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Sites aren't ready for e-business explosion

Many Web sites are not prepared to handle the anticipated increase in consumer online spending and will have to upgrade their Internet systems to keep up with demand, a new study says.

home internet shoppers chart E-business is booming, but many Web sites are unprepared to handle the expected increase in the number of online transactions, new research says.

Consumer spending online will increase nearly six times as the number of home Internet shoppers more than doubles, according to IDC's eWorld study released Tuesday. Meanwhile, with most Web sites lacking back-end software systems integration, most companies will have to upgrade their Internet systems to keep up with demand, the study said.

"E-business is alive and well despite the stock market crash and the economic slowdown in the United States," said John Gantz, chief research officer at IDC. "I was impressed by the penetration of e-business even in emerging geographies. There's not any segment that's immune to the Internet."

The study comes as a slew of e-commerce companies have closed their doors or laid off staff in recent months. Meanwhile, several high-profile traditional companies such as broadcast giant NBC and bookseller Borders have pulled the plug on their Internet initiatives.

But according to Gantz and the study, similar brick-and-mortar businesses will help fuel the growth of e-business in the next few years.

According to the study, consumer e-commerce spending will grow from $118 billion worldwide in 2001 to $707 billion in 2005. Meanwhile, the number of home Internet shoppers will increase from 119 million this year to 317 million in 2005. And e-business revenue will grow from 4 percent of companies' total revenue worldwide last year to 7 percent this year, the study estimates.

IDC also projects that the number of people using the Internet worldwide will increase from 400 million in 2000 to 977 million in 2005. With this growth, companies will devote a larger portion of their information technology budgets to Web projects, the study said. Last year, for instance, companies apportioned 16 percent of their IT money to Web initiatives; this year, that figure will grow to 20 percent, IDC projected.

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Analyst: B2C sites to double
John Gantz, Chief Research Officer, IDC
But the study also found some significant shortfalls. Consumers who access the Internet via mobile devices will represent 60 percent of the worldwide Internet audience by 2005, according to the study. But just 7 percent of companies worldwide have Web sites that are easy to access via mobile devices, and 19 percent plan to have mobile-friendly Web sites by next year.

Although 75 percent of U.S. companies said it was important to integrate their Web operations with their back-end systems, only 23 percent had tied their Web systems into their order processing systems, and just 14 percent into their supply chain, the study indicated.

"There's an awful lot of work to be done to tie back-end systems to front-end systems and to simply upgrade the Web sites themselves," Gantz said.

Meanwhile, a separate study by Nielsen/NetRatings and Harris Interactive, also released Tuesday, said that nearly half of the U.S. adult population--100.2 million people--has made a purchase online. The Nielsen study also reported that 81.2 percent of U.S. adults with Web access have made a purchase online.