In the U.S., 1998's e-commerce estimated sales over the internet were 6.6 billion dollars. The expected growth over the next 12 to 18 months will be 175 to 200 billion dollars. That is a 2,651 percent growth.
This expected growth is due mainly to the fact that consumers are feeling more comfortable than they have been in the past about transacting business over the internet. One of the original concerns, and still is a major stumbling block, is the question of online security, particularly with credit card numbers. With the improvements of encryption methods and third party security verification certifications, this has relieved some of this uneasiness. Finally, the final change was only recently announced by American Express. They will begin issuing "one time use" card numbers, tied to their actual card, so that the card number put on the internet can only be used once. This makes online commerce the safest yet and should be followed by the other credit card companies. Since this information is newer than the source stated ealier, this should either speed up the estimates of online commerce, or dramitically increase the dollar and growth figures. This is truely an exciting time to be in the e-commmerce business.
There has not been an opportunity like this possibly since the industrial revolution. A company that is positioned to take advantage of this should prosper.
There are a large number of e-commerce businesses (known as dot-com businesses). Many have come and gone. The secret of the successful dot-com's has been the marketing and advertising of the business. Even with this information in hand, this can be a very volatile business because it is so easy to copy a successful business. Amazon.com, for example, exhibited unprecedented growth over their first few years. However, today, with the introduction of many competitors, such as Barnes&Noble.com, have led to Amazon.com's stock price to lose more than 65 percent recently.
The lesson here is that the best and most profitable time frame is the first few years, when the costs are the lowest. Also at this time, pricing should be kept low in order gain and maintain market share. As the business venture matures, consideration should then be made concerning whether to continue, consolidate with competitors, or get out of that industry.
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|Prepared By:||Matt Scofield|