Is Big Talk a Big Pain for E-Commerce?

Thanks to William Shakespeare, we know what’s in a name. But what’s in a number?

For e-commerce, plenty. There’s expectation, and if the escalating prediction game doesn’t stop soon, extreme disappointment.

Let’s start with a pop quiz: How much money was spent online during the last holiday season?

Since you’ve been paying attention, you probably know the answer is around US$10 billion. Every research firm with a calculator and a fax machine has released a press release saying so.

Some even expanded the time frame to the last three months of the year so they could lay a bigger number on us: $12.5 billion.

All those totals came after they gave us a running tally week-by-week anyway. Anyone with an abacus could have figured out the total.

The result is that there’s nothing terribly exciting about the numbers anymore. They don’t feel impressive — even though they certainly should — because we’ve been living with them for weeks now. The numbers sound familiar because they’re right around where they were expected to be.

Is Bigger Better?

So, does the excitement factor matter? You bet it does. As one market research executive put it: “Big numbers get headlines.”

And not just within e-commerce circles. If the numbers are big enough, they cross over into the mainstream press like an R&B single hitting the Top 40 charts.

To do that, however, requires more than merely impressive numbers. It requires gasp-inducing figures. Unfortunately, too many market researchers are willing to grab headlines with ever-inflating estimates of future e-commerce growth.

The result is unrealistic expectations — unreachable targets that never should have been put up to begin with.

Bull’s-Eyes Aplenty

On the one hand, business-to-consumer (B2C) estimates have been pretty solid so far. But has anyone checked what the experts say worldwide business-to-business (B2B) e-commerce is supposed to be worth within the next few years?

Forrester Research says $2.9 trillion — that’s trillion with a T — by 2003. That’s an upward revision from the firm’s earlier estimate of $1.6 trillion. Of course, that’s peanuts: Gartner Group says the number should be $7.29 trillion in 2004.

I dropped that number into a story recently and sure enough, an editor friend of mine called me on it. Wait a minute, he said, that’s bigger than the gross domestic product of the United States. That can’t be right.

So I checked and double-checked and sent him the link and swore an oath that that’s what Gartner said. That was two months ago and he hasn’t forgotten. I know because anytime there’s a new prediction of this sector’s growth, he sends it to me for comparison sake.

Solid Reputations

Now, virtually all of the firms making these predictions — from Forrester to Gartner to PCData and Yankee Group and so on — are well-respected companies who aren’t looking to risk embarrassment. They’re not making these numbers up, I assure you.

But what I can’t assure you of is that they’re not tempted to tack an extra trillion — that’s a 1 with 12 zeros on the end: 1,000,000,000,000 — to make sure they get the attention of John Q. Editor on the news desk in New York. The reason why is simple, according to another marketing expert: Grabbing headlines makes the phones ring, first with reporters and then with potential clients.

To be sure, there are different ways to generate the numbers. For instance, the firm that predicts the biggest B2C growth for next year — Keenan Vision, which predicts $117 billion in that sector — includes adult entertainment and other areas most firms don’t.

But those differences are often shoved aside — yes, sometimes by the media — in the rush to get the headlines out with the biggest number possible.

Payment Due

The bottom line is that some day, these numbers are going to be used for comparison. And it may be said that e-commerce fell short. That will hurt.

So the question then becomes, is it worth it to get a few fleeting moments of headline glory now in exchange for that payback down the road?

You’d think the answer would be an unqualified no. But maybe for the firms that issue the numbers, the answer is yes. After all, what are the chances that all these analysts will still be around when the time comes to do the math.

What do you think? Let’s talk about it.

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Note: The opinions expressed by our columnists are their own and do not necessarily reflect the views of the E-Commerce Times or its management.


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