ebusiness article

KPMG regularly publish reports on Electronic Commerce in Europe. The full version of the latest Electronic Commerce Research Report can be found in the "Topical Issues" section of the Enterprise Network web site. Key findings include:

The gap widens between the leaders and the rest

10% of companies use e-commerce to their advantage. "Leaders" achieve at least 1% of revenue from e-commerce, do so profitably and are establishing a significant lead. "Leaders" spend twice as much on Internet marketing, have board level support and an integrated e-commerce / supply chain. The results are a higher likelihood of concluding Internet transactions, increased sales from Internet marketing and proof that the Internet is more cost-effective than traditional supply chains.

Sales over the Internet set to explode within five years

.	Internet Marketing	Internet Transactions
1998	2%	1%
2001	12%	Almost 10%
2003	>20%	>16%

Extrapolating from One Source figures for total turnover of European companies with an annual individual turnover greater than $300 million, around $2000 billion will be transacted directly over the internet in 2001, $3500 in 2003. Explosion will occur after Y2k and Euro-based projects are completed.

Principal benefits are access to new customers and speed of doing business

The single most important benefit of e-commerce, for individual companies

New Markets / Customers	25%
Speed	23%
Flexibility / Adaptability	16%
Cost Savings	16%

Those identifying the attraction of new customers are more likely to be making a profit through Internet marketing and to believe that Internet commerce can give them a competitive edge. One third of those in manufacturing and in business-to-business markets, rated acceleration of business processes most highly.

Principal barriers are concerns over security and customers' lack of access to the Internet

The single most significant barrier to implementing e-commerce, for individual companies

Security Concerns	25%
Customers' lack of access	24%
Resist New Technology	10%
Lack of Knowledge	10%
Difficulty of Implementation	10%

Security concerns are misplaced; tools exist for ensuring security. Those that have already made sales over the Internet are less concerned, UK respondents the least. The financial services sector is most worried, but this relates primarily to customers' confidence in them.

The fact that lack of customer access if cited shows that companies are grasping e-commerce's possibilities - most users connect from work and may feel constrained from making personal purchases.

E-commerce is revolutionising the supply chain

"Leaders recognise the benefits of integrating business processes, both within sales and procurement. Almost half had integrated e-commerce into their supply chain. German companies were the most advanced, French the least. Half of respondents believe the Internet is more cost-effective than traditional channels, a figure directly and positively relating to experience of the Internet.

The report surveyed over 500 European companies, 459 with a turnover above $300 million, 59 with a turnover of $150 - $299 million.

Definitions:

Internet Transactions:	All aspects of the sale conducted over the Internet
Internet Marketing:	Customer browses web site but uses conventional channels to complete purchase