Given the beating many internet companies have taken both on the stock market and in the press over the last few weeks, the world seems suddenly ready for the rapid and indelicate decline of the dot.com in all its various guises, e-commerce chief among them.
   But hold off from humming "The Funeral March" just yet.
   According to a new study from the Boston Consulting Group, e-commerce is only just beginning, not coming to an end.
   Business-to-consumer sales online amounted to $33.1 billion in 1999, a figure 120 percent greater than 1998 online sales revenues, reports the study. 
    This number is expected to grow by another 85 percent in 2000 to $61.1 billion.
    The study urges people not to confuse turmoil in the financial markets with weakness in the basic idea of e-commerce, which it says is strong, growing stronger and is here to stay.
   The study bases this conclusion on major trends.
   First, the online population is just now beginning to mirror the offline population. 
   According to the report, 1999 was the year when web users finally became a bit older, less affluent, more female and less highly educated than they were in previous years.
   While it’s true that advertisers usually chase the high-end demographic groups, the study’s point is that the high end can’t exist in a vacuum if the underlying enterprise—e-commerce itself—is going to blossom. 
    It concludes that the fact that online users look more and more mainstream is a strong sign of health and future growth.
    In fact, says the study, the new demographic composition of the online population means that the fastest-growing e-commerce categories of the coming year will be different than the categories that launched e-commerce in the ‘90s, when the web was largely the province of younger, highly-educated, high-tech enthusiasts.
     Specifically, the Boston Consulting Group anticipates that health and beauty, home and garden, consumer electronics and food and beverage will all be categories that begin growing notably in 2000.
    The study shows that these categories are pretty much wide open competitively. 
   While established online categories such as books or toys or music or financial services are now dominated by the top three players in each niche, the top three players in these newer categories by and large do not have even half of the business.
    For instance, in the health and beauty category, the top three players at this point have just 40 percent of the business; in home and garden, the top three have just 35 percent of the business.
    Compare that to books, where the top three players have captured 85 percent of the market.
   The other main factor the study identifies as indicating a strong future for e-commerce is how much of online retail sales at this point are already being captured by companies with nontraditional retail business models.
   These news types of retail enterprises include auctions, buying groups and manufacturers or distributors that now sell directly to consumers. 
    Together this group accounted for more than 35 percent of online sales in 1999.
   The study says that the nontraditional models that have developed on the web each have clear advantages to both the businesses and their customers.
   This means that e-commerce is clearly providing something people can’t get anywhere else.
   The study also points to the fact that e-commerce entities as a group have not nearly begun exploiting the potential for what its calls "supplemental revenues" above and beyond the retail transaction. 
    These include advertising, customer referral fees and market research fees.
    So-called internet "pure-plays"—companies that exist only online—have been much more successful earning this sort of supplemental revenue than retailers with both an online and offline presence.
     In 1999, supplemental revenue comprised 15 percent of total revenues for pure-plays but only 1 percent of total revenue for "clicks-and-mortar" enterprises.
    While many have looked at these sorts of supplemental revenues as moves of desperate companies in search of cash, this report considers such money an important part of any e-tailer’s future growth, highlighting yet again the idea that e-commerce is just now coming into existence.
    The Boston Consulting Group  warns that traditional retailers have a lot to worry about from their online rivals.
     By the end of this year, online sales will comprise 10 percent or more of a number of retail categories—a reality the report calls "a very real threat" to offline retailers in these categories, which include computers, books and music/videos.

- Jeremy Schlosberg is the senior editor for new media.

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