For ten years, almost every year, we’ve been hearing and reading about the “takeoff” of electronic commerce. Piles of books, articles, reports, online and in print. Countless conferences, seminars, university teaching, etcetera. Lots of hype, very rare accurate reporting of facts.

All of the projections and forecasts were wrong, in one way or another. There were two basic mistakes in the concept of an imaginary “new economy”. One is that anything relating to information technology or online activity would happen in a separate time frame – much faster than anything else. That is just nonsense. The other is that new solutions in sales and distribution would, or could, replace the existing systems. That may be happening in a few cases, but not as widely (or as soon) as it was expected.

But there are developments – and they aren’t small. For several years The Economist has been wisely skeptical about e-xaggeration. On May 15, 2004 it published a front-page story titled E-commerce takes off.

This extensive report is based mostly on the US market – that is different from others for several reasons. One is, obviously, size. Another is that mail order buying was widely established long before there were computers or electronic networks. More recently, twentyfive years ago, there were online commercial services (that was eighteen years before use of the internet became a widespread habit in American households.)  Of course there are e-commerce opportunities, and facts, in Europe and in other parts of the world. But it’s unwise to believe that they always happen in the same way (and in the same time frame) as in the American market.

In 1999, at the peak of the stock exchange “bubble”, there were grossly exaggerated projections about the potential of e-commerce. In 2000 and following years, with the bubble deflation and many “dot com” collapses, there were equally exaggerated perceptions of total failure. Of course there were successful online businesses before the bubble, and they are still there – including “classics” such as the Amazon bookstore and Dell computers.

And, of course, there are (relatively) new developments. According to the Economist report transactions on E-Bay in 2003 were worth 14 billion dollars. The single largest category, by amount of money, was second-hand cars.

(There are other developments in the car business. Online bookings for rentals are increasing, while people use websites to collect information before they go to a dealer to buy a new car).

It’s no surprise that travel is one of the fastest growing areas in online business. This is not only because people and companies find it convenient to compare and book directly, but also because airlines like the idea of bypassing travel agents and saving the cost. There also relevant increases in the online booking of hotels, organized holidays, etcetera.

In retail many Americans are doing online what their grandparents did by mail-order (or phone). But “brick and mortar” dealers aren’t losing business. Online retail sales in the United States rose to 5.5 billion dollars in 2003. That’s a large figure, but it’s only 1.6 percent of total retail. Also in the case of books Amazon’s success isn’t threatening the survival of neighborhood bookstores or large distributors.

In other areas, however, traditional shops are losing ground. In addition to travel agents, there is also the case of music.

Of course (for all sorts of goods and services, not only cars) there is widespread “window shopping” online. It’s probably an exaggeration to say that half the people in Europe who have an internet connection use it to check before they go out to buy, but it’s a fact that the influence of information on purchase decisions is much larger than direct online sales.

It has always been difficult to measure the actual volume of business-to-business online transactions. It’s pretty large, but in some areas it isn’t growing. For instance The Economist reports that several companies are disappointed with the results of automated purchasing systems and are going back to cooperation with experienced and trusted partners. However there are cases where suppliers are forced to go through the buyer’s standardized online procedures. In the case of WalMart this involves purchases worth 250 billion dollars.

It’s large, complex and changing picture. But it’s clear that e-commerce exists – and it’s growing.

It’s surprising, however, that one of the most reliable magazines in the word made, this time, a mistake. It isn’t in the report. It’s in the headline. There is no “takeoff”, no abrupt change from rolling on a runway to flying. In spite of the hype and the disappointments, e-commerce has bee growing consistently for over twenty years. There will be more developments and changes. Some will be slow, some will be faster. But people’s habits and behaviors don’t change as quickly as the gee-whiz prophets wanted us to believe.

In all this there are three basic facts.

• Technologies work when they fit people (not vice versa.)
  See The stupidity of technologies.



• The key to success is service – carefully tailored, and constantly verified over time, to meet the real needs and desires of customers.



• All sound business, especially online, is built on mutual trust. It takes time and care to establish and develop strong relationships.

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