Travel Buys Lead E-Commerce
<B> Travel Buys Lead E-Commerce</B>
By Mary Ann McNulty
Projections for business-to- consumer e-commerce forecast an incredible surge to a Web-based world, but they pale in comparison to forecasts for business-to-business e-commerce.
In a series of unrelated e-commerce studies--some focusing exclusively on travel--analysts are projecting rapid embracement of the Web as a means to do business. Some even are forecasting that the transformations within corporations are starting with travel.
Online business trade of goods in the United States will rise from $43 billion in 1998 to $1.3 trillion in 2003," according to Forrester Research. Included in that huge buy will be $220 billion in business services--including travel. Specifically, Forrester predicts that online business travel will reach $38 billion in 2003, almost doubling every year from $5 billion in 1999, to $10 billion in 2000 and $19 billion in 2001. By 2003, Forrester estimates that 31.9 percent of business travel will be purchased online.
In a study of 22 large firms, Forrester Research found that a handful of leaders are moving services purchasing online, starting with business travel and temporary staffing. "But these early adopters say that most suppliers aren't ready for Internet selling," analyst Michael Putnam wrote in a study earlier this year.
"Of all the business service industries, business travel will be the most broadly changed by the Net, with more than 30 percent of all revenues coming from the Net by 2003," said Forrester Research. "Firms are targeting indirect purchasing to cut costs, of which more than 60 percent is services. The opportunity can be compelling. For example if a $2 billion firm achieves a 50 percent reduction in processing costs of service buying, it will save $20 million annually, increasing net profits dollar for dollar."
The drivers for the online movement, the study said, are time and cost savings, followed by better tracking of information, ease for end-user and reduced errors.
"Eighty percent of our travel business is routine, and we can move that online, cutting our transaction costs from $100 to $50," said one decision maker interviewed for the study.
Focusing on the trends shaping the new world of e-commerce, PricewaterhouseCoopers last month forecast an end to "intermediaries," such as travel and insurance agents, but a surge in "infomediaries," or people or technologies that can add value to a transaction by managing information, rather than inventory.
PricewaterhouseCoopers also predicts a "demise of fixed prices: a return to the art of negotiation," as technology facilitates this.
Among the other trends the consulting firm sees is that payment card transactions will remain the dominant payment type throughout the next three years, with some growth expected in the use of electronic checks. Smart card-based digital cash systems will continue to find niche applications in the food, entertainment, education and transportation markets, PWC said. The firm also predicts that the "user base for e-business ERP, which fully integrates a company's supply chain and interfaces to the customer, will grow through the use of new, easier-to-use appliances like personal digital assistants, smart phones and in-vehicle devices."
XML will become the new HTML for business-to-business applications, according to PWC. It will play a crucial role in e-business application development during the coming years.
This is the first time that PWC has crafted "The E-Business Technology Forecast," but now will issue it annually.
Forecasts for online consumer travel also are projected to surge to $20 billion by 2001, a 700 percent increase over the $2.5 billion in 1998, according to PhoCusWright Inc., an e-commerce consultancy based in Sherman, Conn.