Net News 24.07.00

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Net Economy is Stronger Than You Think

With all the negative short-term news, you may have missed the great long-term trends behind the Internet economy.

You still need common sense. Here's what I've learned:

  • Online revenue keeps growing

  • More consumers are making online purchases

  • Net ads work

  • At least one troubled sector has found some legs.


A recent study from the Center for Research on Electronic Commerce at the University of Texas-Austin says the Internet economy is humming along:

  • 2.5 million Net-related jobs, up 35% from the previous year

  • $524 billion in revenue, up $322 billion

  • $171 billion in ecommerce revenues, up 72%

A Forrester Research analyst says today's consumers are doing and spending more online faster. And a recent Forrester report predicts spending will flourish with:

  • More than half of U.S. households online by next year

  • More than a third having purchased online

  • One in 10 having banked or invested online


A new study by AdRelevance says online advertising is starting to take hold. The survey finds a positive correlation between ad impressions and engaged visitors, especially in three sectors:

  • books/music/movies

  • flowers/gifts/greeting cards

  • computer hardware and software

The upshot: Money spent on online advertising is growing online retail business.


The much-maligned online drugstore sector shows signs of life. Four make noteworthy gains in PC Data Online's Top 20 Online Retailers rankings: jumps from seventh place to fifth, goes from 19th to seventh and rises to ninth place from 18th.

Coming years also look good for online drugstores. According to Forrester, these sites will use patient compliance programs to add $1.3 billion to their top lines by 2004.


But there are hard lessons too. The recent shakeout in dot-coms is sobering. You still need to pay attention to fundamentals. As IT consultant Mel Bergstein says, anyone investing in the New Economy still needs to focus on four key questions:

  • How big is the whole market for your product or service?

  • How big a slice of that target market can you capture?

  • Have you tested your assumptions?

  • Is your business really different from competitors' and can you sustain that difference after unveiling your plans?

I still expect rocky days ahead for some e-tailing sectors (pets, groceries, toys - to name a few). Smart companies will not let short-term market jitters keep them from cashing in on the tremendous long-term opportunities.

OB1 Knordic

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