Success in e-commerce will be dependent on understanding factors such as the nature and future of demand, according to Joe Greene, director of telecommunications and Internet research at IDC Canada Ltd. in Toronto.
Greene told an audience at last month’s Comdex/Canada ’99 in Toronto that IDC doesn’t see e-commerce as an information economy, as it is commonly touted.
“It’s an attention economy,” Greene said. “How do you get people to your Web site and then how do you keep them there?”
He said, by 2003, 20 million Canadians will have Internet access somewhere in their lives and e-commerce dollars will be about $80 billion, “the vast majority of which will be business-to-business.” Only about $12.4 billion will be consumer-to-business, he said.
IDC’s first-quarter 1999 consumer studies show an overall increase in consumer-to-business e-commerce. Almost 20 per cent of people with access to the Internet are going to Web sites intending to purchase.
“They don’t always buy,” Greene said, “but that’s what they’re looking for.”
Of those who did make Internet purchases in the two months prior to being surveyed, most made one or two purchases, usually spending between $20 and $50, and the most often-purchased item by a wide margin was software. The second most common purchase was hard-copy books.
Greene stated again the commonly bemoaned fact that Canadian retailers are significantly behind American retailers in e-commerce and most Canadian dollars are flowing south.
“Most Canadians want to buy Canadian, but they can’t find the sites,” Greene said.
On the business side, 100 per cent of large organizations (more than 500 people) have Internet access, 70 per cent of medium companies (100 to 500 people) have access, and only 35 per cent of small businesses (less than 100) have access, Greene said.
Medium-sized and large organizations spend an average of 12 per cent to 13 per cent of their external IT budgets on Internet solutions and most anticipate spending to increase, according to a 1998 IDC survey of 700 organizations. As for the solutions being purchased, 46 per cent are services for implementation, 31 per cent is hardware and 23 per cent is software.
But a study of 250 small companies in February 1999 showed those companies spend less than 10 per cent of their external IT budgets on Internet solutions, and Greene pointed out that those budgets are also much smaller than the budgets of large companies, usually just covering ISP costs. Furthermore, only one-third of respondents anticipate their spending to increase.
Greene said a key growth market in business Internet will be Web site hosting, as most companies can’t afford to host their own sites.
“There’s a significant amount of money to be made among services firms to link Web sites to back-end systems,” Greene said.
To be perceived as an Internet player, he said, a company must possess these key attributes: Internet- and e-commerce-targeted offerings; strong Internet and e-commerce marketing and branding; and a high share of business channelled through the Internet.
