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ENN year in review: e-commerce 
Thursday, December 28 2000
by Sheila McDonald


Who wants to buy goods and services on-line? Plenty of people, but the trick in
2000 was figuring out what the public wanted, and how much. 

E-commerce -- which we define as any commercial transaction using Internet
technologies -- was business's biggest buzzword early in 2000. Traditional
companies, particularly retailers, lived in fear of being ousted by rivals who
existed only on the Internet. Those rivals were not only fast-moving but also
well-shod, as venture capital flowed easily into such startups.



Hottest of all early in the year were so-called B2C ("business-to-consumer")
e-commerce ventures that sought to sell computers, books and music, or pet
products to the ready masses. But in Ireland the low level of Internet use and
the lack of unmetered access put a painful dent in the e-commerce dreams of
e-tailers like auctioneer eBid and Petsmart, both of whom were forced to cut back
when sales didn't materialise.



The limp performance of B2C firms here was duplicated internationally and helped
trigger the devastating April crash in the Nasdaq. It was then that e-commerce
sentiment turned sharply toward business-to-business ventures, particularly
on-line industry exchanges that let companies buy their corporate supplies
on-line. 



Exchanges like Marketplace.ie, Buildonline, Printorigin, Worldoffruit,
Cateringbuyer and Pubxchange promised skeptical executives deep savings. But
while these B2B exchanges offered a welcome distraction from the hot air of many
B2C ventures, they weren't without their problems. Many exchanges are still
finding customer acquisition a slow and difficult business. And US and European
regulators, who feared the exchanges could become price-fixing cartels, only
narrowly approved ventures like Covisint for the automotive industry and
MyAircraft for the trade of airplane parts. 





FINANCIAL SERVICES



Another turbulent e-commerce sector in 2000 was on-line financial services. In an
effort to play to a market hungry for Internet ventures, AIB announced early in
the year that it would establish a stand-alone Internet bank, much as Prudential
had done with Egg in the UK. But by autumn it was clear that both Egg and the
Internet bank First-e were shouldering massive losses, and AIB cancelled its
plans abruptly. 



While the e-commerce landscape was tough going for business owners in 2000,
consumers in Ireland ended the year far better off than they started. Home-grown
Web shops now offer everything from wine to toys to travel, books and baby gifts,
and are giving Irish users a real incentive to go on-line. And secure shopping
tools, aided by bank initiatives like BOI's Clikpay and AIB's Transactonline, are
easing fears about credit card fraud.



And what do people most want to buy on-line? The poll-takers named travel as the
top product in Ireland, but a look at the whole e-commerce spectrum shows up a
different winner: what people really want to buy is a chance at riches. 



Stock market trading and its earthier cousin, gambling, were the clear winning
products for e-commerce in 2000. Irishman Philip Berber started the year by
selling his firm Cybercorp for a cool USD488 million to Charles Schwab to power
its day trading service. The volume of stocks, particularly Internet stocks,
being traded on-line is no longer at the mad levels that contributed to the
springtime crash, but on-line trading has settled down to a steady volume that
shows it's a keeper. And all of the Irish trading houses have firm plans to
introduce on-line stock trading early in 2001.



Ireland's own Paddypower.com is riding high on the wave of Internet betting,
which now looks set to move to the wireless arena if technology and legal issues
can be resolved. The company is to spend a stunning EUR 30 million in aggressive
strategy for the on-line betting market, which it has found reaches a new market:
those who don't want to walk into a betting shop on the street.  



And the signs ahead look good: Datamonitor says the western European on-line
gambling market, currently worth USD55 million, will reach USD5.5 billion by
2004, equalling the US market.