Select Committee on European Union Written Evidence

Annex A


The rapid growth in business and consumer use of the Internet began with the introduction of the first graphical web browser, Mosaic, in 1992, and the subsequent elimination in that same year of the National Science Foundation's (NSF's) acceptable-use policy, which prohibited commercial use of the Internet backbone.

  By the mid-1990s, the number of consumers with access to the Internet had grown by previously unimaginable leaps and bounds. Also around this time, companies that originally had established web sites primarily for marketing purposes-to promote their corporate or brand identity and to provide information about their products-began to use those sites also for sales. They were rapidly joined by the equally sales-oriented start up companies, a good portion of whom began their corporate existence on the Web. It has been these two market forces that have fuelled the incredible growth in business to consumer e-commerce.

  Since the mid 1990s, the Web has grown with a mind numbing rapidity, achieving mass acceptance faster than any other technology in modern history. It has made its way into the homes of one-third of all Americans and is used by 100 million worldwide. In four years, it accomplished something that took radio more than thirty years to accomplish and television more than twenty.

  Estimates of how big e-commerce is and how fast it will grow vary significantly. Views differ on what to count, and how to count it. According to one estimate, global Internet-driven revenues totalled $22 billion in 1997 and will grow to $74 billion in 1998. The same estimate for 2002 is $1.2 trillion, or some three per cent of the world GDP. These estimates include all revenues generated by having an on-line presence, whether or not sales are closed on-line.

  Globally, there were 414,000 active commercial Web sites at the beginning of 1998, more than double that of a year earlier. It is estimated that there will be 1.6 million by 2002. While business-to-consumer commerce gets more of the media attention these days, business-to-business commerce may account for 80 per cent of the total by 2002.

  There are a number of other statistics that highlight e-commerce's prodigious growth:

    —  U.S. consumers will spend $18.6 billion on the Web in 1999, more than doubling the $8 billion total in 1998, and a 615 per cent increase from the $2.6 billion they spent in 1997. (eMarketer)

    —  Small businesses that use the Internet have grown 46 per cent faster than those that do not. (American City Business Journals)

    —  In 1999, the average annual online expenditure per buyer will be $479; by 2002 when it will reach $976, a 100 per cent increase. (eMarketer)

    —  56 per cent of U.S. companies will sell their products online by 2000, up from 24 per cent in 1998. (eMarketer)

    —  The U.S. not only has the fastest-growing number of Internet users, it also has the largest proportion of e-commerce consumers. (Roper Starch Worldwide)

    —  The number of online buyers will grow at an average annual rate of 20 per cent, rising from 38.8 million at year-end 1999 to 67.2 million in 2002. (CyberAtlas)

    —  Nearly 470,000 United States homes already buy new cars via the Internet. (Forrester Research)

    —  In mid 1998, just over half of the people on the Internet were making purchases. By mid-1999, three-quarters are buying and 82 per cent of these are filling their online shopping carts with multiple purchases. (Greenfield Online)

    —  By 2003, nearly 80 per cent of businesses will be online-compared with just 36 per cent in 1998. (International Data Corporation)

    —  In 1999, U.S. online retail sales should reach $20.2 billion this year as seven million Internet shoppers make their first e-commerce purchases. (Forrester Research)

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