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E-COMMERCE TO TOP $1 TRILLION IN 2002

Posted on February 21, 2002

      By the end of 2002, more than 600 million people worldwide will have access to the Web, and they will spend more than US$1 trillion shopping online, according to a study by research firm IDC.

      "Once people get over the security and privacy hiccups, as well as other problems that are not directly related to e-commerce, and have access to wider product offerings, e-commerce will become as widespread as offline commerce," Carol Glasheen, program vice president of IDC's Global Research Organization, told the E-Commerce Times.

      E-commerce grew to $600 billion in 2001, a 68 percent increase over 2000, IDC said.

      Residents of the United States do more shopping online than those of any other country, according to the study, but the United States' slice of the pie will shrink. "The U.S. is a more mature market, so it saw a lot of its fast growth earlier," Glasheen said.

      The United States now accounts for 40 percent of all money spent online, but that number will drop to about 38 percent by 2006 as Asia and Western Europe increase their online spending, according to IDC.

      In Asia, a smaller percentage of the population is buying online, but the sheer number of people in the region is driving growth of about 89 percent, IDC said.

      E-commerce in Western Europe is expected to rise 68 percent, partly as a result of the new common currency, which brings better competition, price transparency and improved deals for online buyers.

      Other regions of the world are "more in the 40 percent range," Glasheen said.

      Online shopping is showing its slowest growth in Japan, Latin America and Eastern Europe. "Japan jumped on early, but growth has flattened out as it has struggled with economic problems," she added.

      In the United States, 80 percent of the population will use the Web at least once a month by 2006, IDC predicted. In Canada, Web use will grow by 80 percent, with more than half of Internet users shopping online. "Canada is a little bit behind the U.S.," Glasheen said.

      Business-to-business (B2B) makes up by far the largest share of Web sales. One reason why the United States is currently ahead of the game is that B2B is catching on internationally somewhat later than it did in the United States, according to Glasheen.

      B2B will account for 83 percent of online sales in 2002 and 88 percent in 2006, according to the IDC study. "That's not to say B2C is not growing fast," Glasheen noted. "It is -- it's just a smaller slice of the pie."

      The majority of B2B sales consists of volume purchasing, meaning that companies are spending huge amounts of money online. Consumer buyers are numerous, but they are spending fewer dollars on average.

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