Misjudging online business e-commerce

There has been much misjudgement about the nature of online business. A pure online business would not succeed in a world where most people made little use of the Internet, or where the security of financial information is far from assured. In any case, there are very few pure online businesses, except those selling information, such as financial services. Business-to-consumer (B2C) e-commerce has underestimated the cost and complexity of physical delivery to customers.


Companies discovered the reality of click-and-mortar business, and this required much greater investment, logistics and management skills than they anticipated. For example, Amazon and many other e-commerce businesses rely on vast systems of storage and transportation. My analysis is in direct contradiction to the notion of the weightless economy. The studies on Internet companies show that they are always a hybrid of physical infrastructure and information flows.

The new economy was never going to be a fantasy land of unlimited high economic growth. If there is a new economy there will also be new forms of business cycle and, eventually, economic crises, shaped by the specific processes that characterise the new economy. Although there was so much hype around B2C e-commerce, the real shift was in how all kinds of businesses were being transformed by using the Internet. The Internet is transforming business practices, relationships between suppliers and customers, co-operation between companies, sources of productivity and competitiveness.