Mel and all,I hope E-data can handle all this.....
November 8, 1996: 4:14 p.m. ET
The largest marketplace for computer products online.
Online markets thriving. Electronic commerce is making the Internet the
[Internet commerce] hottest market around.
Internet commerce is the
latest, biggest buzz in corporate
America, with thousands of companies
lining up to buy and sell online,
and hundreds more ready to provide
the tools to get them there.
] The obstacles are daunting,
but if optimists' predictions come
true, the Internet could become the
biggest marketplace on the globe by
the beginning of the next century,
an electronic bazaar that will
change the landscape of domestic and
international trade forever.
"The net has created an open
market for anyone who wanted to jump
in," said Jay Tenenbaum, chairman of
CommerceNet, the Internet commerce
consortium.
Internet commerce involves
retailers selling music CDs, flowers
or books on the World Wide Web, and
consumers paying for them from
virtual wallets with secured credit
cards, digital dollars and
electronic checks.
Investors can purchase stock
through online brokers, and bank
customers can log on to move funds
from checking to savings accounts,
and pay their bills. Companies can
use the Internet to reach suppliers
and customers, and transfer
purchasing, distribution and other
corporate functions to intranets.
Because Internet commerce
encompasses so many things, it is
hard to determine exactly how large
a market it is, or will be.
Today, business-to-business
transactions account for the biggest
piece of the electronic-commerce
pie. Revenue from corporate
e-commerce could explode to $13.4
billion next year, from $2.8 billion
in 1996, according to a poll of
1,100 commercial Web sites by
ActivMedia, an Internet researcher
based in Peterborough, New
Hampshire.
Online retailing --
merchandise sales to the public from
stores on the Web and online
services -- should reach $6.6
billion by the year 2000 from $518
million this year, according to
Forrester Research, from Cambridge,
Massachusetts.
But electronic commerce
isn't there yet.
Most consumers still shun
using credit cards online, despite
studies that show electronic
transactions are less susceptible to
fraud than off-line purchases.
Privacy is another big concern.
Early Internet stores and
online malls were unattractive,
disorganized, understocked and
lacking conveniences such as online
ordering. It is no surprise that
shopping ranked last in a recent
Advertising Age poll of Internet
users' online activities, well
behind news gathering and e-mail.
] On the merchant side,
off-the-shelf solutions for building
Internet storefronts were
non-existent until the last six
months. Web-based business is still
hampered by lack of infrastructure
and standards, regulatory
constraints and societal barriers,
according to an electronic-commerce
study conducted by consultants
Arthur D. Little and the Giga
Information Group.
The Internet industry is
working double time to remove these
impediments.
In recent months, a "Who's
Who" of Internet giants has
announced a dizzying array of
products meant to smooth the way for
retailers, direct-mail marketers and
others itching to get wired.
Offerings include hosting services
from AT&T, MCI, IBM, BBN and others
who will create and run a company's
Web business.
Companies that want to run
their own transaction-based Web
sites can buy software building
blocks from Netscape, Microsoft,
Open Market, Connect Corp. and
dozens of second-tier competitors.
Commerce servers are
software packages that turn a
high-performance workstation into a
Web site capable of handling online
transactions and associated billing,
security and customer-service
functions.
To deal with perceived fears
of the Internet safety risks, AT&T,
America Online and other cyberspace
mall managers are guaranteeing
credit cards against theft,
promising that if card data is
stolen while customers shop, the
companies will pay the $50 liability
deductible if credit-card issuers
don't cover it.
No America Online subscriber
has ever had credit-card information
stolen while shopping online, but
company officials are offering the
guarantee as a security blanket.
In another effort to bolster
public trust, the non-profit
Electronic Frontier Foundation and
CommerceNet, the Internet commerce
trade group, have announced eTRUST,
a set of stringent privacy
guidelines for online merchants due
in the first quarter of 1997.
Meanwhile, dozens of banks
and merchants have endorsed the SET
standard for secured credit-card
transactions created by a consortium
led by MasterCard and Visa.
Financial institutions are currently
testing SET protocols with an eye to
building the safety procedures into
the electronic payment services they
offer merchants next year.
Other companies are devising
online payment mechanisms that will
one day fill in for cash.
Market leader CyberCash has
struck deals with Netscape, Oracle,
America Online, Sun Microsystems,
Checkfree, CompuServe and others to
distribute the company's virtual
wallet or build it into their
respective commerce software.
CyberCash has already
distributed 700,000 virtual wallets,
which, by the end of the year, will
contain secured credit cards,
electronic checks, and Mondex's
smart card. Wallets will also
contain a form of pocket change
called CyberCoins consumers can use
to buy a single newspaper story,
play a video game or download a
software upgrade.
CyberCash rivals DigiCash
and First Virtual are marketing
their own electronic payment
schemes. Other companies are
developing keyboards with built-in
smart-card readers that consumers
could use to make purchases from
their PCs.
Despite these efforts, it
could be years, even decades, before
the public embraces alternatives to
cold, hard cash, paper checks and
plastic cards.
"It isn't something
customers are begging for," said
Bill Rollinson, marketing vice
president at Internet Shopping
Network. "Something like this almost
takes a generation" to assimilate.
Likewise, it's doubtful that
consumers will adjust shortly to
shopping online for clothes and
other items that they like to touch
or try on before they buy.
However, a growing number of
virtual companies selling computers,
software, music, books, flowers,
wine, gifts and other specialty
items are already seeing revenue
grow, and in some cases, turning a
handsome profit.
The next big thing in online
sales could be information consumers
buy a la carte and receive
digitally. CommerceNet chairman
Tenenbaum believes that by 2000,
half of all software sold will be
downloaded rather than delivered in
a shrink-wrapped box.
"The economics are
absolutely compelling," he said. |
