Big Business Faces E-Commerce Roadblocks

According to a study released this week by PricewaterhouseCoopers and The Conference Board, America’s largest companies are investing more money than ever in electronic commerce but have not yet utilized the Internet to maximum effect.

The study, titled “Electronic Business Outlook for the New Millennium,” was conducted for the second year in a row and surveyed the manufacturing, financial services, transportation, retail, energy and communications industries. Ninety percent of the respondents show revenues of $1 billion (US$) or more, with half showing sales in excess of $5 billion.

“It’s important to remember that despite how quickly e-business has changed the landscape, it’s still a new paradigm, especially for large organizations,” said Cathy Neuman, deputy global e-business leader for PricewaterhouseCoopers. “It’s not surprising that even the most enlightened companies may be facing disconnects with their e-initiatives.”

Early Development Efforts Hindered

While 17 percent of the companies said they regard themselves as innovative in e-business, 25 percent have yet to move past the “brochureware” stage. Fewer than half have instituted any quantitative or qualitative measures for assessing their performances in the e-business realm.

A majority of the respondents cited “understanding user needs” as their greatest challenge, but investing in marketing analysis and research came up as a low priority.

The following are the top five barriers to e-commerce development as cited by survey respondents:

  • Uncertain costs of implementation
  • More pressing corporate priorities
  • Lack of proven benefits within the industry
  • Lack of accepted standards
  • Current low use of the Internet by customers and suppliers

Online Payment Capability Lacking

Forty percent of those surveyed said their companies are able to handle customer orders electronically, but only 28 percent said they are equipped to process payments online.

“The fact that far more respondents said they can take online orders but can’t process online transactions tells you something is off balance,” Neuman said. “We saw how disconnects such as these led to serious e-biz failures over the holidays, with major online retailers getting slammed for inadequate supplies of inventory.”

What a Difference a Year Makes

Just one year ago, the same survey found that reputation enhancement and brand recognition were the highest e-business priorities. This year, the focus has shifted. Companies expressed far more concern with profits, and 79 percent listed development of easy buying experiences as a major goal.

Significantly, 47 percent of the companies in this year’s study indicated that they have full time e-commerce development units, while less than one third had such divisions established last year.

“For many large companies, the recent moves into e-business are like acquiring an expansion sports franchise,” said Ed Berryman, e-business director for PricewaterhouseCoopers. “The time and money and the talent are there,” he continued, “but the true potential of the team has yet to be realized.”

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