Changing of the guard

E-commerce is dead. Long live e-commerce.

E-commerce is dead. Long live e-commerce.

The stocks of Internet start-ups may be collapsing like a house of cards, but that hasn’t sounded the death knell for e-commerce. Far from it. Indeed, the results of this month’s CFO Forum indicate that corporate America is buying and selling on the Web at an unprecedented pace.

The vast majority - 70.6 percent of respondents - say their companies sell products or services over the Internet. That’s up dramatically from the 41.3 percent who offered the same answer when we first asked the question in February 2000. Surprisingly, an even greater percentage - 74 percent - reports using the Internet to purchase raw materials or other business supplies, an area not covered in our previous survey.

Of those companies currently selling online, 48.6 percent expect the Web to account for at least 5 percent of revenue two years from now. But 2.7 percent estimate that a stunning 60 to 69.9 percent of their top line will come from online sales by then. Moreover, 61.1 percent of companies not selling online plan to do so in the next two years.

Although only 5.4 percent of the companies who now sell on the Web derive more than 5 percent of annual revenues from e-commerce, one third of companies purchasing online acquire at least 5 percent of their raw materials that way. And 25.1 percent use the Internet for at least 10 percent of purchases.

Significantly, 88.9 percent of respondents say they make online purchases directly from suppliers. Small minorities also use purchasing consortia or online exchanges, both of which were highly hyped during the Internet-stock boom.

Sponsored

As has been the case with other revolutionary innovations, few pure Internet companies may be left standing when the dust settles. But e-commerce will remain a thriving part of the economy.

Does your company sell any of its products or services over the Internet?

Yes 70.6%

No 29.4

If yes, what percentage of your company’s total annual revenues come from Internet sales?

0 to 4.9 percent 94.6%

5 to 9.9 percent 2.7

10 to 19.9 percent 0.0

20 to 29.9 percent 2.7

30 percent or more 0.0

If yes, what percentage of your company’s revenues do you expect to come from sales through the Internet two years from now?

0 to 4.9 percent 51.4%

5 to 9.9 percent 24.3

10 to 14.9 percent 16.2

15 to 19.9 percent 5.4

20 to 39.9 percent 0.0

40 to 59.9 percent 0.0

60 to 69.9 percent 2.7

70 percent or more 0.0

If you currently do not sell any products or services over the Internet, do you have plans to do so in the next two years?

Yes 61.1%

No 38.9

If yes, what percentage of your company’s revenues do you expect to come from sales over the Internet two years after you begin selling over the Internet?

0 to 4.9 percent 69.2%

5 to 9.9 percent 23.1

10 to 14.9 percent 7.7

15 percent or more 0.0

Do your direct competitors sell products or services over the Internet that you sell through traditional channels?

Yes 59.2%

No 40.8

If yes, are they hurting your company’s sales?

Yes, dramatically 0.0%

Yes, slightly 16.1

Not yet, but they may soon 25.8

Not at all 58.1

Are your customers pushing you to create or expand an e-commerce capability?

Yes, greatly 6.0%

Yes, somewhat 52.0

No 42.0

If your company sells products or services over the Internet, do you allow customers to make payments online?

Yes 52.8%

No 47.2

Do you provide real-time order-status inquiries online?

Yes 57.8%

No 42.2

If your company sells products or services online, does it also have a subsidiary or division dedicated to that business?

Yes 29.7%

No 70.3

Does your company purchase raw materials or other supplies online?

Yes 74.0%

No 26.0

If yes, how recently did you begin such activity?

Within the past six months 21.6%

Six months to one year ago 13.5

One to two years ago 56.8

More than two years ago 8.1

If yes, what percentage of your company’s raw-materials volume is purchased online?

Less than 5 percent 66.7%

5 to 9.9 percent 8.3

10 to 14.9 percent 16.7

15 to 19.9 percent 2.8

20 to 24.9 percent 0.0

25 to 49.9 percent 2.8

50 percent or more 2.8

If yes, how are you making these purchases?

Through a consortium of buyers in your industry 19.4%

Directly from suppliers using their site or sites 88.9

Through an independent online exchange 22.2

Through “Dutch” auctions 5.6

If yes, how will your online purchasing activity change during the next 12 months?

It will increase 86.1%

It will decrease 0.0

It will stay about the same 13.9

If no, does your company plan during the next 12 months to begin purchasing raw materials or other supplies online?

Yes 50.0%

No 50.0

The results of CFO Forum are based on quarterly surveys of a universe of 1,600 chief financial officers. Because of rounding, responses may not total 100 percent.

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