Don't Believe The Hype

Persistence, strong financial backing and a solid niche put Raging Bull's Web site on the path to success. But not everyone who hangs a shingle out on the Internet is so lucky.

So let's get real. What's really going on? All too often, online retailers launch e-commerce sites only to find themselves competing with a dozen similar companies or having their concept copied. Web storefronts come and go due to lack of marketing, financing and consumer interest. Online retailers must also deal with government regulations (think taxation) and issues of privacy, poor customer service and security.

"Customers are still very concerned about putting their credit cards [on the Net]," says Andy Sernovitz, president of the Association for Interactive Media, a Washington, DC, organization that represents business interests on the Internet.

No doubt there are plenty of lessons to be learned and mistakes to be made. But if you can navigate the treacherous e-commerce waters, your potential to succeed-and succeed handsomely-is enormous. According to International Data Corp., commerce on the Net is expected to increase tenfold to a whopping $400 billion by 2002. The number of Web buyers will expand from 18 million in 1997 to 128 million in 2002.

"More people are online today than had TVs when man first landed on the moon," Sernovitz marvels. "There's an unbelievably big market online, and it's unbelievably cheap to reach them."

Just who is buying online? As with brick-and-mortar storefronts, there's no general rule. But for the most part, it's still consumers in middle to upper-level income brackets who can afford computer equipment and online services. After that, though, anything goes.

"People of all ages, all over the world, men and women-they're all buying online," says Sernovitz.

Books and magazines, computer software and hardware, music CDs and tapes, movies, specialty clothing items, and travel-related products and services remain the hot-ticket items being purchased online. The 1998 Christmas season also saw an online buying surge in specialty gift items like perfume, flowers and candy, says Sernovitz.

But while much attention focuses on the consumer sector, in the near future, the truly big gains will be made in business-to-business e-commerce. According to Forrester Research, within the next five years, online business-to-business commerce will account for $327 billion annually, compared to $17 billion for online consumer commerce. Forrester projects online business trade will find its way into all business supply chains, particularly computers, electronics, aerospace, defense, utilities and motor vehicles.

"In the near future," says Sernovitz, "customers are going to expect businesses to sell online and answer their questions electronically, much as how they [now] expect them to have an 800 number."

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This article was originally published in the May 1999 print edition of Entrepreneur with the headline: E-Reality.

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