Growth volume and dispersion of electronic markets

Ellis-Chadwick et al. (2002) found size to be an important indicator of whether a company would a) have a web site and b) have developed a fully transactional web site. They posited, the larger the retail organisation in terms of number of outlets the more likely they are to have both a)

and b) in place. They suggested this may be because those retailers with the largest network of outlets might have most to lose should they be left as observers, rather than active participants, in a vibrant Internet marketplace. Alternatively, it could be that those retailers with the largest numbers of outlets are most likely to have the investment resources, skilled personnel, scale and sophistication of logistical and technical infrastructure necessary to successfully support e-commerce.

The DTI's International benchmarking study (2004) also found size to have an effect on web site adoption, with almost 95% of large companies having active sites. It should be noted however, that in recent years, small and medium size enterprises (SMEs) have begun to take advantage of the falling costs of going online. In the UK, the rate of adoption of the Internet by SMEs is surpassing official targets and the UK government continues to invest in comprehensive programmes designed to get UK businesses online (Simpson and Docherty, 2004). Many SMEs are taking advantage of easier-to-use web applications and lower-cost outsourcing of web development and site hosting particularly to serve marketing communications objectives. Therefore, size may well continue to be a useful predictor of the level and extent of Internet adoption but as the Internet becomes more accessible a wider range of companies are looking to benefit from becoming involved with the online trading environment to serve an increasing range of business objectives.

The Department of Trade and Industry has been specifically monitoring the dispersion of use of ITC among UK and International Businesses and in doing so the eighth study has concluded there is a strong link between effective use of ITC and productivity. The study looked at a range of industries (see Table 11.2) in 11 different countries.

Table 11.2 Industrial sector analysis

• More businesses are discriminative, selective and focused on the use of the technology in order to facilitate more efficient usage.

• Businesses are becoming more responsive to customer needs and in doing so are concentrating on the needs and expectations of the markets they serve.

• The growth rate of e-commerce is slowing as businesses seek to realise a wider range of benefits from technology adoption including initiatives focusing on improved efficiency, speed of access and customer communications. In the UK 19% of the total sales of businesses selling online are made through the online channel, up just 5% from 2003.

Major trends relating to the dispersion of Internet technologies identified by the study are:

• Significant differences in general levels of technology adoption across industry sectors: 96% of UK financial services businesses have a web site compared with 80% of construction businesses and 74% of UK primary businesses. This level of uptake is slightly higher than the average of the other ten nations surveyed -Australia, Canada, France, Germany, Italy, Japan, the Republic of Ireland, South Korea, Sweden and the USA - where the figures were 88%, 60% and 68% for each of the sectors respectively.

• The number of companies with Internet access is reaching saturation. Some 95% of all companies in countries surveyed had Internet access (see Figure 11.6.). In most countries the proportion of companies with web sites

Table 11.2 Industrial sector analysis




Public administration, education,

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