The Future of Ecommerce

According to a new study from the Center for Research in Electronic Commerce, eCommerce will become the industrial revolution of the 21st Century.

The Internet economy continues to grow robustly, with both new and established companies reaping profits online. eBusiness still has huge untapped potential, according to Anitesh Barua, associate professor of information systems at the center. He believes that its effect on our industrial economy will be as significant as the shift from the agricultural economy of the 17th Century.

Barua discussed the Dell-sponsored study during the company's press gathering in San Francisco.

"Dot-coms are a visible but small part of the Internet Economy, and their failings are overplayed in the media," he said. "The dot-com economy is not crumbling. A great many dot-com businesses are doing well. They're running with sound business practices, and they're doing it without cash from venture capitalists."

In September, the center completed a study, which supports this claim. They accomplished this with help from more than 1,200 businesses in the U.S. and Europe. The bulk of the study focuses on the positive impact the Internet is having on businesses, big and small. This isn't just about selling something online. It's about companies taking business processes onto the Internet, streamlining them and increasing profits.

For example, large companies that implemented new Internet technologies -- such as improved supply-chain processes - saw improvements of 13 percent to 21 percent in financial performance measures. For multibillion-dollar companies, that's a huge savings that can improve the bottom line, as well as the economy as a whole.

The Internet can have an even larger impact on smaller companies, which typically do not face the same infrastructure difficulties of larger firms. A small company that includes the Internet in its business model can achieve greater market share and visibility and can reach new markets more effectively.

In the study, small businesses with annual revenues of less than $10 million saw average improvements of 40 percent to 50 percent in financial performance.

The U.S. Department of Commerce has also released statistics, which document the increasing impact of eBusiness on our lives. The online sales figures for the third quarter indicate that total online retail sales reached nearly $6.4 billion for the quarter ended Sept. 30. That's a 15.3 percent increase from the previous quarter, and the biggest increase since the department started tracking eCommerce numbers a year ago.

It is uncertain what the sales growth actually means. Does it indicate that the number of online shoppers has increased, or does it show that shoppers have simply become more comfortable purchasing big-ticket items? The fact that auto dealing is the second fastest-growing segment hints at the latter.

These figures also indicated that pure-play Internet retailers are lagging behind their mail-order and bricks-and-clicks counterparts. And despite its healthy growth, e-commerce sales still represented less than 1 percent of the $812 billion in overall retail sales for the quarter.