A new industry report by a reputable research firm and a personal prediction by a top industry analyst have come to the same conclusions regarding the future of E-commerce: The sky's the limit.
"Even the most bullish forecasts are probably conservative," said Edward Kerschner, stock strategist for the PaineWebber Group, speaking to a group of institutional investors. "Major technological revolutions are always bigger than anyone expects." As an example, he noted that forecasts about the early growth of the automobile industry were dismissed on Wall Street as too fanciful, only to have production rates far exceed even the most optimistic projections.
The new report, which substantiates Kerschner's opinions, is by ActivMedia Research, a company based in Peterborough, New Hampshire, and is contained in their 6th annual Real Numbers behind 'Net Profits 1999 study. The projections contained in that report foresee global E-commerce reaching $95 billion in 1999 and exceeding $1.3 trillion by 2003. Revenue growth rates of 150 percent, up from 72 percent, are forecast for 1999, with a further increase of 138 percent for 2000 as online buyers rely on the Internet for a wider range of goods and services, says the report.
"Expanding cross-language capabilities create increasingly permeable global boundaries," said Harry Wolhandler, ActiveMedia's vice president of market research. "Speedy digital information flow facilitates free trade and business worldwide. Political improvements coupled with faster, more efficient cross-cultural communications are fueling global E-commerce."
Kerschner did sound a cautionary note, however, when he told the group that, despite the bright prospects, investing in electronic commerce is far from simple. Internet businesses are easy to get into and, "being there first is not a guarantee of survival," noting the disappearance of many personal computer companies that were leading the business in the early 80's. Today, companies that hadn't even gone public until after the boom years of 1982-83 dominate the PC business.
His further prophesy is that in 50 years, services will account for 80-85 percent of private-sector gross domestic product, compared with 72 percent now. Agriculture and mining, comparatively, will account for only 1 percent of private-sector gross domestic product. He said that information is moving in the direction of becoming a free commodity, which is bearish for many traditional providers of news, sports and financial information.
The Real Numbers Behind 'Net Profits 1999 study is an annual publication written based on an n-th random sample drawn from 550,000 English-language publicly listed URLs. More than 890 respondents took part in the survey. It contains 175+ detailed tabulations each, shown for 125 subgroups. A few salient facts from Real Numbers Behind 'Net Profits 1999:
72 percent of Websites are still based in the U.S. \n92 percent of E-commerce is generated through U.S.-based Websites. \nExports are becoming increasingly critical to U.S. E-commerce growth. \n9 in 10 revenue dollars are product and service sales, not ads.
