Optimism blights e-commerce

The e-commerce future has not arrived just yet

The number of firms betting on e-commerce is rising steadily, but a survey by IT consultants CMG suggests that expectations are "hugely divorced from reality".

The UK, meanwhile, has lost its e-commerce leadership, knocked into second place by France, according to the third CMG eCom index.

The CMG researchers interviewed managers of 250 firms in the UK, France, Germany and the Netherlands, and the vast majority, 80%, expect e-commerce activities to grow strongly over the coming 12 months.

The first two eCom surveys, conducted in June and November 1999, had seen a smaller number of firms expecting e-commerce growth - 62% and 72% respectively.

But while expectations are high, the reality appears to look different.

'Significant' decline

Only a small number of companies is recording more than 1% of revenue through e-commerce, and the index for e-commerce activity is actually down by 30% since June '99.

According to the survey, the amount of e-commerce activity declined "significantly" during the winter months, with British and Dutch firms hardest hit.

Nonetheless, the authors of the CMG survey report that "many companies now feel duty bound to emphasise their internet offerings in public pronouncements, however tenuous the link".

But while companies ramp up their internet activities, they realise that it is harder to achieve "online customer loyalty than ... loyalty from regular customers".

Online winners

Three of the firms surveyed are already e-commerce winners. They record more than 25% of their annual revenues through online trading, and a further four expect to reach this point during the next 12 months.

Just about half of all organisations say they might reach the 25% mark within the next five years.

The survey, however, only examined a relatively small sample of companies from five sectors - banking, insurance, utilities/telecoms, retail and transport/logistics.

Internet 'pure plays', which do all their trading on the web, were not polled.

And there is another factor explaining the poor e-commerce figures: Many old economy firms have just begun to focus their e-commerce activities.

In June 1999 only 45% of firms had an e-commerce strategy in place. One year on almost two-thirds have defined their strategy for the e-commerce future and are now beginning to implement it.