The global internet audience continues to grow
steadily, with the worldwide base of broadband internet users (including fixed
and wireless) standing in excess of 4.3 billion as 2019 began.
This vast base of high speed internet users
encourages businesses to innovate in order to offer an ever-evolving array of
online services.
Sectors that are
growing very rapidly online include the sale of entertainment products, travel,
apparel and consumer electronics.
Even
groceries have moved into the fast lane, as online grocery and household
product sales are growing quickly thanks to same-day delivery options.
The most powerful trends on the internet
include access via smartphones, the migration of entertainment, including TV
programming, to the web and cloud-based software-as-a-service.
Today, consumers are more focused than
ever on finding the best prices while shopping in the most convenient or
satisfying manner.
Consequently,
e-commerce firms that offer high value at consistently low prices are
well-positioned to prosper.
The standout
winner in e-commerce continues to be Amazon, where sales have soared thanks to
aggressive pricing, free shipping for its “Prime” members and an ever-growing
variety of merchandise.
Amazon's
revenues soared from $34.2 billion in 2010 to $233 billion in 2018.
The firm's sales outside of North America are
booming as well, despite the fact that it has major foreign competition, particularly
from companies based in China.
Analysts at eMarketer reported American
e-commerce sales in
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The global internet audience continues to grow
steadily, with the worldwide base of broadband internet users (including fixed
and wireless) standing in excess of 4.3 billion as 2019 began. This vast base of high speed internet users
encourages businesses to innovate in order to offer an ever-evolving array of
online services. Sectors that are
growing very rapidly online include the sale of entertainment products, travel,
apparel and consumer electronics. Even
groceries have moved into the fast lane, as online grocery and household
product sales are growing quickly thanks to same-day delivery options. The most powerful trends on the internet
include access via smartphones, the migration of entertainment, including TV
programming, to the web and cloud-based software-as-a-service.
Today, consumers are more focused than
ever on finding the best prices while shopping in the most convenient or
satisfying manner. Consequently,
e-commerce firms that offer high value at consistently low prices are
well-positioned to prosper. The standout
winner in e-commerce continues to be Amazon, where sales have soared thanks to
aggressive pricing, free shipping for its “Prime” members and an ever-growing
variety of merchandise. Amazon’s
revenues soared from $34.2 billion in 2010 to $233 billion in 2018. The firm’s sales outside of North America are
booming as well, despite the fact that it has major foreign competition, particularly
from companies based in China.
Analysts at eMarketer reported American
e-commerce sales in 2018 of an estimated $526.1 billion (up significantly from
$454.9 billion in 2017). This figure
includes online retail product sales, travel sales and digital downloads, but
not online gambling. Global internet e-commerce
sales exceeded $2.84 trillion in 2018, according to eMarketer, and could top
$3.45 trillion in 2019. China is posting
phenomenal growth in e-commerce, up by 29.1% in 2018, according to analysts at
eMarketer, to a total of $1,462.4 billion.
Online travel booking continues to enjoy strong
growth, in a broad sector that includes car rental, hotel bookings,
transportation and tourist attraction sales.
The success of new accommodation sharing sites like Airbnb and vacation
home rental sites like HomeAway is boosting this trend.
China’s e-commerce leaders
remain much smaller than rival Amazon.com
Estimated
revenues 2018, billions of US$:
Amazon $233
bil.
Tencent $44
bil.
Alibaba $40
bil.
Online and mobile advertising during 2018 in
the U.S. collectively reached $125.8 billion, according to eMarketer, taking
55% of the total advertising market.
Online advertising is surpassing TV advertising in America. Online leader Google’s recent results are a
good indicator of the strong growth in online advertising. The firm saw revenues soar in fiscal 2018, to
$136.8 billion.
Growth in broadband subscriptions worldwide
continues at a strong pace. The number
of American homes and businesses with broadband access capabilities topped
111.3 million by the end of 2018, according to Plunkett Research estimates,
thanks in part to modest monthly fees at internet service providers. This number does not include mobile broadband
subscriptions, estimated at another 322.4 million.
A significant evolution is taking place in the
world of business, as more and more telecommunications services move to the
Internet. VOIP (internet-based telephone
calls via Voice over Internet Protocol) continues to grow in popularity. Meanwhile, the concept of “unified
communications” threatens to completely revolutionize business by combining all
communications into one screen on the desktop, including phone, fax, e-mail,
instant messaging, voice mail and teleconferencing. Voice communications will be digitized and
archived, just as e-mail is today. A
user’s communications tools will move seamlessly from the desktop to the mobile
device.
Convergence:
The internet is about saving time (and therefore often saving money), as
well as broadening available choices while eliminating physical and
geographical boundaries. The full
potential of the internet has barely been tapped. New methods of taking advantage of online efficiencies
are becoming widely accepted, as access to high-speed internet connections
becomes commonplace. The long-awaited
phenomenon of “convergence” of entertainment, computing and communications
arrived around 2004 when enough consumers had subscriptions to fast broadband
to create a true mass market worthy of the immense investments required to
launch products of broad appeal, such as downloads of movies via Netflix. The smartphone revolution accelerated this
trend. Now, the latest televisions come
equipped with built-in internet connections.
This is creating radical changes in the way TV viewers obtain their
movies and TV programming. For example,
subscribers to Netflix, Hulu or Amazon Prime are able to stream downloaded
movies directly to their internet-connected TV sets.
A
Brief History of the Online Sector: The e-commerce and internet sector has evolved
rapidly, going through several distinct stages since its beginnings in the
1970s:
The Internet Is Born: First, there were the early days, when the internet
was seen by many as a realm for techies only, one that would produce few, if
any, commercial enterprises. Initially
designed in 1973, the internet was a series of communication protocols written
by Vinton Cerf as part of a project sponsored by the U.S. Department of
Defense’s Defense Advanced Research Projects Agency (DARPA). The first demonstration of a three-network internet
protocol-based connection occurred in November 1977. Eventually, a well-enabled internet was
rolled out in 1983, primarily as a failsafe method of defense communications
and as a means for researchers at various universities to communicate.
The Web Is Created: Next, the World Wide Web and the coding
language of HTML were conceived in 1989 and implemented between 1990 and 1993
by Tim Berners-Lee, enabling a never-ending hyperlinked cyber world where
sharing unlimited data became user-friendly thanks to the magic of linked
pages.
The Boom Ensues: Starting in 1993 and 1994, entrepreneurs and
financiers realized that hyperlinked, electronically posted data could be commercialized
with vast, global potential. A dramatic
revolution in retailing, publishing and entertainment was visualized, one in
which consumers and business people alike would eagerly pay for the convenience
of online shopping, trading and viewing of published data. An economic boom ensued, the likes of which
hadn’t been seen since the beginnings of earlier technological
breakthroughs: electricity, the
railroad, the telephone, the automobile and the passenger-carrying airliner.
Thousands of hopeful new businesses were
launched. Capitalization for these new internet-enabled
companies ranged from cash-strapped ventures launched in garages with Visa card
credit lines, to companies like WebVan that received vast sums from
professionally managed venture capital firms only to fail miserably. Roughly 6,000 new firms of significant size
raised a cumulative total of more than $100 billion in venture capital in the
boom period (1994-2000). About 450 of
these companies sold their stock to the public via IPOs (initial public
offerings). Stock markets soared and
instant billionaires were made, although many of those stocks later
plummeted. Venture funds that cashed out
early reaped phenomenal gains, and financiers easily found additional investors
for new venture capital pools. Companies
with little or no sales and profits, led by the success of Netscape’s IPO,
found eager buyers for their newly issued stocks. The NASDAQ index of stocks rose to 5,000 by
early in the year 2000, and the Chairman of the Federal Reserve warned of
“exuberant optimism.” Some said this
boom couldn’t last—others said it was the beginning of a “new economy” that
would last forever.
The Bust: In
mid-2000, the internet industry entered a bleak and dreary phase after the
NASDAQ collapsed in March, bringing the entire sector to its knees. By October 10, 2002, the NASDAQ was down to
1,108 from a high of 5,132 in March 2000.
Hundreds of thousands of people lost their jobs. Stock portfolio values plummeted. Thousands of firms closed their doors, filed
bankruptcy, downsized or were scooped up at bargain prices by competitors. Sellers of hardware, software, consulting and
telecommunications services suffered mightily.
Entrepreneurs found it nearly impossible to raise funds to launch or sustain
their businesses. The dream of a “new
economy” became a nightmare for some—profits still matter; business cycles
still happen.
The Reality Phase: By early 2003, this sector’s dark clouds were
abating, and a “reality phase” was taking shape. Well-conceived, internet-based businesses
were proving their value. Consumers had
become devoted fans of buying over the internet. Businesses of all types were finding that the
internet creates true operating efficiencies and drives profitability. For example, while most of the airline
industry suffered terribly in recent years, value-based discount airlines
Southwest and JetBlue enjoyed superior financial performance, in no small part
because of their use of e-commerce to efficiently book reservations and sell
tickets online. “Efficiency” is the most
important factor in the e-commerce and internet sector’s newfound success. Consumers find the internet to be a terrific
way to efficiently expend their shopping and banking efforts. Travelers find the internet to be an
efficient way to book hotels rooms, flights and rental cars. Consumers of all types use eBay to look for
bargains, autotrader.com to look for cars at great prices and iTunes to
download music. Corporate procurement
managers find the internet to be the most efficient way to purchase needed
goods and inventory. Hundreds of
millions of people worldwide find e-mail, instant messaging and VOIP telephony
to be the most efficient ways to communicate.
Low Costs Fuel the Steady Global Growth Phase: Today, access to fast internet, both wired
and wireless, is available at bargain prices in a vast footprint across the
globe. Even in relatively undeveloped
nations, both consumers and businesses have grown to rely on the internet for
everyday needs. Inexpensive devices and
wireless networks continue to proliferate in much of the world. Mobile computing is accelerating at blazing
speed thanks to moderately-priced smartphones and service plans, offering fast internet
access and very advanced features.
Meanwhile, the cost of developing and
maintaining web sites has plummeted, opening the door to millions of
self-funded entrepreneurs, and making it easier for venture capital firms to
fund startups using low amounts of cash.
Trends such as open software and cloud computing, along with modular
software development tools, have made it easier, faster and cheaper to start
sophisticated web sites.