E-Commerce Looks for a Second Chance in 2002

January is quickly flying by and we’ve hardly had time to consider what awaits e-commerce in 2002.

Last year tested all of us, with unprecedented jobcontraction, more failed Web companies, and heightened security fears spurred by September 11th.

Lulled by the longest period of economic growth inU.S. history, many of us abruptly awoke to therealities of recession.

Against this backdrop, how does the year 2002 look for e-commerce? Information technologybudgets are paper thin, and leeway for money-losinginitiatives is non-existent. But, as they say onBroadway, the show must go on. So here are some of myexpectations for the new year.

1. The Death of “E”

In the business world, the ubiquity of the prefix “e”– as in e-commerce, e-business, e-collaboration — willtaper significantly. Fortune 100 companies likeGeneral Motors (NYSE: GM), who have created discretee-business units and hired dedicated e-executives,will begin to absorb e-initiatives into the core oftheir businesses.

Indeed, GM created eGM in 1999 as a transient entity,fully expecting to incorporate the earnings of eGMinto the entire corporation.

Clearly, e-technologies like procurement, supply chainmanagement, and enterprise resource planning (ERP)applications are not going away. On the contrary, ascompanies integrate these technologies more deeplyinto their internal operations and into their tradingpartner relationships, the technologies will becomecore components of doing business. And isolating them asunique investment areas will become obsolete.

Few companies will invest in brand new technology in2002, due to tight IT budgets. But many will work hard to leverage investments already made in ERP, customer relationship management (CRM), and inventory management systems.

As a result, rather than hearing overarching monikerslike e-commerce and e-business this year, you’relikely to hear more functional terms like supplierintegration, partner collaboration, and knowledgemanagement.

2. Bye-Bye Pure Play

In the coming year, the last of the purelyInternet-based retailers will disappear. Over the pastyear, it has become clear that consumers have diverseshopping needs that are best fulfilled throughmultiple sales channels.

E-tailers that began as pure-play online sellers havestruck deals with brick-and-mortar retailers tosatisfy the in-store shopping needs of their customers. Even Amazon.com (Nasdaq: AMZN) is no longer a pureInternet play anymore because of its Target and CircuitCity partnerships.

In fact, don’t be surprised if Amazon sets up shop,literally, in that vacant office park down the streetsometime this year.

Similarly, many traditional retailers, like Walmartand Kmart, have reeled their Internetspin-offs back in and woven them into multichannelsales strategies.

E-tailers who ignore physical world channels willperish or be acquired in 2002.

3. EBay Will Leave Cloud Nine

Are you tired of the constant stream of anomalous goodnews coming out of San Jose? Most recently,trend-bucking powerhouse EBay (Nasdaq: EBAY) reported2001 consolidated net revenues of US$748.8 million,representing 74 percent annual growth.

Sure, the company has plenty of reasons to lookforward to more happy days in 2002: a promisinginternational business, freshly inked sales andmarketing alliances with IBM and AOL Time Warner(NYSE: AOL), a solid executive management team, toname a few.

EBay’s financial worries are few, but the company willlose a step or two this year because of lingeringproblems with the buying experience.

With a record 126.5 million listings during the fourthquarter alone, EBay is having increasing difficultyensuring the integrity of its sellers. Stories ofmisrepresented and undelivered EBay merchandise litteronline discussion boards.

Granted, EBay’s bottom-line concern is its payingcustomers — the sellers. But because it has been ignoring itscustomers’ customers, the company will struggle with aretreating buying community in 2002. With EBay customers looking around, the underdog Internet auctioneers may have a chance.

4. In Liberty We Trust

Web services have a lot of growing up to do this year.This next wave of e-commerce, say analysts, willinvolve client-hosted applications that interact inreal-time with other applications, using Internetprotocols.

Under this model, consumers will conduct multiplerelated transactions simultaneously, usingsingle-sign-on registration.

However, still unresolved is the question of whichentity should be trusted with our personalregistration information. Microsoft (Nasdaq: MSFT) haselbowed its way to the forefront of this discussionwith its .NET initiative.

But the story by no means will end with Microsoft. Bymid-year, look for industry-shaking online identityspecifications from the Sun Microsystems (Nasdaq:SUNW)-backed Liberty AllianceProject.

Working behind closed doors since September 2001, themulti-corporation initiative intends to create anopen, federated solution for network identity — enabling ubiquitous single sign-on and decentralizedauthentication.

I’m betting 2002 will bring a solution to the onlineidentity riddle, courtesy of Sun and friends.

Overall, this year will be a year of big changes and second chances.