E Commerce

What is ebusiness?

Ebusiness (e-business) or electronic business refers to commercial activities performed over computers and related technologies mainly through networks such as intranets, extranets, and the Internet to streamline, improve, and extend business operations. Ebusiness and ecommerce are often viewed to be one and the same, however this is incorrect. Ecommerce is simply a part ebusiness, more specifically, the trading aspect of ebusiness. •

Ebusiness and Intranets An intranet is network of computers that belong to an organization. Companies use intranets to efficiently share information such as work-related documents and to facilitate collaborative efforts amongst its employees. It's a private network, thus only authorized users have access.

•

Ebusiness and Extranets An extranet is essentially an intranet except it allows authorized people outside the company access to certain areas of the system. Extranets streamline business processes with suppliers, vendors, and business partners.

•

Ebusiness and the Internet The Internet is the global network of interconnected computer networks. From workat-home moms to mom-and-pop shops to big corporations, the Internet provides new business opportunities to those who embrace it. The Internet is here to stay; if you want a piece of the pie, then it is imperative that you approach it just like a brick-andmortar business and have a solid strategy. Otherwise, join those that have gone before you in the black hole of cyberspace.

Ecommerce definition and types of ecommerce Ecommerce (e-commerce) or electronic commerce, a subset of ebusiness, is the purchasing, selling, and exchanging of goods and services over computer networks (such as the Internet) through which transactions or terms of sale are performed electronically. Contrary to popular belief, ecommerce is not just on the Web. In fact, ecommerce was alive and well in business to business transactions before the Web back in the 70s via EDI (Electronic Data Interchange) through VANs (Value-Added Networks). Ecommerce can be broken into four main categories: B2B, B2C, C2B, and C2C. •

B2B (Business-to-Business) Companies doing business with each other such as manufacturers selling to distributors and wholesalers selling to retailers. Pricing is based on quantity of order and is often negotiable.

•

B2C (Business-to-Consumer) Businesses selling to the general public typically through catalogs utilizing shopping cart software. By dollar volume, B2B takes the prize, however B2C is really what the average Joe has in mind with regards to ecommerce as a whole. Having a hard time finding a book? Need to purchase a custom, high-end computer system? How about a first class, all-inclusive trip to a tropical island? With the advent ecommerce, all three things can be purchased literally in minutes without human interaction. Oh how far we've come!

•

C2B (Consumer-to-Business) A consumer posts his project with a set budget online and within hours companies review the consumer's requirements and bid on the project. The consumer reviews the bids and selects the company that will complete the project. Elance empowers consumers around the world by providing the meeting ground and platform for such transactions.

•

C2C (Consumer-to-Consumer) There are many sites offering free classifieds, auctions, and forums where individuals can buy and sell thanks to online payment systems like PayPal where people can send and receive money online with ease. eBay's auction service is a great example of where person-to-person transactions take place everyday since 1995.

Companies using internal networks to offer their employees products and services online-not necessarily online on the Web--are engaging in B2E (Business-to-Employee) ecommerce. G2G (Government-to-Government), G2E (Government-to-Employee), G2B (Government-toBusiness), B2G (Business-to-Government), G2C (Government-to-Citizen), C2G (Citizen-toGovernment) are other forms of ecommerce that involve transactions with the government-from procurement to filing taxes to business registrations to renewing licenses. There are other categories of ecommerce out there, but they tend to be superfluous.

Surveys Ecommerce prospects and profitability: a summary of Internet sources and findings. What's really happening in ecommerce, globally and by market sector? You can follow events in your favorite business magazine for answers — as indeed you should — but you must also bear in mind the restraints under which magazines operate: strict deadlines, advertising control and the need for entertaining copy. Proper research takes time, contacts and expertise. It is not entertaining. The ensuing reports cost thousands, more if prepared for a single client, and can therefore place vital information beyond the reach of small or medium-sized companies. Happily, even the more prestigious research companies provide abstracts of their report findings, and there are further articles scattered across the Internet. Ecommerce Digest collects and summarizes this dispersed material, identifying the sources so that you can check their reliability and take your own research further. understanding research reports a survey of current prospects for online advertising a survey of prospects for e-publishing and ebooks. ecommerce and internet fraud: a survey prospects for b2b ecommerce: an Internet survey current ecommerce prospects in north america current ecommerce prospects in europe current ecommerce prospects in latin America current ecommerce prospects in asia - pacific rim countries current ecommerce prospects in rest of world

Understanding Research Reports Free and commercial research reports: a short guide.

Sources of Ecommerce Information There's no shortage of 'information' on ecommerce, and in terms of increasing reliability the sources could be ranked: 1. internet 'get rich quick' schemes. 2. 'killer guides' to some aspect of ecommerce: marketing, copy-writing, etc. 3. ecommerce sites apparently offering guidance but in fact promoting a limited range of goods and services. Followed by: 1. 2. 3. 4. 5.

ecommerce news sites. guides to ecommerce from reputable publishers, some in e-book form. technology research reports. market research reports. academic studies.

All material has its merits and problems. Sources of the first two types usually contain good ideas, but ecommerce is a good deal harder and more complicated than claimed. Type 3 sites provide helpful introductions, but the recommended products are not necessarily the best going. Type 4 sites keep you up with events, but the stories are more company promotions than solid information. Some type 5 books should be in every e-marketer's library, but the mechanics of publishing prevent the information being very full or up-todate. Technology research is a $15 billion/year industry, but not as independent as claimed. Market research is essential, but has problems listed below. Academic studies provide a perspective and useful element of caution, but tend to be backward-looking and concerned with business theory.

Market Research Reports We have compiled summaries of ecommerce prospects from the abstracts freely provided by the leading market research companies, but it's obvious that the: • • •

full reports are not cheap findings differ between surveys predictions are continually being revised

Which survey should you trust? And how many reports should you purchase — all of them so as to compare, or none at all? We can't answer these questions directly, but we do provide some questions you might ask yourself.

Data Quality Internet users are so conditioned to receiving free information that they sometimes suppose that all information is theirs by right. It isn't, and can't be. Information has to be collected, analyzed and disseminated, and the cost of doing these must be met somehow. Often the process is very indirect — keynote speeches at institutional get-togethers, for example, which further the aims of the industry concerned — but the exercise has eventually to end in some benefit. And that applies even to interviewees. Data collected by market research companies are only as good as the questions and persons asked. CEOs who give up valuable time to answer journalists' questions understand that the increased publicity helps sales and market standing: they're not going to be self-critical, or give away company secrets. By its very nature, all commercial information is suspect, and its value is often proportional to the effort put into its collection. Before purchasing any report, try (and it's not easy) to find out: • • • • •

when the data were collected: ecommerce changes rapidly. how the market data were collected — questionnaires, analysis of company reports, interviews, etc. the identity of the interviewees or questioned, and whether they were in a position to know and be candid. statistical validity of the data. matters that might affect judgment — inducements offered to those participating in the survey, etc.

Then ask yourself if you can properly use the information. You may learn, for example, that online customer acquisition costs are now averaging $40, but do these apply to the online operations of household brands or to market newcomers? And in what market sector? Differences are crucial, and you'll want to be sure that the sample represents your sort of company. Check that the: • • •

data could be relevant to your needs. predictions have been reliable/useful in the past. Market research company has a good reputation, and has not simply presented what subscribers wish to hear.

Are we implying that market research is a waste of money? Certainly not. Though marketing usually much exceeds the costs of getting a site online, it's usually essential. Indeed, some form of market research is unavoidable, and without its guidance you'll be flying blind. But just remember that information has to be used intelligently. If you're unsure of a report's value, you may want to commission your own market research, though the cost will be an order of magnitude higher.

Surviving in Ecommerce Ecommerce defied gravity in its glory years. Growth, market share, brand awareness, perceived value — these seemed far more important than mundane matters like return on investment. While capital was cheap, ecommerce could afford to live on vision, but most companies now have to watch the bottom line. The ecommerce divisions of large organizations may not need to generate a cashflow yet, but management most certainly expects a sensible plan for the longer term. And smaller companies have much shorter lead-times to return positive cashflows and ROI.

These are still problem areas. Future cashflows are notoriously unpredictable in a new economy. Share prices are also volatile, giving wide variations in any figure for market capitalization. Another approach has therefore been to consider only future revenues because the better-placed Internet companies have spent heavily on marketing, at the expense of immediate profits. {2} Ecommerce companies, though far from profitable, may also have achieved a commanding position in the marketplace, which makes them valuable acquisitions to a company wishing to enter or expand in that marketplace. A fifth approach, traditionally adopted by companies that extract or employ commodities with fluctuating prices — oil, minerals, cocoa, etc. — is to watch the production costs of competitors. Operations are acquired only when production costs can be kept within the industry lower half or lower third, ensuring that half or two thirds of their competitors will go out of business before they themselves will be affected — allowing the market ample time to correct itself. The various approaches of assessing an ecommerce operation are not mutually exclusive, and much depends on management's goals. Online selling won't be a mature market place for many years to come, and it's still not known how valuable is first mover advantage — i.e. whether new companies can catch up with market leaders, learning cheaply from their mistakes. Safety lies with the fifth approach, of course, and with the majority of small, illinformed ecommerce operations still expected to fail, anyone determined to succeed should: • • •

have the resources to survive 5 years of little or no profits. keep selling costs in the bottom third of their particular market. minimize setup and operating costs, so that a decent ROI is achievable in the long term.

A survey of current prospects for online advertising A free survey and study of online advertising prospects.

Background: History of Internet Advertising Advertising has faithfully served the print industry for 200 years, and was applied to the Internet with every expectation of success. Static, rotating, scrolling, animated, Flash and interstitial banner ads were designed to generate traffic, increase brand awareness and generate leads and sales. Internet companies were founded on advertising revenues, and for some years the companies prospered. {1}

Unfortunately, average click-through rates then began to fall, from perhaps 3% initially to 0.15 - 0.3% in 2000 (i.e. only 1.5 to 3 per thousand viewers actually clicked on a banner ad) {2} Rates paid for CPM (cost per thousand pages viewed) were adjusted downwards, {3} {4} and many companies folded. {5} With hindsight, it's obvious that Internet ads were different animals. Advertisements in print magazines survived because readers kept the magazine for future reference. Advertisements often added a useful body of content, and some were even works of art. None of this could be said of banner ads, which were brash and distracting. But marketing itself was reaching saturation point. To make themselves heard above the din of advertising — grown from to 35 billion in 1980 to 86 billion items in 1999 for US direct mailing alone {6} — the leading manufacturers launched massive campaigns on hoardings, glossy magazines and TV. The ads were expensive, and were intended to appear so, to assure customers that these were big players with solid resources behind them. {7} Such campaigns were not practical on the Internet, which prides itself on being a level playing field, but, for all the lavish spending in traditional ways, brand erosion continued apace. The average US company cannot expect to retain more than half its original customers after 5 years. {8} The world is changing fast, and even the ad companies are not sure what to do. {9}

One instance is ROI return on investment). It's always been hard to measure {10} — which explains the appeal of software for customer relationship management, {11} and for GRP (gross rating points, equivalent to a 1% reach of intended audience), an approach that is now being beta-tested. {12}. There were always gaps in the accounting process, and customers nowadays will compare prices online before making purchases off-line, {13} a practice that makes the website important but difficult to assess. {14}

2003-4 Prospects In 2001, Myers forecast a 10% growth in 2002 online ad spending, and Jupiter Media Metrix predicted an annual increase of 18% until 2005. {15} In fact, there was a small decrease in ad spending generally in the first half of 2002, but a second half rise of 6.2% has been predicted by AdAge. {16} Proprietary information needs to be treated with caution, particularly when freely provided. Nonetheless, there is some evidence that banner ads are more effective than once thought {17} and one advertising site reports click rates of 3-4% for well-targeted ads, (though this translates to a high $100 customer acquisition cost). {18}. Online advertising is beginning to make a comeback {19}, perhaps {20} Nonetheless, it does not appear that CTR (click through rates) have recovered to their 2000 levels, {21} {22} so that web merchants advertising through banner ads may wish to plan with a 0.5% {23} click-through rate, if: • • • •

ad is well targeted. ad has unusually good content and design. demographic and psychological customer profiling has been used. Ad has been optimized by repeated testing. {24}

More important than click-through rates are conversion rates, and web merchants will need to consult other surveys on this site for figures, and/or purchase third-party research reports. {25} {26} {27} Rates clearly depend on a host of factors, but a 1% conversion rate may still be a reasonable figure. Email marketing can improve these figures, particularly for the all-important cost of acquiring a customer, but only if a customer is retained. {28} Video ads remain a distant dream, according to a July 2000 Jupiter Research report. {29} Sites relying in part or wholly on advertising revenues must do their sums carefully. References are listed here and below in our Sources section. Subject to the usual disclaimers, overall rates around $5/cpm may serve for initial planning purposes, but will need to be firmed up with specialist information purchased from sites listed below.

E-books Survey Prospects for ebooks and e-publishing.

Background: History of E-Publishing Once text could be put in digital form, and dissemination made easy by the Internet, epublishing became an exciting prospect. Word processing programs appeared in the middle 1980s, and few offices were without them by 1990. Launched commercially in 1993, the Internet had linked a million machines a year later and has now penetrated 50% of American homes and businesses. Hardware and software continue to improve. The 1998 RocketeBook and the Softbook readers were bought by Gemstar in 2001, who re-engineered them as REB 1100 and REB 1200 machines {1}. Some of today's e-book readers will play music as well, and models under development will be more versatile and comfortable to use.

Everyone agrees that e-publishing is here to stay, and will revolutionize the industry. {2} Dozens of e-publishers already exist, and many of the larger booksellers already have an ebook department — Amazon, Barnes and Noble, Random House, etc. One small e-reader can relieve students of their heavy burden of textbooks, and vast areas of the developing world will gain access to information and educational opportunities that were unthinkable before. But how much e-publishing is profitable now? Publishers are cagey about figures: they emphasize the future, that they're in for the long haul. Heartening stories go the rounds, particularly Stephen King's Riding the Bullet, an e-book novella that earned him $450,000 in 3 days (though excess bandwidth charges took back $110,000). {3} Nonetheless, bestseller sales in e-books are typically 1,000 - 7,000 per year, {4} which is small by traditional publishing standards. Too many sites proclaim, "You too can have a profitable e-publishing business — just buy our e-book to learn how."

In short, e-publishing is not easy money yet, and perhaps never will be. Market research is essential, to see not what people should pay, but what they really will pay for. The publishing trade still does this badly, lacking the interactivity that the Internet can bring. As for e-book standards, common sense and the history of technology suggest backing the companies with good track records and marketing muscle, i.e. Adobe (Acrobat) and Microsoft (Microsoft eReader).

Current Problems If the advantages of e-publishing are obvious — lower production costs, smaller print-runs, shorter times to market, greater power and profits to authors and adventurous publishers — why hasn't the industry surged ahead? Probably because of: • •

• •

• •

•

hardware costs. Most e-book readers are still too expensive, nothing like the $50 to $100 that buys a CD player. {5} proliferating platforms. Acrobat, Microsoft e-book, Gemstar, PalmOS, etc.— which platform should authors write for and readers stock their library with? Hardware and software can be discontinued without warning, and no one wishes to buy into obsolescence. {6} limited range of titles. Lists are steadily increasing, but only a small fraction of print books are also available as e-books. quality filters are unclear. Traditional publishing builds on specialist skills — MS selection, editing, proofing, typesetting, illustration, warehousing, marketing, reviewing — each adding a quality filter to the final product. Buyers of e-books do not have these reassurances. {7} preference for printed books. Despite advantages of backlit pages, graphics and multimedia, electronic readers are not yet as comfortable as the traditional paper book. fragmented nature of publishing business. The USA has over 50,000 publishers. {8} Add publishers in Canada, UK and Australia and the total in the English-speaking world may exceed 100,000. Not all are profitable. Many publishers are small, local and specialized. Publishing, accounting, warehousing and marketing procedures vary widely, as does the software employed. Hence a broadly-satisfied reading public, but also great waste and difficulties in implementing common IT standards. {9} e-books are not easily returned. Books are distributed with hefty discounts (55% at Amazon) on a sale or return basis. Print-on-demand books are more costly to produce and do not encourage returns: comparatively few bookstores therefore stock them. {10}

2004-2005 is being suggested as the time when these problems will be overcome, and epublishing really takes off. {11}

2001-2002 Performance Conversion rates for online book sales are 42% in the case of Amazon, but average 5-8% overall. {12} Mainstream publishers are beginning to take up material originally selfpublished or published in electronic form. {13} The year saw a steady growth in e-book sales, with the main publishers reporting year on year increases from 40% to 100%. Palm Digital Media alone sold 180,000 e-book titles in 2001, and 5 million copies of Microsoft Reader were downloaded for use on desktops, notebooks and pocket PCs. {14}

2003-4 Prospects We have not found a reliable Internet survey of immediate prospects for e-publishing and ebook marketing. All the same, trade articles and the output of e-book hardware suggest an accelerating acceptance of e-publishing, and no doubt more success stories. The really exciting new developments — lightweight flexible screens, wireless downloads — are proven technology, but cheap products are still some years away. Nonetheless, and more than other forms of ecommerce, e-publishing will change entertainment habits, and widen educational opportunities.

Subscription Services Very different from e-books are subscription services. While the distinction between content downloaded and content read online may seem purely technical, Internet users do not like subscription charges. The content providers argue, very understandably, that their material costs money to collect, analyze and present, and that charging is becoming more necessary, {15} if not acceptable now that advertising revenues have dried up. {16} But 70% of online adults in a recent survey could not understand why anyone would pay for online content. {17} Only 12% in fact paid up when faced with subscription charges,{17} and anecdotal evidence suggests that even that 12% can be optimistic. Content providers trying to estimate future conversion rates should note that commercial schemes for individual pages are even less popular. The book format makes a difference.

Internet Fraud Report An Internet fraud report: a brief overview of the current situation

Internet Fraud Though small in relation to ecommerce turnover, Internet fraud is serious — for the victims and for the reputation of the industry. According to NCL, US Internet fraud losses amounted to $6 million in 2001. Their breakdown: {1}

Online Auctions

70%

General Merchandise

9%

Nigerian Money Offers

9%

Computer Equipment

2%

Internet Access Services

2%

Adult Services

2%

Work at Home Plans

2%

Advanced Free Loans

1%

Credit Card Offers

0.5%

Business Opportunities

0.5%

Overtopping everything was e-auction fraud. Of the 31% of online Americans (35 million people) who participated in online auctions in 2000, 41% encountered problems. Checks were cashed without goods being sent (or vice versa) and the average loss per victim was $326. The obvious safeguards were not known or not used. Only 17% paid with credit cards and a mere 6% employed an escrow service. {2} A Gartner survey produced much higher figures. $700 million in online sales were lost to fraud in 2001, representing 1.14% of a $61.8 billion total. This was some 19 times that of offline fraud, and 5.2% of 1000 online customers surveyed complained of credit card fraud, and 1.9% of identity theft. Once again, many customers had only themselves to blame —

they were prepared to adopt simple password-based applications and not employ the more demanding PKI, smart-cards and disposable card-number systems. {3} Responses to a survey conducted at The Worldwide E-Commerce Fraud Prevention Network's site reported 50% with fraud losses in the $1-100,000 range, and a staggering 19% who had lost more than $100,000. {4} Retailers stand to lose more than customers. An Experian survey back in 2000 indicated that, though UK online credit card fraud was under 1% on most websites, it had reached 40% on some sites for software, ticket sales and the household electrical goods. Moreover, while customers were liable only for the first £50 of fraud, retailers had to cover the full cost of such theft, with prosecution of offenders still difficult. {5}

Fraud Prevention E-tailers are gradually adopting protective measures, though more reasonable charging by credit card processing companies would help. Some 70% of e-merchants adopt address verification systems, 54% follow up with their customers or adopt real-time authorizations, and 43% adopt after-the-fact fraud prevention measures. {4}. A good range of solutions is now available, and free papers can be downloaded from the security companies concerned. {6} {7} {8} {9} Please note that this page is out of date, and that simple measures exist to prevent or minimize Internet fraud. For more details consider our ADVANCED GUIDE TO ECOMMERCE, now in its fourteenth edition, which contains a proper Internet Fraud Report, with extensive listings on anti-fraud measures, and what to do if you fall a victim of fraud or misrepresentation.

Ecommerce: Pacific Rim A free survey of ecommerce prospects in the Pacific rim countries.

Introduction: Pacific Rim Countries Japan, Australia, Taiwan and New Zealand would be the countries of rapid Internet use, predicted a Unesco survey in 1998, {1} and these countries are now growing markets for ecommerce. And many more people use mobile phones in Japan than in Europe or (in particular) America.

36% of Hong Kong household had Internet access by 2000, and the number of online shoppers in Taiwan doubled over the 1999-2000 period. {2} Some 20m of Korea's 40m people were expected to be connected up by 2001, and the government is promoting ecommerce. {3} ComputerWorld Hong Kong believes that the Asia-Pacific Rim area will account for 32% of non-US online ad spending by 2004.{4} Of Oracle's 12,000 partners worldwide, 1500 are already located in the Pacific Rim, {5} with China having the potential for 400 million Internet users. {6} Ecommerce in China was indeed predicted at $221 million in 2000 and $11.7 billion by 2004. {4} Australia and New Zealand traditionally look outward, and ecommerce can provide goods not readily available at home.

Difficulties should not be underestimated, notably political control (Hong Kong), the preference to act through middlemen (Japan) and the plethora of languages.

Prospects 2003-4 The July 2002 Economist Information Unit {7} ranks preparedness for ecommerce in the Pacific Rim countries as follows (USA scoring 8.41)

Country

Index

Australia

8.30

Singapore

8.17

Hong Kong

8.13

New Zealand

7.67

Taiwan

7.26

Korea

7.11

Japan

6.86

Thailand

3.86

China

3.64

Philippines

3.72

Indonesia

3.29

Vietnam

2.96

While small and medium-sized companies in this region have been quick to adopt emails, they have been more wary of ecommerce, generally seeing websites as a means of advertising more than on online selling. Up to 75% will have their own website by the end of 2002, but 65% outsource their hosting. {9} China currently has 56.6 million Internet users, and some 10% have bought something online. {9} Internet usage (millions) is currently as follows: {9}

China

56.6

Japan

51.3

South Korea

27.8

Taiwan

11.6

Australia

10.6

Hong Kong

4.4

Singapore

2.3

New Zealand

2.0

The greatest potential may therefore lie with China, {10} but sites will have to be in Chinese, and offer goods and services acceptable to its communist government.

Ecommerce Statistics: Europe

Ecommerce statistics: a survey of ecommerce prospects in Europe, with references and information sources.

Background: Ecommerce in Europe You'll find ecommerce statistics vital for doing business in Europe. Though the region had the potential to reach $1.6 trillion in online trade by 2004, Forrester {1} estimated in 1999, Europe has been slow to adopt the necessary site personalization, channel integration and technology. {2} {3} The best of European ecommerce sites have been as good as their American counterparts, but many — probably the majority — have lost money. Indeed, a recent check by the British Chamber of Commerce {4} reports that three-quarters of smaller firms and more than half of medium ones surveyed had seen no return on the £1,000 to £100,000 spent on their ecommerce site. As the table indicates {5}, only a tiny fraction of retail sales are currently made online, and many visitors are only window-shoppers.

country

ecommerce as % of total country retail sales

% online window country shoppin g

Sweden

0.68

Finland

28

Sweden

27

UK

0.37

Netherlan 28 ds

Norway

26

Netherlan 0.34 ds

Sweden

23

UK

22

Germany

0.30

Norway

22

Germany

21

Belgium

0.16

Spain

16

Netherlan 18 ds

France

0.14

France

14

Finland

16

Italy

0.09

Germany

14

France

8

Spain

0.06

Italy

14

Spain

8

Portugal

0.06

UK

13

Italy

7

Current problems include:

% of interne t users buying online

• • • • • • • •

language barriers.{6} multiple currencies, somewhat eased by adoption of the Euro. differing tax and VAT regimes. {7} uncertainty over and pending legislation on ecommerce taxation.{7} {8} lack of cross-border logistical support. poor IT infrastructure. conservative banking attitudes restricted choice of software, payment service providers and MAPs.

Prospects 2003-4 The July 2002 Economist Information Unit {9} ranks preparedness for ecommerce in Europe as follows (USA scoring 8.41)

country

Inde countr inde country x y x

index

Netherlan Norwa 8.40 8.17 Greece ds y

7.03

UK

8.38 Austria 8.10 Portugal

7.02

Switzerlan Czech 8.32 Ireland 8.02 d Republic

6.45

Belgiu 7.77 Hungary m

6.05

Sweden

8.32

Denmark

8.29 France 7.70 Poland

5.52

Germany

8.25 Italy

7.32 Slovakia

5.00

Finland

8.18 Spain

7.07 Romania 4.00

It's encouraging to note that Sweden, Netherlands, UK, Finland, Denmark and Germany score well, and businessmen in these countries generally understand English.{10} As always in business, openness to new ideas, deregulation, entrepreneurship, incisive thinking and planning are vital, suggesting an agile company will outperform the large corporation if strengths are recognized and played to. Ecommerce is still being explored in Europe {11}, and even in the UK only 24% of companies have websites, with 10% taking orders online. {12}. Excellent prospects exist for the right strategies. {13} At a time of economic uncertainty {14} the market is still open, and success for smaller companies will go to those who can exploit local conditions and niche markets. The larger companies will continue to streamline purchasing, logistics and human resources, though in technology and implementation most still lag a year behind the US. {15} A recent T.N.S. study reports that security remains as a customer worry, particularly in Germany, and that online shopping has increased in France and Norway over

the last year but fallen in Austria, Czech Republic and Finland. {16} Ecommerce is firmly established in the UK, with 10 million visiting ecommerce sites over the Christmas 2001 period, some 70% of the Internet population. {17} A 2002 eMarketer study estimated European ecommerce revenues at $980 billion in 2004, little more than half the earlier Forrester prediction, but still appreciable. {18} Finally, it's worth remembering that 75% of Internet users by 2005 will be located in Europe and Asia. {19}.

Ecommerce: Other Countries A survey of ecommerce prospects in other parts of the world.

Ecommerce in the Rest of the World Prospects for ecommerce in the Third World are nil in the foreseeable future: the great bulk of firms and individuals do not even possess the hardware. Other countries — e.g. South Africa, Israel, Russia — with advanced economies and a history of Internet use certainly offer prospects in the medium- to long-term, but currently exhibit some or all of these problems:

• • • • • • • •

expensive Internet access. commerce traditionally conducted on more personal lines. demand is for different products: local knowledge is essential. English won't serve: some of the site must be in the national languages. addresses don't follow US standards. tax and shipping are not covered by US or European rates. credit cards are not widely used. over-regulation by government and/or control of Internet material.

•

fraud at unacceptable levels (up to 80%).

Apart from the occasional IDC and NUA reports, {1} few overall surveys are readily available for this wide swathe of countries — perhaps a reflection on prospects — and the picture has to be put together from scattered Internet material. South Africa's Internet population exceeds that of the rest of Africa put together, but while a 1999 study of South African ecommerce found a readiness to embrace new technologies, it also pointed to the need for deregulation.{2} Nonetheless, though lacking cyberlaw legislation, {3} South African online sales reached R 20 million over the 2000 holiday season — encouraging, though but small beside the $10.7 billion in the US over the same period. {4} The 2001 Internet World Israel was only moderately attended, with many exhibitors receiving more resumes than business cards. {5} A 2001 survey has looked at the market for high-end integrated software products in Turkey, {6} but the abstract doesn't disclose findings. Ecommerce growth has been slow generally in the Eastern Bloc. {7} Appreciable and growing numbers of people use the Internet in southeastern Europe, but ecommerce spending in Bulgaria will increase only by 150% over the 2000-2004 period, an IDC report predicted.{8} Much of India belongs to the Third World, despite its own silicon valley at Bangalore, but awareness of the benefits of B2B (and to a lesser extent B2C) ecommerce is increasing.{9} Indeed, the country recently introduced ecommerce legislation and realtime card processing systems {10}. Ecommerce has arrived in Russia, despite a dislike of credit cards {11}, and some 500 shops were online in 2001. Only some 4% of Russians possess a credit card and 80% of online transactions are in cash, through a variety of payment devices. {12} Legislation was put in place some time ago, {13} and a large potential is recognized. Most countries (and particularly India) have their ecommerce entrepreneurs offering site design and web hosting, but their frequency and selling pitches are nothing like those in the US. Ecommerce has a long way to go — as have the all-important supporting services: credit card processing, fulfillment and shipping — but opportunities for market position exist for companies with patience, contacts and resources. The July 2002 Economist Information Unit {14} ranked preparedness for ecommerce as follows (USA scoring 8.41)

Country

Index

Israel

6.79

South Africa

5.45

Turkey

4.37

Bulgaria

4.25

Sri Lanka

4.05

India

4.02

Romania

4.00

Russia

3.93

Saudi Arabia

3.77

Egypt

3.76

Iran

3.20

Ukraine

3.05

Nigeria

2.97

Pakistan

2.78

Algeria

2.70

Kazakhstan

2.55

Azerbaijan

2.38