Giga Puts Big Number on Online Business Savings

The results of a study released today by Giga Information Group (Nasdaq: GIGX) told everyone in the e-commerce world their instincts were right: Buying online saves money. Not exactly a startling revelation, but many companies that have poured big bucks into changing their buying and selling strategies may take heart from the Giga study’s concrete numbers.

The projections are based on Internet growth estimates and 1998 online sales figures. In 1998, the researcher says industrialized nations saved $17.6 billion, but the lion's share -- $15.2 billion - was realized in the United States. As reported, America's competitors in Europe and Asia are expected to quickly close the gap in Internet trade over the next several years.

Internet Business Equals Profits

Since cost savings yield greater profit margins in most cases, Giga says the ultimate result will be more effective companies even if gross sales revenues do not climb at the same rate. Profits attributable to Internet-based cost savings will range from $360 billion to $480 billion for U.S. companies by 2002. Results should be similar in other countries, the researcher added.

"The Internet is more than just a new way to sell products and services, it's a way to efficiently run a business, resulting in significant cost savings that add to an organization's bottom line,'' said Andrew Bartels, a vice president following the e-commerce market for Giga Information Group.

The broader sales reach and the opportunity to make a more dynamic sales pitch are only the beginnings of the Internet's benefits for companies. While those features directly impact gross sales revenues, companies that creatively and aggressively integrate the Internet into their internal operations stand to gain from many other cost saving factors, Giga says.

Web sites speed a company's order handling and processing operations, giving distributors and resellers a place to submit orders, verify prices, check order status and make other inquiries while the company employs a smaller workforce to handle such communications. That service has a trickle-down effect for the distributors and resellers, who become more efficient because of their online access to the supplier. Similarly, making product and company information available online to potential customers builds a company 's image and loyal customer base, Giga says.

The Internet has a similar effect for companies communicating with their own field sales forces or distributors, making changes in marketing and sales plans and training materials more efficient to distribute. Many companies are similarly embracing the Internet for internal employee communications and human resources needs, Giga says. Employees sign up for benefits, search for new job opportunities within the company, make travel plans, order supplies and report expenses online.

Giga is based in Cambridge, Massachusetts, with 10 other offices around the world. The company, founded in April 1996, specializes in helping companies integrate the Internet into their businesses.