Expert PredictionsWritten by Craig Pearson Wednesday, 10 June 2009 15:24
So, a paragraph earlier, we tell you to forget the numbers. Now, we are about to bombard you with a series of numbers that will make your head spin. Are you ready for some forecasts?
- A recent study by Gartner Group estimates that B2B e-commerce will skyrocket from about $145 billion in 1999 to $7.3 trillion in 2004, accounting for seven percent of all global sales transactions. Source: Gartner Group.
- Global e-commerce will reach $6.9 trillion in 2004, capturing 8.6 percent of the world's sales of goods and services. Source: Forrester Research
- One quarter of all business-to-business purchases will be made online by 2003, and will be worth $2.8 trillion. Source: Boston Consulting Group.
- Business-to-business e-commerce will dominate the business-to-consumer side by a factor of six, reaching $1.3 trillion by 2003. Source: Deloitte Research.
- The Giga Information Group estimates that Internet commerce will save companies $1.25 trillion by 2002, with the U.S. accounting for half of this amount. Giga calculates that within three years, American firms will gain a profit increase of between $360 to $480 billion due to savings accrued through e-commerce. Giga also says that annual cost savings for U.S. firms will be more than $600 billion every year by 2002. Source: National Assoc. of Manufacturers
- A poll finds that by 2001, 71 percent of corporate leaders plan to extend their business processes to eMarketplaces, where multiple sellers and buyers conduct commerce online. Source: Forrester Research.
- B2B-based Internet commerce will reach $5.7 trillion by 2004. "Customers that do not take an aggressive approach to B2B commerce will lose customers and ultimately fail." Source: AMR Research.
Figure 1: Online access will surge faster with new access devices.
Figure 2: Forrester Research's projections for U.S. e-commerce
BEHIND THE NUMBERS
So, let's take a break from the numbers for a minute and recap the significance of all of these prognostications.
If the Internet is such a vital tool, and experts agree it is to play an increasingly important role in commerce, why then are so few manufacturers capitalizing on Web opportunities? A nationwide poll of American manufacturers earlier this year found that 68 percent of those responding said their companies weren't using electronic commerce as a forum for business transactions.
"No one questions the importance of B2B e-commerce, yet relatively few manufacturers are participating in it," said Jerry Jasinowski , president of the National Association of Manufacturers. "The new NAM survey shows a wide disparity between the recognition by business that the Internet is a vital new form of commerce and the actual application of that knowledge by American industry."
The survey found that manufacturers are now using the B2B e-commerce for:
- 23 percent, new product introductions;
- 17 percent, shop for the best price;
- 17 percent, use in place of EDI;
- 13 percent, RFP/RFQ/RFI;
- 12 percent, buy intermediate materials, parts, sub-assemblies or shipping services;
- 10 percent, arrange logistics;
- 7 percent, buy raw materials;
- 5 percent, integrate existing supply chain.
To help speed things up a bit, the association launched it's own multi-million dollar website portal, (www.manufacturingcentral.net) in March.
Most online buyers are hooked on manufacturers' websites. The attraction is consumers' belief that manufacturer sites offer the best product information, the lowest prices and helpful post-purchase support.
MANUFACTURERS' SITES POPULAR DESTINATIONS
In June 2000, Forrester Research (www.forrester.com) released its findings from a survey of 10,000 online consumers in the U.S. and Canada. Of interest to manufacturers in the report, "The Manufacturers Growth Spiral" is that:
- Most online buyers are hooked on manufacturers' websites. And the no shows -- those who aren't now visiting these sites --- soon will as they become more experienced Web users. The attraction is consumers' belief that manufacturers' sites offer the best product information the lowest prices and helpful post-purchase support.
- While pure-play Web retailers and traditional brick-and-mortar merchants fight over online buyers' wallet share, 80 percent of consumers who've made a purchase online have found another place to shop on the Internet: manufacturers' websites (see the May 2000 Forrester Report "Retail & Media Data Overview").
Online buyers who visit manufacturer sites also visit often. Web shoppers who visit manufacturer sites don't click on them by accident; 62 percent of the nearly 9,000 online buyers in Forrester's survey who have ever visited a manufacturer's site say that they do so regularly.
Forrester also found some evidence that manufacturers are finally expanding their Web efforts. "Manufacturers who've dipped their toes in the water are ready to go for a swim. While 92 percent of e-commerce-enabled manufacturers have met or exceeded their sales expectations and are planning to increase their online activity, 68 percent of manufacturers not yet selling online expect to be within three years."
CRYSTAL BALL GAZING
Here's an assortment of other interesting forecasts and predictions that we came across in our research.
- Pure play dotcom companies will gradually peter out this year and stock evaluations of Net companies will balance out. Source: IDC Research, January 2000.
- "E-business technology has already made outsourcing large modules to Tier 1 suppliers possible. As Internet technology continues to make more demand data visible, more and larger modules will be outsourced until OEMs stop manufacturing altogether. Initially powertrains, which some OEMs look at as a value-added component, will remain an OEM manufactured module, for the first four to five years. Within 5 to 10 years, even these components will be outsourced. During this 10-year transition, OEMs will continue to assemble the modules into cars, but Tier 1 suppliers will eventually take over this role too." Source: AMR Research.
- A new report by IDC shows that the market for Internet appliances -- devices designed primarily to connect to the Internet and to email -- is expected to soar to $18 billion by 2004. Source: The Industry Standard.
- A survey of American workers found that 81 percent reported using a computer in the past month, and 68 percent have access at home. One third of all workers report spending at least one hour a day on the Internet at work. Source: Rutgers University & the Univ. of Connecticut.
- The Internet economy by itself is now one of the world's major economies. The $301 billion in annual revenue generated by Internet companies now rivals the U.S. automotive ($350 billion) and telecommunications ($270 billion) industries. Source: Univ. of Texas Centre for Research in Electronic Commerce.
- By 2006, almost half of the U.S. workforce will be employed by industries that are either major producers or intensive users of information technology products and services. Innovation has increased demand for high paid IT workers, and wage gaps between IT workers ($53,000) and all other workers ($30,000) continue to widen. Source: The Emerging Digital Economy II: U.S. Dept. of Commerce.
- From 1998 to 1999, the number of Web users worldwide increased by 55 percent, the number of Internet hosts rose by 46 percent, the number of Web servers rose by 128 percent, and the number of new Web address registrations rose by 147 percent.Source: The Industry Standard.
- Dell Computer's online sales more than doubled during 1998, rising to more than $14 million per day, and accounting for 25 percent of the company's total revenues. Source: The Emerging Digital Economy II: U.S. Dept. of Commerce.
- As many as 28.2 million people have personalized a webpage, more than 10 times the number from two years ago. Source: Cyberdialogue.
- Though the Internet has grown at an incredibly rapid pace, an historical analysis by Industry Standard magazine found that television penetration grew at a faster rate and radio just as quickly. Source: The Industry Standard.
- With higher bandwidth Internet access, real-time television video and audio quality presentations will be possible. Source: The Online Business-to Business Industry: ActivMEDIA Research.