Oz business online buying tipped to grow in 2000: IDC

While Australian companies lead the Asia Pacific in online purchasing, the value and frequency of transactions showed an "infancy" in internet adoption in the region, an IDC report suggested.

IDC Asia Pacific's Technology Integration Panel Study for Q1, 2000, claimed Australian business had a "tendency...to lean towards the Net" for purchases compared to the AP region.

The survey suggested that 46 per cent of local businesses purchased online, while the regional mean was 38 per cent.

Around two transactions were made per month, typically for PC hardware, office supplies and mobile phones, according to Brooke Galloway, senior internet analyst, IDC. The median value of purchases was $US5,000.

The low occurrence and value of online purchases reflected an "infancy" of e-commerce adoption in the region, the survey said.

"Australia is not an online catalogue business culture (like the US)," said Galloway. Businesses preferred to "build trust" with web vendors before moving purchases online, she added.

Similarly, consumers reflected this mindset. In Australia, 20 per cent of 5.21 million internet users purchased online. Galloway regarded this as low consumer adoption, attributing the result to "security concerns."

The telecommunications and finance sectors were most likely to purchase online. 74 and 64 per cent of businesses from the respective industries were driving high adoption rates, Galloway said.

She attributed strong uptake among telcos to "massive change" in the market, referring to a surge in web-initiative spending by this sector. Telcos are "forced to change their ways" more than any other industry, as they supplied the IT infrastructure, Galloway said.

Moreover, IDC predicts production, healthcare, government and education, finance and insurance, and distribution industries will follow suit.

Web-based activities industry-wide will grow in importance in 2000, and experience a 57 per cent increase in mean spending, the survey said. Budgets will range from $A110,000 to $A174,000.

Overall operating budgets for web projects more than doubled across all sectors from 1999 to 2000. Web-spending sat at 19 per cent in 2000, up from 8.5 per cent in 1999, the survey showed.

This year, the IT infrastructure sector expects it will dedicate a quarter (25.4 per cent) of its budget to online projects, the largest increase in the proportion of operating budgets spent across all sectors.

Australian enterprise is realising the high cost savings online buying generates. It reduces paper-based procurement, and cuts overhead by minimizing human involvement, Galloway said.

The manufacturing and mining sectors were also jumping on the online-buying bandwagon. "They're coming together to develop marketplace portals to do online buying," said Galloway.

She cited General Motors, Ford and Chrysler's US subsidiaries for their investment in a consolidated portal strategy to leverage their purchasing power through the web.

The local B2B online selling space was quiet in contrast, the survey showed. 13 per cent of companies had ventured into online selling, on par with a regional average of 14 per cent.

Galloway believes the challenge for businesses in converting to an internet selling model is the "complexity of integration." Resellers headed the market, representing 35 per cent of local uptake, followed by telco and utility companies on 22 per cent.

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