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E-commerce firms seen booming

Companies selling e-commerce software can expect tremendous business over the next five years, a new study says.

E-commerce software companies can expect booming business over the next five years, according to a report released today by Zona Research.

The Net will continue its transition from a mere marketing tool to a full-fledged sales vehicle in the next five years, the report says.

Of the companies surveyed, 79 percent currently use the Internet for marketing purposes, dwarfing the 10 percent that use it for sales transactions, the report states. But 44 percent of those surveyed say they intend to start selling over the Internet in the next two years.

"For the Internet software industry, the market for their products should grow dramatically in the next two years," said Vernon Keenan, a Zona research director, adding that "1998 and 1999 are going to be banner years for...companies that sell e-commerce server software."

In addition to those selling server software, hardware companies and firms that specialize in connecting e-commerce systems to back-end computers will reap the benefits of the coming boom, according to Keenan.

The Zona report identified three stages of technology adoption in the e-commerce economy. In the first stage, companies publish on the Web to save money. In the second, companies sell products on the Web. In the third, companies establish and develop new protocols and online spaces to conduct business.

The development and deployment of those protocols is another looming economic opportunity, though a less immediate one. One example is OTP, or the Open Trading Protocol. OTP allows buyers and sellers to authenticate themselves, set prices, complete bids, and secure accounting transactions.

Meanwhile, companies not yet on the Net should take note that their competitors are going online, said Keenan.

"Selling products and services online will be seen in the year 2000 as a de facto way of doing business," he said.

The survey, conducted in January, examined 112 businesses with more than 500 employees each. Zona Research is a subsidiary of Intelliquest.