The next decade of e-commerce won't see anything like the fury of fortunes and fallouts of the first 10 years, but there remains plenty of opportunity for improving the process and attracting the minority still not shopping on-line, experts say.
Whether it's un-tethering consumers from desktop computers with new mobile services, enriching Web pages with better graphics, or easing transactions with a universal payment system, companies are already experimenting with ways to refine the e-commerce process.
"In the last few years, there's been very little innovation in e-commerce. We're seeing steady growth, but we're not seeing a lot of new players." says Barry Parr, an analyst with JupiterResearch, an Internet consultancy. "We've sort of come into this expectation that there's going to be a next great thing. But e-commerce has developed so quickly early on that we've moved into a period of stability now."
Graham Matthews, a managing partner with VenGrowth Capital Partners Inc., sees e-commerce increasingly becoming a specialized service that companies who can't afford to invest in leading technology will farm out.
As e-commerce has started to mature, users have come to expect a reliable and smooth experience, which means companies need to invest in complex transaction systems that link into accounting and inventory programs as well as tools that ensure security and reliability.
"We're starting to see huge growth in intermediary or outsourcing services," he says. "If you're doing over $100-million in on-line commerce, then it may make sense to have the infrastructure in house. But otherwise it's wise to look at outsourcing."
VenGrowth has made a $3.4-million bet on Truition Inc., a Toronto-based software firm that provides outsourced services. The startup expects to take a share of customers' e-commerce revenue ranging between 1.5 and 5 per cent, Mr. Matthews said.
In the early days, many investors thought e-commerce would become such a unique channel that they were actually questioning whether shopping malls would close down, says Mark Skapinker, a managing partner of Brightspark Ventures, a Toronto-based venture fund.
As things turned out, e-commerce developed into more of a complementary retail channel. Today, one of the greatest growth opportunities is in mixing e-commerce with mobile communications. In Japan, the wireless networks are fast enough and the devices are powerful enough that consumers are able to get information off their phones as they shop. They may be doing price comparisons as they walk through a mall or getting directions to a specific store.
In North America, networks are being upgraded now and similar services should be available here within the next 24 months, Mr. Skapinker says.
His firm is placing bets on several startup companies working to enable these kinds of wireless services. Tira Wireless of Toronto makes software to overcome the challenge of the multiple software platforms that run today's mobile devices. It uses Java-based applications to allow any variety of programs to run on any device.
But Mr. Parr warns that there are still significant challenges to making mobile phones a key part of e-commerce. "The challenge isn't just that the screen is so darn small and the keyboard so limited, it's the context in which people use their cellphones," he says.
Most individuals still use their mobile devices primarily for phone calls, and transforming them into e-commerce tools will require a cultural shift. That's unlikely to happen for a long time, especially as the phone companies are reluctant to open up their networks, Mr. Parr says.
Carriers today charge their customers by the minute and by the amount of data they receive. They are also hoping to secure a piece of every retail transaction done on their networks. That's too much for a technology that cannot come close to offering the experience people get on their desktop or notebook computers, he says.
In the short term at least, expect to see greater improvements in the way leading Web sites are designed, rather than in mobile e-commerce. On-line properties such as Google Inc.'s map service are developing new and simpler ways for people to interact with and access information, Mr. Parr says.
One of the most anticipated services still to come to the Web is micro payments, which promises the ability to make small payments for services or products, anywhere on-line, through one financial party.
Apple Computer Inc. has fine-tuned a micro payment model with its iTunes music store that sells songs for 99 cents each. But recently, Apple agreed to include eBay's PayPal service on its site.
PayPal is the most popular payment service on-line with more than 70 million account holders. It takes credit card payments from buyers and delivers them to a seller. The recipient can opt for either cash or leave the balance in a PayPal account for later transactions.
Auctrion firm eBay is working to bolster the service, which accounts for nearly one-quarter of its revenue. But it may face tough competition from Google, which formed a new company in March called Google Payment Corp., generating widespread speculation that the search company is working to diversify its advertising revenue with a payment-processing service.
GREATEST GROWTH OPPORTUNITY
Mixing e-commerce with mobile communications is the way of the future.
Micro payments
The promise: The ability to make small payments for services or products anywhere on-line through one financial party.
The challenge: Building critical mass to be able to gather payments from most on-line sites. Developing the necessary software and infrastructure to be able to process millions of small payments effectively. Winning consumer trust.
The players: Phone companies, eBay's PayPal payment service, Google, Yahoo.
Wireless
The promise: The ability to buy and sell and to gather information anywhere off a wireless handset.
The challenge: Small screens, multiple software platforms, network speeds, consumer behaviour, high cost to users.
The players: Rogers Communications, Bell Mobility, Telus and other global wireless carriers.
Services
The promise: Improved presentation and interactive features that give users more information with greater ease.
The challenge: Creating a real world experience on a two-dimensional medium that has broadband limitations.
The players: Search engines like Google, e-ecommerce sites like Amazon.com, community sites like Craigslist.org.
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