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How big is it?

Ray Hurst looks at internet penetration and usage

Who's out there?

Well, when I first attempted to answer this question at the back end of 1998 there were between 60 and 160 million users worldwide give or take a few million and depending on who you believed.

The big riches to rags story of 2001-2 was the dotcom crash. Amongst all the dot-bomb jokes it was easy to overlook the fact that Internet usage has carried on growing at a phenomenal rate. Current global estimates (2004-5) indicate that there are upwards of 700 million of us online, 840 million according to the GlobalReach research agency. According to research company Nielsen there are upwards of 34 million Britons currently connected. And, as of December 2004, there were some 190 million Europeans online says stats compiler Nua, who also break global usage down country by country. It's an inexact science and these figures are best guesstimates, but there's no question which way the graph's moving. Predictions for 2005 suggest getting on for a billion people online globally, with Europe and Asia-Pacific growing faster than the U.S. (IDC).

Online Retail

Here's an interesting one. According to Forrester Research, net-influenced sales represent three times as much revenue as online sales. In other words, people prefer to research products and prices online and then shoot off to the shops to buy offline. Apparently, almost 60 per cent of wired Europeans say that they shop across channels because they want to see or touch products before buying them. But many are also worried about the cost of delivery, poor fulfilment and what they see as the difficulties and security risks of buying online. The good news is that it's predicted that net influenced sales will reach $169.2 billion in Europe and $37 billion in the UK by 2007. The bad news is that, currently, some 48 per cent of "online to offline" shoppers choose a different supplier to the one they used to do their research with online.

Let's hold it right there though: what are the lessons from this? Well...

Despite some predictions, internet usage is still rising- and often in unexpected categories. Older people and under-10's are currently serious growth sectors.

If people are using the internet to research their buying decisions, that's just fine. It's better than not buying at all, and shows that having a website is as good a shopfront as a high-street store.

And choosing to buy elsewhere tells us something we already knew: customers have an eye for a bargain.

None of this suggests that people aren't buying online. According to NOP Research Group over half of all Internet users in the UK shopped online in the first six months of 2002. Along with the ever-popular books, and CDs, big spend items include electrical goods, clothes, groceries, computers and holidays. With traffic jams a constant irritant, Christmas 2004 (like the past three Christmases) will no doubt prove to show a surge in online shoppers, many of whom will be shopping online for the first time.

Whereas women were hugely outnumbered by male users when I first did this exercise ten years ago, women are now driving the growth in Internet use, according to many of the surveys. According to MORI in January 1997 70% of British internet users were men, 60% were under 35 years old, and over half were in the top social classes (AB). Now, men make up just over half of surfers, while those under 35 are in the minority (44%). The proportion of internet users who are ABs is now around a third, and shrinking.

The shop at your desk

An interesting trend is developing amongst business decision makers, according to the Washington Post, Nielsen-Netratings and MORI Research. Their survey results reveal that business people are more influenced by the web than by any other type of advertising medium. Around 60 per cent of decision makers said that the Internet was the best way for advertisers to reach them, while fewer than 40 percent recommended using television or radio. Nearly half of decision makers also said that the Web influenced them to make a purchase or obtain a service for their businesses. Online advertising is currently in something of a crisis, mainly because web users are bored of banner advertising. But what this survey really says is that desk-bound office workers can't get enough of easy-to-use websites. They're a captive audience for eight hours a day! No wonder everything from travel booking to wedding planning is successfully delivered in the online space. Amusingly, several surveys this year also show the web to be the Number One distraction in the workplace.

Finally, the report 'Reality Bites' by the CBI and KPMG shows how business use of ebusiness has changed dramatically from four years ago when email and rather flaky brochure Web sites dominated the picture. Nowadays some 87 per cent of businesses use ebusiness to cut costs and improve efficiency. Apparently, nearly 60 per cent believe that ebusiness will reduce costs by up to 10 per cent. Some 60% of companies are buying some goods and services online but just 16% have fully automated and integrated their processes from suppliers through to customers. However, about a quarter of you have partially automated your business processes integrating your online purchasing/sales channels with your main order and invoicing systems. A third of you are just one step behind, transacting online without integration into the main business. And a whopping 90 per cent of you have at least made a start - offering online access to product or service information.

Just read that last paragraph again... 90%. The internet has developed to the same degree as the fax- it's a must-have, not an interesting quirk. It's never too late to jump on the bandwagon, and you've made the first step already by coming here. Now find out more about building a website or running an online shop.

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