e-Commerce projected to reach $5.7 trillion in four years

By Staff -- Logistics Management, 6/1/2000

AMR Research forecasts that the value of business-to-business electronic commerce will reach $5.7 trillion by 2004. The Boston-based market-research firm says that assessment is based strictly on expected shipment volumes from suppliers to customers. "e-Commerce will be adopted at a faster rate than many companies realize," AMR says in a recent publication, Report on E-Commerce Applications.

AMR further concludes that Fortune 1,000 companies will drive the adoption of electronic commerce throughout the supply chain. "If the largest and most dominant player in each vertical industry moves to the Web, [it]'ll pull other companies along," says Randy Covill, a senior analyst for e-commerce at AMR. "That will accelerate the move to business-to-business e-commerce."

The adoption of e-commerce will bring about support for numerous private trading hubs and trading exchanges that will extend electronic commerce capabilities to large numbers of smaller suppliers. The study notes that exchanges that are established for buying and selling in specific industries will expand into logistics, financials, and other services.

AMR estimates that online communities now account for less than 1 percent of all commercial transactions. But it believes that 52 percent of all transactions will occur through exchanges by 2004.

Although private exchanges built around existing trading relationships will fare well, Covill isn't optimistic about the future of public exchanges that are open to all entrants. "Each industry will have no more than one or two public exchanges max," he predicts.

The research firm estimates that electronic data interchange accounts for about 80 percent of the dollar value of electronic intercompany transactions at present. But it expects that much of this volume will soon switch to the Internet.