The internet is clearly here to stay, and as e-commerce takes off, both businesses and individuals are beginning to reap its benefits.
The internet will be the cash crop for resellers as more UK businesses gear up for selling over the Web. The internet is rapidly moving towards being a global economic driving force.
The US still leads the way and has performed the first large-scale study of the Web economy. The US Department of Commerce revealed that use of the internet is doubling every 100 days and that the digital economy already represents more than eight per cent of the US gross domestic product.
It also revealed that computer and communications industries were growing at more than double the rate of the US economy.
The US Secretary of Commerce William Daley said: 'For several months, we have looked at the economic impact of information technologies ... In the past five years, information technologies have been responsible for more than one-quarter of real economic growth ... Investments in information technologies account for over 45 per cent of all business equipment investment.'
Daley had some powerful examples to back the US belief in the internet as a business medium. He revealed that General Electric plans to buy $5 billion of goods over the internet, that Dell's internet sales peaked at $6 million per day and Cisco Systems internet sales reached $1 billion by December 1997.
But it is not only the large corporates that will make money.
'E-commerce gives small and medium-sized firms immediate access to worldwide markets without the need for overseas trips or overseas reps,' said Daley.
He added that the rewards for individuals jumping on the e-commerce rollercoaster are high. The report revealed that the 7.4 million people working in the area earn 64 per cent more than the private sector average.
The question remains whether the UK is willing or able to enjoy the benefits of e-commerce. Nick Gibson, analyst at Durlacher Research, revealed that in the UK, access to the Web via leased line is set to climb by over 100 per cent in a year, and there are about 1.5 million residential users already. 'It certainly looks good for e-commerce. So far, the things people are buying over the internet are mainly holidays, software and entertainment goods like CDs, books and videos. But PC penetration and the lack of bandwidth inhibit the technology. There is also the problem of providing interesting local content,' he said.
This growth is also leading to another, less welcome, boom. According to a report commissioned by Novell, unsolicited and junk email or 'spam', is costing UK business #5 billion per year (PC Dealer, 29 April).
Heather Stark, principal consultant at Ovum, warned: 'Setting up to do business online is a high-risk venture. Businesses that go online are taking part in a very public experiment. For every rising star of online commerce, there are massive dark spaces in between, with no signs of life.
As the internet changes from a communications channel to a revenue channel, it will trap many organisations into evolutionary blind alleys of their own making.'
UK businesses are still taking a cautious approach to the internet.
A survey of 578 UK companies by the Institute of Directors revealed that only four per cent were selling over the internet and 30 per cent did not have a Website. This slow adoption rate could be costing UK business dear. Global e-commerce accounts for nearly #5 billion, but analysts expect it to rise to about #180 billion by 2002.
Governments are already taking steps to tackle the problem of how to tap this potentially huge source of revenue. The US is attempting to keep the internet free of customs tax, while the German Finance Ministry is pushing for the global adoption of VAT on the internet. As the world economic powers express concerns over the internet as a business medium, the main industrial nations have established the G8 electronic commerce committee in an attempt to lay down guidelines.
The tidal wave that is the internet and e-commerce is in the process engulfing the world. Dell intends to achieve 50 per cent of its sales via the internet within the next few years, according to chairman Michael Dell. Tom Mere-dith, Dell CFO, announced that daily European internet sales figures have now outstripped those of the US.
As individuals, businesses and governments are all focusing their attention on the new business tool, UK business needs to understand the changes in culture that it will bring in its wake.
'Businesses must avoid falling into the trap of ignoring online commerce because they do not know how to react to it,' said Stark. 'Equally, they should not be driven by fashion, fear, or a vague feeling that they should make the most of future opportunity.'
The UK follows the US lead so often that Daley could be right. He believes: 'that the digital economy is alive and well and growing; some businesses and workers are reaping the benefits; businesses of all sizes should prepare for the digital economy; and given the role of e-commerce, government should rethink the way it looks at the economy'.
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