Yesterday and Tomorrow: Some 
Facts about Electronic Commerce Trends

E-commerce Revenues to Surge

In a July 1997 report, International Data Corporation (IDC) predicted that the growth in the number of on-line buyers and the amount of the average transaction will drive e-commerce up $2.6 billion in 1996 to more than $220 billion in 2001. 

Forrester Research Inc. says consumers rang up $530 million in on-line transactions in 1996 and will drive that up to $7.17 billion by the year 2000. 

The Yankee Group in Boston estimates consumers spent $730 million in 1996; by the year 2000, consumers will account for $10 billion in e-commerce sales. Business-to business e-commerce accounted for $12 million in 1996, but is expected to skyrocket to $134 billion in the next three years. 

Forrester Research estimates that the overall Internet economy will approach $200 billion in 2000, up from $15 billion today. The report detailed five other major industry segments poised to reap financial gains from the Internet:
infrastructure, access, content, financial services, and consumer retail. 

Forrester predicts that durable goods manufacturers will lead the rush to Net-based e-commerce, reaching $99 billion in sales by 2002. Makers of paper, plastics, apparel and other non-durables will sell $17 billion online
by 2002.  

In a survey published earlier this year by CommerceNet, an industry consortium, and Nielsen, a media-research firm, 73% of Internet users had used the Web for shopping in one way or another in the past month. 

The Market

Jupiter Communications expects the number of U.S. households on-line to rise from 14.7 million in 1996 to 36 million by the year 2000. 

According to projections by IDC, by 2000, 46 million consumers in America alone will be buying on-line, spending an average of $350 a year each. 

Volpe, Welty, & Co estimates the number of companies engaged in interbusiness electronic commerce will rise from 111,000 in 1996 to 135,000 in 1997. Over 435,000 companies are expected to engaged by year 2000. 

Market Drivers 

The composition of the Web is changing dramatically. According to ActivMedia, one in four Web sites is now a retailing site, with the number to significantly rise in the near future. 

According to Jupiter Communications, the travel industry has emerged as one of the fastest growing segments of the Internet. Jupiter projects on-line spending for travel services will reach $1 billion by the end of this year almost 50 percent of the $2.3 billion that will be spent
on-line this year and will continue to grow to the $3 billion mark by the year 2000. 

Forrester Research predicts that three non-technology segments will drive revenues from the Internet in the year 2000: 1) content; 2) financial services; and 3) consumer retail. Improved security and the increasing number of
households on the Web will drive consumer retail to $7 billion in 2000. 

According to Forrester Research 150 companies in 12 industries found the biggest internal hurdle to e-commerce was getting a company’s own marketing and IT groups to work together. Another major issue was tying front-end customer systems to back-end order
processing systems. 

Demographics to Note

Women shoppers spent approximately $368 million online in 1996, according Jupiter Communications. By 2000, Jupiter forecasts that this figure will grow to nearly $3.5 billion, based on the ever-increasing numbers of
women going on-line. 

Forrester Research reports that nearly 5 million 18-to 24-year-olds are currently on-line, and will surge to 10 million by 2001. Of the 25 million young adults now in the United States, 22% are already on-line, and by 2001, more than a third of this group will be wired. 

A new study conducted by NAVIDEC found that Internet users over age 50 shows the older crowd is just as active on-line as younger users, though with different interests. The icing, for those interested in commercial use of the Internet, is that users over 50 are both more affluent and more inclined to buy products on-line than their younger counterparts. 

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