The Incredibly Quiet E-Commerce Explosion

E-commerce is garnering converts at an increasing pace, even though it is not grabbing the headlines it once did.

Analysts say this quiet explosion is making its mark in back-office streamlining of systems, in business-to-business (B2B) dealings between companies, and in efforts to assist customers by providing self-service Web channels. It is also manifesting in many companies' practical moves to cut costs and speed up operations by implementing new technology.

In fact, e-commerce has become such a natural part of the business landscape that research firm IDC predicted worldwide online sales will reach the US$1 trillion mark in 2002.

Novelty Days Over

In short, e-commerce has moved beyond its novelty days and is getting down to serious business, becoming a natural part of multichannel efforts to make sales and improve the bottom line.

"The emphasis of e-business has shifted away from the 'e' part to focus on the 'business' part," Meta Group vice president Gene Alvarez told the E-Commerce Times.

Aberdeen Group research director Kent Allen noted that in its younger days, e-commerce was ill-served by hype that portrayed anything Web-related as a way to get rich quick.

As a result of inflated expectations generated by the rah-rah machine, the dot-com implosion unfairly put the entire sector on a death watch. In recent months, however, increasing integration of e-commerce into the business operations of mainstream corporations has proven the naysayers wrong.

"E-commerce is alive and well, although we're still in sort of a mourning phase to some extent from those early days," Allen told the E-Commerce Times.

Low-Profile Players

As business recovers from the dot-com hangover, e-commerce is steadily gaining a foothold in daily business life.

"People are doing gangbusters online," Allen said.

One reason the current boom is a quiet one, he noted, is that many firms taking advantage of e-commerce are not household names. For example, thousands of small businesses are using the medium to cost-effectively serve both their local communities and far-flung markets that they never would have reached without the Net.

In fact, an online presence is helping many businesses, both large and small, extend their reach without spending significantly on new buildings or personnel.

And converging channels are providing businesses of all stripes with more opportunities to sell to existing customers and attract new ones.

Meta Group's Alvarez said the prevailing uses of e-commerce may not be as high-profile as commerce firms or investors would like, but he noted that these business practices are producing big changes, albeit under the radar. The emphasis is shifting from making stockholders rich overnight to using the Internet to boost efficiency and return on investment, he said.

Recovery Mode

Alvarez added that e-business also is recovering from the public bashing it received in the wake of dot-com crashes.

"This environment created an extreme counterreaction where some users believe that they need not invest, evaluate or even plan for e-business," he said, referring to current disillusionment with the online medium. "Yet many prudent organizations are quietly using this time well to create and update sites, which will enable them to compete for customers and service their customers at a lower cost."

Meta Group has projected that through 2005, extranets and B2B portals increasingly will be used to streamline business processes on both the buy and sell sides. In addition, B2B marketplaces will continue to provide vertical opportunities for companies to outsource services and buy supplies.

Investments Warranted

Alvarez contended that a number of e-commerce-related initiatives will merit new investment in coming years. On the business-to-consumer (B2C) front, those initiatives might include moves to buy back or integrate Web stores into core brick-and-mortar operations.

Companies also should improve search capabilities, he said, in order to reduce time required to locate products or services, enhance online visualization capabilities, streamline Web site navigation and cut download times. Adding cross-channel functionality also would be worthwhile, according to Alvarez.

On the B2B side, Meta projected that e-commerce is likely to see improved order management systems, creation of "channel partner portals" for better self-service, improved content syndication, and more online collaboration among partners on forecasting, product design and order management issues.

Such behind-the-scenes growth may not capture attention in the same way that high-flying tech IPOs once did. But experts say they bode well for the long-term future of e-commerce.

"The heyday is over, but that's a good thing," Aberdeen Group's Allen said.