUs) and found examples of companies generating at least 1% of their total

turnover from electronic commerce. Around 10% of the overall sample are also

generating E-commerce revenue profitably. KPMG identified key characteristics

of this .leader. group: they were more likely: to have board level support for

E-commerce activities; to have integrated E-commerce into their supply chain;

and to be concluding Internet transactions. They also had higher Internet

marketing budgets than the rest of the sample, and had more positive attitudes

to the benefits and necessity of the Internet. As we shall see, such

characteristics are also common to best practice SMEs.

Scotland’ Craft Brewers Cooperative is the sales and marketing arm of the

Cream of Craft Brewers in Scotland, that is, those who brew beer in traditional

style, using no additives or preservatives and malt that is free of GMOs

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