Old-Economy Firms Flunking Net 101

SAN FRANCISCO (03/21/2000) - Many of the biggest companies in the world are still struggling with the basics of doing business online, and a significant minority have not even begun to plan online business strategy.

In a study to be released today, PricewaterhouseCoopers LLP and The Conference Board took a global cross-section of how corporate giants -- almost all with more than US$1 billion in revenue -- are doing business online and found that most of the firms can't even accept online transactions.

Forget fine-tuning e-commerce; these companies are still struggling with the basics. Although almost all of them have a site listing their product and service offerings, only 40 percent can receive orders on their sites and a mere 28 percent accept online transactions. Of the companies lacking online business capabilities, one-quarter have yet to begin the planning stages. And about one-third of companies surveyed admit that they have no systematic approach to doing business online.

Executives from companies such as Bertelsmann, Gillette, Pharmacia/Upjohn and Whirlpool, representing sectors such as manufacturing, financial services and wholesale/retail trade, were interviewed for the study.

Given the currently modest state of affairs, most companies are optimistic -- 46 percent predict that more than one-tenth of their revenues will come from online transactions in 2003. Currently, almost 80 percent of them make less than 5 percent of their total revenues online. Only 4 percent of the companies surveyed make 20 percent or more of their revenues through the Internet.

Eight out of 10 of these corporations say they want to create a convenient buying experience for customers. Increased overall revenue and reduced costs also are reasons that the companies say they are going online. Customer service is another top concern, with 65 percent citing this as a motivator for doing business online.

Perhaps the best indicator for the state of the corporation and the Internet is that 82 percent of the companies surveyed utilized traditional -- rather than Web-based -- electronic transactions over a private network, a system that predates the Internet by more than 10 years.

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