The future of business
Data collected from the US (1999) shows the e-commerce percentages of total value in the following different business areas (See Appendix 1): Looking at this data, I could safely say 20% of the Total Value of Business Trades was e-commerce, which is a respectable amount considering how long e-commerce has been used for. This data shows Manufacturing and Merchant Wholesale Trade, (sectors where goods are sold to other businesses) had substantially higher e-commerce percentages than Retail Trade and Selected Service Industries (sectors where goods and services are sold to individual consumers as well as to other businesses).
Looking closer at the percentages, if all manufacturing and wholesale e-commerce was entirely business to business trade and all retail and service e-commerce activity was entirely business to consumer, more than 90 percent of total e-commerce would be business to business. This shows that one of the best uses of e-commerce is in fact for business-to-business trade. However, business-to-consumer e-commerce has the potential to affect the way in which people live and interact with each other and is therefore also a key aspect for statistical measurement, for example personal banking is a business-to-consumer service, and can drastically affect the way in which people live, and if the e-commerce formula works true for personal banking then surely a great competitive advantage would be available.
One of the main factors that will determine the success of business-to-consumer e-commerce will be the availability and ease and readiness of capable technology, such as computers with Internet access and interactive/digital television. Taking a look at some 1998 statistics in the UK, approximately 32% (up to 50% in certain areas) of UK households had a home computer (See Appendix 2), and it was predicted that this would rise to 44% by the year 2008. Where in fact the reality is access to computers and the internet has developed much faster then anticipated (a projected 10% increase per month), from an estimated 11.5 million internet users in 1999 to 25 million in internet for personal use (April 2001). This is important data, as the use of e-commerce is largely dependant on how many people have access to the Internet. So with such an obvious public interest in technology, and the Internet, then surely e-commerce is the way forward for many consumers.
With such an active public interest in technology and the Internet, companies such as Egg Plc, an online banking company, noticed the potential edge that could be gained from such wonders as online banking, and has flourished ever since. Egg estimates that 54% of Britons are now using interactive technologies, which is probably why they also report that a huge increase of 37.5% in online banking within the past 6 months, now standing at roughly 5.5 million online bankers. (See Appendix 3)
Looking at egg’s 5-year report from 1996 to 2000 (See Appendix 4), egg’s net interest has gone up and up and up from ï¿½1 million in 1996, up by ï¿½3.8 million when they reached 1997, and most noticeably, particularly after the 1998 period, up to ï¿½10.5 million when Prudential launched the Egg business (www.eggcom) in October 1998, which shows fantastically how well electronic commerce, along with the huge boost in home technology and internet access has effected the company. This is shown as in the next year they reached ï¿½22.4 million net interest income, and up to an incredible ï¿½80 million by 2000, showing a 761% increase since the introduction of the Internet to the company.
Also what is quite noticeable is the amount of egg customers, and how quickly they increased, not surprisingly after the 1998 launch of egg (which stood at 155,353 customers) the customers increased by 510% to 792,348 at 1999. The gap in the market was clearly discovered, and allowed a huge potential success for the company.
After looking at the Egg Plc example, I can conclude that electronic commerce can be said to affect the productivity, profits, and distribution systems of businesses. The use of electronic websites presumably expands the potential market for businesses’ goods and services and thereby increasing the sales income generated. The company is increasing the range of potential new customers and business hours, as they are introducing a potentially global customer base, and can be available for 24 hours a day.