Report: Shakeout ‘Irrelevant’ to E-Commerce Boom

The Nasdaq plunge and accompanying dot-com shakeout are “irrelevant” to the sustained growth of worldwide e-commerce, which shows no signs of slowing, according to a report released Tuesday by IDC.

“Business-to-consumer (B2C) Internet commerce is alive and well,” IDC declared in its eWorld2001 report.

“The shakeout is really more about stock valuations than about fundamentals,” IDC chief research officer John Gantz told the E-Commerce Times. “Confidence is shaken a bit, but there is still a lot of work being done out there to make e-commerce happen.”

In fact, IDC said that more money will be spent on e-commerce initiatives this year alone than was spent on Y2K bug preparations in the five years leading up to the year 2000.

Furthermore, the payoff will be immediate, with brick-and-mortar companies increasing the amount of revenue they derive from the Web from 4 percent in 2000 to 7 percent this year.

Surprise Scenarios

The eWorld report, which IDC began compiling in February, is based on 13,000 interviews with chief technology officers, e-commerce executives and consumers in 27 countries.

Gantz said that one of the biggest surprises of the study was the amount of consumer e-commerce being conducted outside the U.S.

“We thought the U.S. would blow everybody away,” Gantz said.

Instead, the survey found that 30 percent of sites around the world were equipped to take orders. “Country after country said they were heavily involved in business-to-consumer e-commerce,” Gantz said.

Separation Anxiety

Another surprise to Gantz — and a potential opportunity for rapid growth and investment — lies in the fact that only a fraction of online sales are actually tied into a company’s order processing system.

“That means you still have a predominant situation where people are taking orders off the Web and then processing in a separate system,” Gantz said. “It shows that it’s a lot easier to put a catalog up on the Web and take orders than it is to really integrate. It also means there is a lot of opportunity for providers of those services.”

B2C Still Rules

While business-to-business (B2B) e-commerce continues to explode, commerce on the Web is still aimed primarily at consumers, IDC found. Of the 40 percent of brick-and-mortar companies that already have an online presence, 81 percent sell to consumers.

Worldwide, however, only one in 10 can handle online payments, an area that Gantz said corporations need to address quickly.

Healthy Outlook

Looking further into the future, IDC believes that US$5 trillion will be invested worldwide on e-business efforts in the next four years. The Framingham, Massachusetts research firm also believes that the number of Web sites will double again in that time, while the total value of e-commerce grows tenfold.

“The dot-com stock crash has made people lose sight of the fundamental reasons companies invest in e-business,” said Gantz. “But contrary to recent reports, Nasdaq’s woes in no way mean the end of e-business.”