After the dot-com bubble burst, the cold reality sank in: Most companies don’t get a great deal of revenue from Internet distribution of their products. Although roughly two thirds of the CFOs who responded to our survey say that their companies do business on the Internet, 94.4 percent of those that do get less than 5 percent of their revenues from orders placed online. That probably should not come as a surprise considering how many companies spent lavishly to create separate e-business units a few years ago only to fold them into their traditional distribution systems when enthusiasm faded as time wore on.
That said, CFOs do seem to believe that the Internet offers solid long-term growth opportunities. More than 30 percent of those who sell online expect sales to equal or top 5 percent two years from now, with 2.8 percent expecting to get 15 percent or more of their revenues from the Internet. More than 54 percent of CFOs say that they feel some pressure from their customers to create or expand e-commerce capabilities, and 70.2 percent say that their top management and board of directors are committed to the Web.
Interestingly, 64.6 percent of the respondents say that they have competitors who push products electronically that they themselves sell through more traditional channels. Of this group, 59.4 percent say that such competition is not affecting their business, but 34.4 percent think they might soon be hurt.
Of those who receive orders online, 61.1 percent also collect payments online. More than 57 percent created their own online security systems. The major change from the go-go days of the dot-com boom is that those who have Internet business units say that they have no intention of taking them public. Five years ago the answer would likely have been very different.
Does your company sell any of its products or services over the Internet?
Yes 67.3%
No 32.7
If yes, what percentage of your company’s total revenues comes from Internet sales?
0 to 4.9 percent 94.4%
5 to 9.9 percent 5.6
10 to 14.9 percent 0.0
15 to 19.9 percent 0.0
20 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 69.4%
5 to 9.9 percent 22.2
10 to 14.9 percent 5.6
15 to 19.9 percent 2.8
20 to 29.9 percent 0.0
30 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 42.1%
No 57.9
If you do not currently sell products or services over the Internet, what percentage of your company’s revenues do you expect to come from sales through the Internet two years from now?
None 42.9%
Less than 5 percent 50.0
5 to 9.9 percent 7.1
10 to 14.9 percent 0.0%
15 to 19.9 percent 0.0
20 percent or more 0.0
Do you have direct competitors selling products or services over the Internet that you sell through more traditional channels?
Yes 64.6%
No 35.4
If yes, are they hurting your company’s sales?
Yes, dramatically 0.0%
Yes, slightly 6.3
Not yet, but they may soon 34.4
Not at all 59.4
Are your customers pushing you to create or expand an e-commerce capability?
Yes, greatly 0.0%
Yes, somewhat 54.2
No 45.8
Would you say your top management and board of directors are committed to e-commerce?
Yes 70.2%
No 29.8
If your company sells products or services through the Internet, do you allow customers to make payments online?
Yes 61.1%
No 38.9
Do you provide real-time status inquiries online?
Yes 51.2%
No 48.8
Do you feel comfortable with your site’s security features?
Yes 93.0%
No 7.0
Did you develop your security system internally?
Yes 57.1%
No 42.9
If yes, do you sell it to others?
Yes 0.0%
No 100.0
If you developed it internally, how often is it upgraded?
Monthly 50.0%
Quarterly 16.7
Yearly 33.3
If your company sells any of its products or services through the Internet, do you have a subsidiary or division dedicated to that business?
Yes 38.2%
No 61.8
If yes, have you sold or are you considering selling a stake in that business to the public to raise capital?
Yes 0.0%
No 100.0
If no, are you considering creating an e-commerce subsidiary or division to raise capital at higher valuations than your business would ordinarily command?
Yes 5.0%
No 95.0
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.
