Two Percent – Chapter 5
The Census Bureau of the Department of Commerce has announced that their estimate of U.S. retail e-commerce sales for the third quarter of 2004 was $17.6 billion, an increase of 4.7 percent from the second quarter of 2004 and 21.5 percent from the third quarter of 2003. E-commerce sales in the third quarter accounted for 1.9 percent of total sales. This impressive double-digit growth rate is more than triple the growth of retail sales overall. Soon — probably by the end of the current quarter — e-commerce will be more than two percent of all retail sales.
Why isn’t it 20% instead of 2% ? There are many reasons — only some of them not technology related. The number of people with "always on" Internet connections is a factor. Ease of use and concerns about security, identity theft, and privacy also contribute. I am optimistic that these issues will be adequately addressed. As eBay and Amazon continue to grow and show real profits to the world, business leaders are paying more attention. The free markets will drive competition and then innovation will kick into high gear. We have barely scratched the surface of what is going to happen.
While e-commerce is important and will continue to grow rapidly, it is not the most important capability of the Internet for humankind. How about if linking millions of personal computers together and combining their unused capacity could lead to a cure for cancer or create a vaccine for SARS or smallpox? We know it could happen in years but a new breakthrough might accelerate the timetable dramaticlly. IBM’s announcement of the World Community Grid earlier this week may turn out to be the most significant use of the Internet ever. Much more on this in an upcoming story.