Anaheim, California, September 9-12, 1996
Just a few years ago Internet Commerce was an oxymoron. At the Internet Commerce Expo at the Anaheim Convention Center, analysts from International Data Corporation presented studies showing $328 million in actual charted sales for 1995. By 2000, that figure is projected to grow to $116 billion. Internet advertising alone, $180 million in 1995, is projected to reach $1 billion in 1998.
Are there business opportunities? You bet. Commercial Web sites currently break down into three categories: 80% are static, 15% support some type of online catalog or commerce and 5% have full-blown ordering and payment capabilities. First-year costs for the hardware, software, design and staff for a top site average $1 million. Each "super site" typically offers over 60,000 products to customers located primarily in the United States.
Think Globally, Shop Locally
We think the Internet is big here, although only 15% of all households currently have Internet access. In Europe and Asia, the number is less than 4%. On top of that, while one in three users in North America may actually shop online, only about one in twelve do so outside the U.S. These factors suggest it may take a decade for the rest of the world to catch up. But catch up they will. The U.S. has only 5% of the world's population and the number of international users is expected to increase tenfold by 2000, from 9 million to 90 million. So, within a few years, half of all Internet users will live outside the U.S.
What Sells?
As you might expect, top-selling consumer products on the Internet are likely to be computer related or appealing to the technically savvy. Products with broad appeal that sell in all parts of the country, or which have a passionate following, such as sports-related items, work well. Just make sure the product can be purchased on the basis of information.
Who Sells?
Ninety-one percent of all businesses with over 100 employees have some access to the Internet, so business-to-business transactions are a big market. On the other hand, Ted Leonsis, President of America Online Services, claimed, "Last night, we kicked Larry King's butt. We are pulling prime-time ratings like an NBC." He expects AOL will sell $250 million in advertising this year.
Is it Profitable?
At the executive cross-fire session, "How Do You Generate a Profitable Business Model for a Commercial Web Site?," c|net CEO Halsey Minor quipped, "Everyone is going to be profitable in the third quarter of next year." The IDC analysts spoke of an "Internet hangover" in which companies are having to spend more than they anticipated on cutting-edge sites.
The driving force is access. Three thousand six hundred companies now offer Internet access services. Corporate access is growing at 73% annually. The amount spent on access alone will be over $8 billion in 2000, $5 billion corporate and $3.2 billion for individuals, 160 million people all together.
Statistics from International Data Corporation, an International Data Group Company.