Market Size Study for Electronic Commerce

Transcription

1 Market Size Study for Electronic Commerce An Estimate of the amount for Internet Electronic Commerce in June 17,1999 Ministry of International Trade and Industry Andersen Consulting Ministry of International Trade and Industry

2 Objectives and scope of the study Objectives To estimate the current market size of electronic commerce in To Estimate the future market size of electronic commerce in To compare ese market size with US market size. To develop basic estimation model Scope Coverage: Transaction amount generated by electronic commerce in, By categories of products and services in both business to consumer (B to C) and business to business (B to B) electronic commerce Forecast range: (next five years) 1

3 Definition of Electronic Commerce in This Study Definition Commercial transactions (that is exchange of merchandise, services, information, and/or money between suppliers and receivers for the commercial transfer of goods/services between economic actors Through electronic mediation using Internet technology * * Internet technology refers to the use of TCP/IP protocol whether the network circuits are on public lines, dedicated IP networks, Internet VPNs, satellite circuits, or other similar media. 2

4 Scope of media for electronic commerce in this study Scope of this study Media to be used for EC On-line service Public Internet Extranet Satellite Broad casting Satellite communication ( non-tcp/ip) Include Web and non-web Include satellite Internet services, internet menu on on-line service Include EDI over Internet/Extranet Conventional VAN ( EDI) 3

5 Scope of activities included in electronic commerce in this study Prior to ordering At the time of ordering After ordering Procurement activities Development/ design activities Access information Search for and select products Confirm estimates Negotiate prices and terms etc. Finalize specifications Finalize (customize) content of order etc. Issue purchasing order/contract Indicate specifications and quantities ordered Process ordering and contracting invoices Proceed settlement etc. Arrange delivery conditions etc. Process delivery and inspection invoices Settle etc. Finalize specifications (discuss specifications and exchange drawings) etc. Sales/marketing activities Provide information Promote sales Provide estimates Negotiate prices andterms etc. Issue order acceptance/contract Ask for payment Process order-booking and contracting invoices etc. Finalize delivery conditions Transport goods and services to the purchaser (physically or electronic) Process delivery and inspection invoices Receive payment (when separate from order acceptance)etc. 4

6 Flow of Goods/services and money in electronic commerce Payment/verification service provider Advertising service provider System service provider, Telecoms carrier Payment fee Credit/verification fee Advertising fee System construction and management fee Telecoms charges System construction and management fee Telecoms charges Sale and supply of goods and services Mediation fee Seller Mediator membership fee, subscription fee, Purchaser price of digital content (procuring company, consumer) Sale and supply of goods and services Price of goods or service, mediation fee, service fee, Transportation fee Flow of money in the electronic commerce (values counted towards size of market) Values not included in size of market estimates in this study Physical distribution service Transportation fee 5

7 Method of Approach Step Description Determine basic model structures and model parameters Analyze US forecasts - Determine a basic model structure and select parameters/ - Analyze and compensate forecasts for electronic commerce in the US, considering current US situations and differences in definition. Analyze drivers/barriers Identify model parameters Estimate market size by fact base Calibrate and fine tune parameters Computation of size of market forecast - Select drivers/barriers and analyze them in the view point of the differences between and the US for each drivers/barriers. - Identify parameters using integrated US forecast and comparative analysis of drivers/barriers. - Add up current and future market size related variables directly, using results of questionnaire surveys, interviews and published information. - Adjust parameters with reference to findings for current size of market and fine-tune parameters with references to future projection by fact base. - Plug estimates for each parameter into the model to compute a size of market forecast. 6

8 Outline of estimation model B to C B to B Market size Input data/information market size Input data/information Population Macro statistical data (based on ese demographic estimates) Percentage Internet users analysis Interview/survey findings Relevant data and information Total sales Macro statistical data (based on input-output tables) Ratio of ec users to internet users Ratio of ec spending to total spending US forecasts Comparative coefficients /US US forecasts Comparative coefficients /US Per capita spending analysis analysis analysis analysis Existing US forecasts Relevant data and information Interview/survey findings Relevant data and information for drivers/barriers Existing US forecasts Relevant data and information Interview/survey findings Relevant data and information Macro statistical data (based on input-output tables) Ratio of ec to total transactions US forecasts Comparative coefficients / US analysis analysis Interview/question naire survey in Existing ec forecasts in the US Interview/question naire survey in Relevant data and infomation regarding drivers/barriers in and the US 7

9 Outline of estimation model (continued) forecast by segment forecast US forecast Comparative Coefficient by segment Normalized weighting for each drivers by segment (0~1) Gap indicator compensation by segment (~0~) US/JP Gap indicator on each drivers through segment (0~1~) Driver/ barriers # 1 Driver/ barriers # 2 Driver/ barriers # 3 Driver/ barriers # 4 Driver/ barriers # x Drivers/Barriers US Situation Situation Statistical Data Statistical Data qualitative information Qualitative information Evaluation by analyst Evaluation by analyst Calculated by segment 8

10 B to B electronic commerce Drivers/Barriers Industrial structure Standardization Strength of group/keiretsu ties Extent of efforts to reform business and industrial structures Spread of supply chain management Infrastructure development Telecoms infrastructure Telecoms costs Telecoms capacity Telecoms quality Social infrastructure Security Development of verification systems Compatibility of hardware and software IT penetration Corporate computerization PC installation rate LAN installation rate EDI installation rate ERP installation rate Internet use rate Investment in computerization Social structures Regulatory environment Statutory regulations Deregulation Budget allocations Tax incentives Government leadership Formulation of vision statement Incentives for industry standardization Computerization of government * The closer to the top right of the diagram, the larger the gaps between and the US and the more influence a factor has on the development of electronic commerce transactions in goods and services. This diagram represents an average evaluation for all goods and services. In the actual model, we made more detailed evaluations of factors for specific goods and services segments. 9

11 Drivers/Barriers : Gaps in and the US and degrees of influence Large Normalized weight =Degree of influence on electronic commerce promotion through segments Small Strength of group/keiretsu ties Small Extent of efforts to reform business and industrial structures Corporate computerization Telecoms infrastructure Social infrastructure Government leadership Regulatory environment Spread supply chain management Standardization Large Gaps between and the United States in 2003 Most important factors will be: extent of efforts to reform business and industrial structures and spread of supply chain management. * The closer to the top right of the diagram, the larger the gaps between and the US and the more influence a factor has on the development of electronic commerce transactions in goods and services. This diagram represents an average evaluation for all goods and services. In the actual model, we made more detailed evaluations of factors by specific goods and services segments. 10

12 Summary of Forecasts of Electronic Commerce in and US Comparison of scale of electronic commerce in and USA USA - 65 billion. 3,160 billion 2,250 billion. 21,300 billion. - 8,620 billion 68,000 billion 19,500 billion 165,300 billion.... 1) US$1 = 120 Numbers in parentheses ( ) indicate percentage of commercial transactions conducted electronically. 11

13 Amount and penetration rates of Business to Consumer (B to C) Electronic Commerce in and US (x 100 million) Amount of B to C electronic commerce in and US Penetration Rates of B to C electronic commerce in and US 250, , , ,000 50,000 0 Privatesector consum ptive USA spendin g* ( 1 trillion) * Calculated at US$1 = ,500 42, ,900 4,300 71,100 8, ,900 USA 16, ,600 31, , % 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% 0.4% 0.02% * Private-sector consumptive spending as calculated from the input-output tables of and the United States % 1.1% 1.7% 0.06% 0.14% 0.28% USA 2.3% 0.51% 3.2% 0.97%

14 Amount and penetration rates of B to B Electronic Commerce in and US (x 1 trillion) Amount of ese and US B to B electronic commerce B to B electronic commerce penetration rates in and US % 140 USA 20% 19.1% % 10% 5% 0% 2.5% 3.7% 1.5% 2.2% 6.1% 3.3% 9.6% 5.0% 13.8% 7.4% USA 11.2% Total B to B sales value (x 1 trillion)* USA * US$1 = 120 * Computed from final demand plus intermediate demand as shown in the input-output tables of ese and the United States. Does not include any services except information services and transportation and physical distribution services (for example, does not include health care, education, or telecommunications services). 13

15 Amount of Business to Business (B to B) Electronic Commerce by segment amount of electronic commerce by specific B to B product/service segments * (x 1 trillion) Electronics and information products 4.3 Automobiles and autoparts 3.3 Chemical products Utilities Paper and office products Transportation and physical distribution Food Textiles, consumer electronics, consumer goods Construction Industrial equipment Steel, nonferrous metals, raw materials Total 8.6 * 1 For this study, services in the B to B market include only information processing and allied services, and transportation and physical distribution services. Other services (health care, education, telecommunications etc.) are not included. 14 * 2 For the size of the B to B market, we count sales values of merchandise by an industry rather than procurement by an industry.

16 Amount of B to B Electronic Commerce in : Breakdown by Product/Service Segments (x 1 trillion) Amount of electronic commerce broken down by B to B product/service segments (Figures in parentheses ( ) indicate the electronic commerce penetration rate) Total Steel, nonferrous metals, raw materials Industrial equipment Construction Textiles, consumer electronics, consumer goods Food Transportation and physical distribution Paper and office supplies Utilities Chemical products Automobiles and autoparts Electronics and information products Intense global competition is the impetus for large companies in the electronics and information products and automobiles and autoparts segments to introduce electronic commerce transactions. Electronic commerce transactions will spread to the transportation and physical distribution management as part of the spread of supply chain management for other industrial sectors. In construction, large general contractors will introduce electronic commerce transactions as part of CALS. 15

17 Penetration rates of B to B Electronic Commerce Market in : by Product/Service Segments Electronic commerce penetration rates for individual product/service segments Electronics and information products Automobiles and autoparts Chemical products Utilities Paper and office supplies Transportation and physical distribution Food Textiles, consumer electronics, consumer goods Construction Industrial equipment Steel, nonferrous metals, raw materials Total 0% 20% 40% 60% 80% 100% 9% 42% 8% 39% 4% 2% 8% 0% 12% 1% 1% 6% 5% 9% 0% 3% 0% 4% 2% 11% There is a high need for electronic commerce transactions in construction because of the large amount of drawings that need to be exchanged and the large number of smaller-sized companies in the industry. For transportation and physical distribution, there will be an acceleration of distribution EDI standardization as manufacturers begin to introduce supply chain management. In both cases, government follow-up for example, construction CALS and the Outline of General Distribution Policy would be effective. 16

18 Current Penetration rates of B to B Electronic Commerce by Segments in and US Electronic commerce penetration rates for individual B to B product/service segments 1998 ( 8.6 trillion) 1998 USA ( 19.5 trillion) Electronics and information products Automobiles and autoparts 0% 5% 10% 9.5% 8.0% Electronics and information products Automobiles and autoparts 0% 5% 10% 11.3% 10.5% Chemical products 0% Chemical products 1.1% Utilities 0% Utilities 2.5% Paper and office supplies Transportation and physical distribution Food Textiles, consumer electronics, consumer goods Construction 0.1% 0.1% 0.6% 0.5% 0% Paper and office supplies Transportation and physical distribution Food Textiles, consumer electronics, consumer goods Construction 0.9% 0.5% 0.6% 0.6% 0.1% Industrial equipment Steel, nonferrous metals, raw materials Total 0.2% 0.4% 1.5% Industrial equipment Steel, nonferrous metals, raw materials Total 0.2% 0.5% 2.5% The gaps between and the US in the chemical products and electric power and gas segments are probably due to differences in industrial structures (differences in regulatory environments, differences in degree of competition). * Calculated at US$1 =

19 2003 Penetration rates of B to B Electronic Commerce by Segments in and US Electronic commerce penetration rates for individual B to B product/service segments 2003 ( 68.3 trillion) 2003 USA ( trillion) Electronics and information products Automobiles and autoparts Chemical products Utilities Paper and office supplies Transportation and physical distribution Food Textiles, consumer electronics, consumer goods Construction Industrial equipment Steel, nonferrous metals, raw materials Total 0% 10% 20% 30% 40% 3.5% 2.3% 8.0% 12.0% 6.3% 5.3% 9.0% 2.6% 3.9% 11.2% 41.9% 39.0% Electronics and information products Automobiles and autoparts Chemical products Utilities Paper and office supplies Transportation and physical distribution Food Textiles, consumer electronics, consumer goods Construction Industrial equipment Steel, nonferrous metals, raw materials Total 0% 10% 20% 30% 40% 50% 60% 7.4% 6.9% 2.8% 3.6% 3.9% 16.5% 19.1% 28.7% 29.1% 41.1% 38.8% 54.0% * US$1 =

20 Grouping of B to B Electronic Commerce Segments Degree of standardization of goods and services High Low Category of goods and services Commodities Utilities Steel, nonferrous metals, raw materials Chemical products Custom-built products Industrial equipment Services Low Domestic market products Paper and office supplies Transportation and physical distribution Textiles, consumer electronics, consumer goods Food Construction Less than 5% High Global assembly products Electronics and information products Automobiles and autoparts Forecast electronic commerce penetration rate in 2003 Note: The degree of standardization for goods and services is a conceptual degree based upon representative items in the category. 19

21 Conclusions The B to B electronic commerce market in is currently worth about 8.6 trillion; electronic commerce has spread much farther in this market than in the B to C market. The gaps with the US are surprisingly small here: by value, it is about half the US s size, and about 1 year behind. In 2003, the ese B to B electronic commerce market will expand about 8-fold to around 68 trillion. The gaps with the US will be at about the same levels as currently seen. However, there will be differences in the product segments for which electronic commerce spreads due to differences in the industrial structures of and the US. In the future, will need to be concerned with the quality of electronic commerce activities rather than just the size of the transactions involved. Electronic commerce transactions should be used in a variety of settings for example, expansion to smaller companies and integration of transaction infrastructure to provide impetus to efforts to reform business and industrial structures. 20