Ecommerce companies see quick returns

It takes 12 months for companies to begin making money from their ecommerce strategies, and the return on investment can be as much as 70 per cent, according to researcher IDC.

Almost half of the 600 US-based dotcoms and brick and mortar companies surveyed by IDC claim that their web operations are now profitable, but 18 per cent said they did not know when they would begin making money from their sites.

The respondents said budget limitations, skills shortage and weak marketing by their companies are holding them back from being more profitable. Issues such as getting support from management and integration with back-end systems are less of a concern to the internet professionals polled.

The most common remedies for unsuccessful sites are either to drop unpopular items from their catalogue, close their online operations or lay off staff. But 20 per cent of respondents said they will invest more in their websites.

The risk of failure is unlikely to prevent more companies from going online, however. IDC predicts that US companies will invest $950bn building and expanding their web infrastructures. This figure will be split 38 per cent on equipment and 62 per cent on the business.

Traditional 'offline' companies will spend the most getting wired, shelling out $42tn in 2004, compared with $2tn by dotcoms. John Gantz, chief research officer at IDC, said: "Bricks and mortar companies will fuel real investment in ebusiness."

Services firms will spend the most on web technologies, investing $228bn in 2004 to create a web presence. That sector is followed by retail at $145bn, financial services at $105bn and manufacturing at $98bn.

The respondents from large companies said it cost them $463 per employee and 19 months to build an ecommerce site. Gantz said large firms going online over a 12 month period are likely to see their database grow seven times, and the number of transactions per day increase 15 times.

He added that European companies are not far behind the US in implementing ebusiness strategies, but spend a few months longer at the planning stage. In contrast, US companies go online as quickly as they can and withdraw if things do not go to plan.