Tuesday, January 2, 2001

Online Spending Projections Were On The Mark

As projected by ActivMedia Research at the beginning of 2000, consumers increased online shopping by the projected 46% for the year. The bulk of their shopping occurred during the 2000 holiday season. Reuters reported in late December that online holiday spending touched $8.7 billion. This number is in line with ActivMedia's anticipated total online sales of $56 billion for 2000 as projected in the "Real Numbers Behind Online B-to-C Vendors 2000". Retailers continue to fine-tune their online marketing and order processing and as they do, online sales for B-to-C marketers will reach $1.1 trillion by 2010.

More than half (57%) of all consumer-oriented websites are actively selling products and services to consumers and accepting online orders. Another third (36%) are engaging in marketing activities at the site but stop short of taking orders. These sites provide pre-sale information and post-sale support but are not fully functional in eCommerce.

ActivMedia Research's VP of Information Services, Chris Anne Wheeler stated, "eCommerce activity is really starting to pick up steam. Online order processing systems are maturing to the point where eTailers who invest in online and offline promotional activities are reaping the rewards with significant increases. Overall it takes time to become profitable online and those who implement solid business plans to support reasonable sales volumes should do well online going forward."

B-to-C firms were the first sector to achieve significant sales volume through the use of the Internet. However, the dominance of B-to-C sites on the Internet is expected to erode as other sectors of the economy build their online businesses. Currently B-to-C amounts to nearly half (47%) the total revenue generated by the Web. By 2010, B-to-C will be less than a third (31%), as other sectors (B-to-B, Online Content, ISP and Non-profit sites) experience more extreme rates of growth. The B-to-B sector, in particular, is expected to eclipse B-to-C in terms of Web-generated revenues by 2001.

Websites Invested $22 Billion in Website Services in 2000
According to survey respondents in ActivMedia Research's "Real Numbers Behind Web Hosting & Development" study, Websites invested $22 Billion in Website hosting, design, programming, systems and network hardware.

Total Website Development Budget Allocation Design & Programming 26% Hosting & Access 13% Computers & Peripherals 12% Consultants for Strategy 10% Web Applications 10% Software 8% Systems Integration 8% Online Transactions 7% Network Hardware 6%

Specific breakouts demonstrate that site-design support is the single largest element of total site creation and hosting budgets in a given year, garnering twice the dollars of site hosting and access services. Roughly half of  all dollars spent globally for creating and keeping sites online goes for development, the other half covers maintenance and site operations, including hosting. The split between development costs and hosting costs  varies across site types based on function required from the site.

ActivMedia's VP of Market Research Harry Wolhander adds, "The majority of website costs are borne internally by Web businesses. Sites investing the most are those who heavily internalize the strategic skills and abilities required to develop a leading-edge business online, while mid-level businesses are more likely to turn outside for technical support to bring sites online. Due to outside costs for connectivity, one in four operating and maintenance dollars costs are spent externally, as are one in five site development dollars."