The European e-Business Report The European e ... - empirica

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The European E-Business Report 2005 1.4 Improving Customer Service: Electronic Marketing and Sales 1.4.1 Adoption of online selling The continued e-commerce paradox – a boom that is hard to track in statistics The E-Business Report 2004 pointed at the "e-commerce paradox" (cf. p. 26f.): while a vast majority of observers agree that e-commerce is booming in special markets such as tourism, retail and IT services, a paradox appears when it comes to tracking this boom statistically. The percentage of companies that allow customers to order products and services online appeared to be stagnating. This observation holds still true for 2005, at least on the aggregate level. There is hardly an increase in the percentage of firms reporting online sales. These observations lead to a frequently cited phenomenon. If e-procurement activities have gained momentum, as an increasing number of enterprises report buying supply goods online, who is the seller on the other side of the line? In fact, there is no straight forward simple answer, although two possible explanations are plausible: • Firstly, it appears that there is only a limited number of companies in many sectors which have specialised in selling their products online (either through their own website, on B2B marketplaces or via dedicated proprietary networks), while there are many more companies in the respective value chains that make use of this offer without selling their own products online. In other words, online selling could be – to some extent – a one-to-many activity. • Secondly, some companies make only rudimentary use of e-procurement, for instance for rather insignificant purchases of office material or other MRO goods 22 , without necessarily selling anything online themselves. The e-Business Survey 2005 provides new evidence for this assumption (see chapter 1.3.2, use of ICT systems for e-procurement). On the other hand, it is uncontested that the internet has had a profound impact on customer service and sales in several industries. A recent special report and cover story of The Economist about the impact of the internet on consumer power concluded that the digital marketplace has made the claim that "the customer is king" come true. 23 While this perspective mainly applies to B2C oriented sectors, e-Business W@tch sector reports of 2005 indicate that applications supporting customer service are clearly gaining momentum in B2B oriented sectors as well, for example in the machinery and equipment and the pharmaceutical industries. Electronic marketing and sales: key figures in 2004/05 A majority of firms from the 10 sectors studied in 2005 had a website on the internet. Figures are largely comparable to those presented in 2003. About 60% of small firms, 80% of medium-sized and 90% of large companies are represented on the internet. However, these statistics do not provide a good picture about the use which a company makes of its website. Figures include on the one hand the most simple, basic websites which may consist of only one or two pages with company information, and, on the other, highly developed sites with sophisticated interactive features, including high level e-commerce functionalities such as secure ordering and online payment systems. A useful indicator as to whether websites consist of more than just a few pages and whether they are regularly updated is the use of Content Management Systems (CMS). Currently, about 30% of firms that have a website say that they use a CMS. Among large firms, the share is about 40%. 22 23 Maintenance, repair and operating goods. Supplies which companies need to maintain their operations, for example office supplies, in contrast to direct production inputs. "Crowned at last. A survey of consumer power", in: The Economist, April 2-8 2005. 14-page special report. 31
The European E-Business Report 2005 In 2005, about 15% of firms from the 10 sectors said that they made online sales (see Exhibit 1.4-1). Thus, figures are surprisingly similar to those from the previous surveys (2002, 2003), in spite of the different configuration of sectors in 2005 and the dynamic demand for internet-based services in specific sectors such as tourism. Even the relative share of online sales (as % of total sales) has not significantly changed. In brief, it appears that there is no clear statistical evidence of the online boom. It must be considered, however, that transaction oriented statistics fail to acknowledge the rapidly increasing importance of the internet for making purchasing decisions. Thus, in a way, these figures only show the tip of the iceberg. To understand the real impact of the internet, 'net-influenced' sales must not be neglected. This approach considers the important role of the internet during the prepurchase stages, for instance for browsing offers and comparing prices. This observation, which was already presented in the 2003 edition of the European E-Business Report (cf. p. 30), still holds true and may even have increased in importance since. Exhibit 1.4-1: Online sales activity in 2004/05 Make online sales Online sales 50% Use specific ICT systems for online sales Weighting firms empl firms empl. firms empl. firms empl. firms empl. firms empl. Total (EU-7) 15 17 36 43 36 37 16 11 12 9 8 17 By sector (EU-7) Food & beverages 8 12 74 67 24 21 0 9 2 2 6 15 Textile & clothing 10 14 44 73 42 23 3 2 11 3 7 14 Publishing & printing 18 37 43 53 38 38 6 5 13 4 9 27 Pharmaceutical 13 18 54 54 30 26 4 16 12 3 12 26 Machinery & equipment 5 11 66 61 18 36 0 3 16 1 8 17 Automotive 11 6 49 73 32 15 12 4 8 8 9 24 Aeronautics 12 8 13 72 59 28 26 0 2 0 14 6 Construction 3 4 64 61 36 39 0 0 0 0 3 8 Tourism 31 36 30 28 38 44 20 15 11 13 12 19 IT services 25 25 26 45 28 27 20 12 26 16 23 40 By firm size (EU-7) Micro (0-9 empl.) 15 35 35 16 13 8 Small (10-49 empl.) 14 41 37 16 5 11 Medium (50-249 empl.) 16 36 49 10 5 20 Large (250+ empl.) 21 57 30 5 7 28 By country (10 sectors) Czech Republic 12 14 44 51 27 29 20 10 10 9 4 9 France 8 11 37 46 29 23 29 24 6 7 6 17 Germany 25 19 41 53 41 36 7 6 11 4 13 23 Italy 13 15 14 22 57 51 27 18 2 9 3 8 Poland 16 15 37 55 30 30 22 10 10 5 10 9 Spain 15 13 52 36 26 44 2 6 20 13 12 17 United Kingdom 16 24 32 41 21 36 21 9 26 15 13 21 Base (100%) All Companies selling online All Base: N = 5218 (Total, all companies). "All" = firms using computers. Weighting: "firms" = % of firms; "empl." = enterprises comprising …% of employees (in the respective sector / country). Source: e-Business W@tch (e-Business Survey 2005) From a broader perspective, an interesting finding is that the same sectors in which companies buy the highest shares of supply goods online are also the ones where the highest shares of online sales were reported. Only in IT services, tourism and publishing more than 10% of firms said that they make more than 5% of their revenues from online sales. 32
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