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Friday, November 25, 2005

Dismantling E-Business Myths (Part I)

Top Ten E-Business Myths:

  • E-business is having difficulty recuperating from the dot-com slump
  • B2C companies corner the majority of online sales
  • E-business = online sales
  • Informational sites generate no business spin-offs
  • It is dangerous to use your credit card online
  • The web is an image-based medium
  • Money is a decisive factor in the establishment of a dot-com company
  • Operating a transactional site is the only way to make online sales
  • Online advertising is not efficient
  • An online presence is all you need to drum up business

Myth No. 1

E-business is having difficulty recuperating from the dot-com slump

In as early as 1996, Forrester forecast that B2C sales figures would hit US$12.1 billion by 2000. At the time, while many other analysts were putting forth equally high predictions, numerous sceptics adamantly argued that those numbers were far too optimistic. As you can see in the table below, the figures predicted by Forrester and other firms were, in fact, all wrong. Nearly all of them had actually underestimated future sales by almost half. You will also notice that actual sales between 2000 and 2003 registered a steady and significant growth. This fact clearly proves that the dot-com slump did not greatly affect the rise and adoption of e-business.

Year Forecasts Actual sales
2000 $12.1 $27.9
2001 $17.3 $36.9
2002 $28.8 $45.5
2003 - $86.9
B2C sales: 1996 forecasts vs. recorded sales
(US market, in billions) (1)

Myth No. 2

B2C companies corner the majority of online sales

Contrary to what you may be led to believe, B2B commerce is the true motor powering e-business exchanges. In fact, according to Statistics Canada, while B2C generated sales of $3.3 billion in Canada in 2002, B2B sales amounted to $10 billion. (2) Moreover, this hefty dominance of B2B sales over B2C sales is a widespread phenomenon confirmed in all countries.

Myth No. 3

E-business = online sales

There is no denying that e-business includes the sale of products and services online. However, a plethora of activities other than sales also falls under the term “electronic business”. In fact, the Grand dictionnaire terminologique ( Quebec 's official French language terminological dictionary) defines e-business as: “ A method of conducting business that involves transforming a company's main business processes by integrating Internet technologies .”

This definition implies that all the traditional functions of a company can be potentially affected by e-business. For example, in terms of human resources it is possible to recruit candidates online (e-recruiting), share knowledge online, conduct training online (e-learning), manage scheduling online, etc. This example demonstrates how other functions, such as a company's finances, supplies or sales and marketing are also affected by a vast array of digital applications and procedures. Nevertheless, it is important to understand that each business, depending on its products and services, activity sector and business model configuration, may or may not benefit from transferring certain traditional business functions to an electronic version.

(1)PowerPoint presentation given by Jacques Nantel, Holder of HEC Montréal's RBC Financial Group Chair of E-Commerce, to the Professional Marketing Research Society on April 2004. Source: Forrester Research 1996 and the U.S. Department of Commerce, Feb. 2003.

(2)Source: “ Enquête sur le commerce électronique et la technologie ,” Statistics Canada, April 2003.

This article was originally written in French and have been translated by Wendy Wolbert


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