The E-volution of E-commerce Part IV:
Worldwide E-commerce Explodes

In sharp contrast to ACEC’s hesitance to formulate hard-and-fast conclusions, dozens of research firms have released e-commerce reports within the last year with highly optimistic outlooks. For example, according to Forrester Research 17 million U.S. households will be shopping online by the end of this year, spending approximately $20 billion. The trade association Shop.org’s figures slightly differ, as it predicts that e-tail sales will practically double to $61 billion this year, from $33 billion last year.

Moreover, worldwide e-commerce is set to explode. International banking firm Piper Jaffray estimates that by 2001 the e-commerce marketplace will exceed $228 billion, Price Waterhouse foresees online trade of goods and services generating $434 billion by 2002, Activmedia estimates $1 trillion worth of e-commerce revenue by 2001, and Forrester Research estimated in 1998 that business-to-business e-commerce will rise to 1.3 trillion by 2003, and recently revamped that figure this year to be $3.95 trillion worldwide.

However, the biggest profits and overall growth are liable to be made in the business-to-business (B2B) market, which CIO Magazine calculates accounts for 80% of the overall e-commerce market. Forrester ‘s B-2-B market scale begins with $403 billion in 2000, $953 billion by next year, $2.18 trillion by 2002, and by 2004, B2B e-commerce will exact 7% of the projected $105 trillion total sales transactions worldwide. IDC agrees and predicts e-commerce to grow from $130 billion in 1999 to $2.4 trillion in 2004.

“An international perspective is necessary to address this subject since e-commerce potentially crosses national borders to a greater extent than other, traditional forms of doing business.”

~ Advisory Commission on Electronic Commerce,
Report to Congress, April 2000

Regardless of the wide differences in access, statistics show that overall usage of computers and the Internet both in the United States and around the world have increased dramatically. In 1993 it is estimated that less than 5 million Americans were using the Internet, today that number has increased by 20 times to exceed 100 million according to the Commerce Department. Internet strategy firm Nua believes that as of May of last year there were 171 million people across the globe accessing the Internet, with more than half of them being in the U.S. The Commerce Department reports that by March of this year the number of Internet users escalated to 304 million. Research firm Global Reach gives a more conservative estimate stating that as of January of this year there were 252.5 million users around the world. UNDP Administrator Mark Brown wrote in the agency’s June 2000 issue of Choices that it estimates that by 2001 there will be 700 million Internet users.

And even though the UNDP calculates that the U.S. has more computers than the rest of the world combined, Nua estimates that there was a decline in world share of Net usage for North America last year, falling from 62% in 1997 to 57% in 1999. Furthermore, although that the number of people in the U.S. gaining internet access jumped to 40% over the last year, it paled to the increase seen across the globe, with most regions at least doubling their previous numbers of Internet users (see chart below).

Nua also projects that one-third of e-commerce spending will be generated outside the US, tripling the amount spent worldwide last year (not including the U.S.). CIO Magazine stated in its April 10 issue that 60% of e-commerce revenues will come from outside the US by 2004. Forrester Research agrees, predicting North America will only contribute approximately 40% of $454 billion in world sales by 2004. Gartner Group is a bit more optimistic about global spending touting figures estimating that the rest of the world’s consumers will surpass the cumulative e-spending of Americans next year and toppling our dominance by more than 150% by 2003.

However, apparently as with all e-figures, e-stats, and e-predictions these days, they must be compared to what the next Nostradomous on the block has to impart. Emarketer, which actively synthesizes other Research companies’ data, believes a lot of the bells and whistles are inflating the true estimates for the current e-conomy. Its own worldwide e-commerce projection is substantially less than many others, $187.6 billion by 2003.

Perhaps the most extraordinary thing about these figures is that barely three years ago the amount of Internet-based commerce was cumulatively less than $10 billion (in the US).

Part V: The Dot-com Demise

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