E-Commerce To Trigger Global Trade Boom

E-commerce will transform international trade into a US$1.4 trillion online export market by 2004, according to a new report released Monday by Forrester Research. The report also predicts that 23 percent of all U.S. exports will be conducted online in four years.

Not all countries will share equally in the wealth generated by e-commerce, however. With 19 countries accounting for more than 80 percent of online imports and exports, Forrester expects an inequality to result between “e-business extrovert” countries that actively trade online and “e-business introverts” that do not.

“Online markets hunting for international trade volumes should focus their global plans on high [online exporter] nations,” Forrester analyst Matt Sanders said in the report.

Trade Problems Fuel Growth

As American e-businesses attempt to expand overseas, they are discovering they cannot simply imitate their domestic business models. Forrester’s report finds that differing business practices overseas are the top challenge to global expansion. Insufficient technology was cited as the second largest barrier to the global e-marketplace.

To overcome these obstacles, 60 percent of the companies interviewed in the report plan to partner with international firms. Meanwhile, global e-businesses will take advantage of the current difficulties in global trade to carve a profitable niche for themselves.

“These online marketmakers expect to thrive by solving critical cross-border issues like the lack of price information and high distribution costs,” Sanders said. “While offline exports suffer due to structural inefficiencies, the Net offers many opportunities to streamline this international trade.”

Opportunities for Internet businesses include accessing international suppliers instantly, tracking the flow of goods across borders and creating single online marketplaces to speed up supply chains.

Trading Patterns Disrupted

The respondents in the report project that non-U.S. buyers and sellers will make up nearly half of the total sales volume in international e-marketplaces by 2002. However, this e-commerce will not flow equally across frontiers. Initially, U.S. and Canadian companies will lead all online exporters, while businesses in Asian countries like Japan and China will first see benefits in 2003.

The majority of U.S and Canadian online exports will remain within North America. In Northern Europe, the report projects that Norway and Denmark will lead in e-marketplace exports, while petrochemicals are expected to be the largest online industry in Western Europe.

“These online markets will disrupt many existing trading relationships,” Sanders said.

The report recommends that global corporations treat suppliers in “extroverted” online exporting countries differently than those in “introverted” countries. Sanders also advises technology providers to look overseas to high online exporters for future growth.