Industry predicts explosion in business on the Internet

THE AMOUNT of business done over the Internet is set to quadruple in the coming two years, industry executives believe.

This explosion will bring many businesses and consumers into regular contact with the Internet for the first time, marking the long-awaited arrival of electronic commerce as an accepted way of doing business.

However, the growth of the number of transactions in North America is likely to be twice that in Europe, further extending the lead that US companies have in the field of electronic commerce.

A survey conducted by Deloitte & Touche, the consulting group, polled more than 1,000 chief information officers in six major industries in 25 countries. Asked about their expectations for electronic commerce, most said they thought it would explode.

The most rapid growth is likely to be in the area of consumer transactions, where people and businesses actually use the web to order goods. Although the number of businesses offering their goods on the Internet has proliferated in recent years - cars, food, music, books, bank accounts and even clothes can now be purchased on the web - the number of people making use of the service has been relatively small.

According to Deloitte, just 13 per cent of all business and consumer transactions are currently done over the Internet. This is expected to breach the 50 per cent mark in the next two years. Meanwhile the number of businesses using the web for marketing purposes is expected to rise from 44 per cent at the moment to more than 75 per cent.

The survey found that questions of security, which have traditionally prevented companies and consumers from venturing on to the web, were becoming less important.

"Until now, businesses have been hesitant to adopt e-commerce because of security concerns or the perception that their customers aren't using it to buy products and services," said John Reeve, partner at Deloitte Consulting UK. "Now companies are coming to the realisation that security will always be an issue - but less of a concern than missing out on a vital new channel that could provide a tremendous competitive advantage."

The biggest growth in Internet use is expected in those industries which have been slow to adopt it, such as consumer businesses and the healthcare sector. In consumer industries, the proportion of transactions conducted electronically is expected to rise from 8.4 per cent 43.4 per cent in two years' time. The survey also predicts that the use of the Internet in healthcare is likely to increase more than fivefold to 33.3 per cent.