What’s in a number?

THERE have been some big numbers hitting the headlines in the online world. Internet penetration in the US has now risen to 60 per cent of the population. Worldwide, the total number of Internet users will surpass the one billion mark sometime in the next three years.

In two of the classic books in the field, both Nicholas Negroponte and Ray Hammond argued that in 1996, with only 50 million Internet users worldwide, the one billion mark would come in 2000. Both were widely condemned for excessive optimism at the time – both were proven right, give or take a few years.

So when we inspect some of the numbers in the media and consulting world in Australia, it’s wise to keep in mind that in growing industries penetration figures are often underestimated and forecasts that try to model consumer behaviour have a low predictive accuracy.

I make this point because in the sensationalised rush to bury the dotcoms, there is absolutely no evidence to suggest that online usage in Australia is doing anything but growing at an impressive rate.

In terms of worldwide comparisons, Australia is among the leading nations in terms of access, with 41 per cent using the Internet in 2000, according to the Australian Bureau of Statistics.

We lag the USA and some Nordic Europeans, but far outstrip Japan, Germany, the UK and France.

Almost 50 per cent of all Australian households should have home Internet access by the end of 2001 and 6.9 million adults, more than half the total, used the Internet in the year to November 2000, up from 44 per cent a year earlier.

Australians do not shop online at the same rate, primarily due to poor website design, security concerns and a retail purchasing culture that historically has seen little “catalogue” buying. However, more than 1.3 million people shopped or ordered services on the Internet in 2000 – up 66 per cent from a year earlier but still less than 1 per cent of the total value of retail trade.

In the much more difficult to measure, but more substantial business-to-business market, the government estimated that there was about $5 billion in e-commerce activity in 2000.

I believe that as the online business market matures, and over three-quarters of Australians become regular Internet users, then e-commerce sales will increase more rapidly than they have over the past two years, especially given the amount of market slack available.

Locally, Perth measures up well, lagging just behind Canberra and Darwin in total connectivity measures, with 48 per cent of the adult population online. More impressively, this was a higher percentage than cities like Chicago or Los Angeles.

E-commerce also looks set to grow, with a recent study estimating that in 1999 Internet sales were less than $50m in Perth. The study sees this total rising by 2004 to $598m based on higher connectivity and increased comfort levels with online sales.

Whether or not the predictions are correct, one thing is certain: the Internet is here to stay and will con-tinue to be a major driver of economic growth and productivity gains in the coming years both in Western Australia and Australia.

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