Local online buying tipped to grow

While Australian companies lead the Asia-Pacific in online purchasing, the value and frequency of transactions showed an "infancy" in Internet adoption in the region, an IDC report has suggested.

IDC Asia-Pacific's Technology Integration Panel Study for Q1, 2000, claimed Australian business had a "tendency . . . to lean towards the Net" for purchases, compared to the AP region as a whole.

The survey suggested that 46 per cent of local businesses purchased online, while the regional mean was only 38 per cent.

Around two transactions were made per month, typically for PC hardware, office supplies and mobile phones, according to Brooke Galloway, senior Internet analyst, IDC. The median value of purchases was $US5000.

The low occurrence and value of online purchases reflected an "infancy" of e-commerce adoption in the region, the survey said.

"Australia is not an online catalogue business culture [like the US]," said Galloway. Businesses preferred to "build trust" with Web vendors before moving purchases online, she added.

Similarly, consumers reflected this mindset. In Australia, 20 per cent of 5.21 million Internet users purchased online. Galloway regarded this as low consumer adoption, attributing the result to "security concerns".

The telecommunications and finance sectors were most likely to purchase online, with 74 and 64 per cent of businesses from the respective industries driving high adoption rates, Galloway said.

She attributed strong uptake among telcos to "massive change" in the market, referring to a surge in Web-initiative spending by this sector. Telcos are "forced to change their ways" more than any other industry, as they supply the IT infrastructure, Galloway said.

Moreover, IDC predicts production, healthcare, government and education, finance and insurance and distribution industries to follow suit.

Web-based activities industry-wide will grow in importance in 2000, and experience a 57 per cent increase in mean spending, the survey said.

This year, the IT infrastructure sector expects to dedicate 25.4 per cent of its budget to online projects, the largest increase in the proportion of operating budgets spent across all sectors.

Australian enterprise is realising the high cost savings online buying generates. It reduces paper-based procurement, and cuts overhead by minimising human involvement, Galloway said.