NZ e-commerce set for $US3b spurt

E-commerce in New Zealand is set to grow at a phenomenal rate, recent research suggests. Local research from both IDC and the Gartner Group indicates that New Zealand is following a worldwide trend which IDC US says will see business on the Internet reaching $US333 billion by 2002 (compared with $US8 billion last year). The Gartner Group report surveyed the most senior IT managers within large organisations in New Zealand.

E-commerce in New Zealand is set to grow at a phenomenal rate, recent research suggests.

Local research from both IDC and the Gartner Group indicates that New Zealand is following a worldwide trend which IDC US says will see business on the Internet reaching $US333 billion by 2002 (compared with $US8 billion last year).

The Gartner Group report, to be released at the end of May, surveyed the most senior IT managers within large organisations in New Zealand, on what percentage of revenue they expected their companies would earn from the Internet.

About 0.2% of their organisations' revenue at present is coming from commerce via the Internet. The respondents expected that to grow within a year to 6.2%, and to 20% in five years' time.

IDC research manager Pat Pilcher says it must be remembered that the IDC $US333 billion figure includes business-to-business Internet commerce which takes in things like money crossing borders through customs, duty transactions and freight forwarding.

Despite the growth, he says the consumer e-commerce is very much a revenue stream at the moment rather than a profit stream.

But he says he is "very bullish" about Net ommerce. He says an IDC study released late last year showed the percentage of users buying goods and services on the Web in New Zealand will go from 7% at the end of 1996 to more than 29% by 2001. As a result of the increase, the average transaction size will increase as well.

"We project at the moment — and our numbers are conservative — that commerce in New Zealand will hit about $US665.4 million by 2001."

He says that Internet commerce in 1997 totalled about $US10.2 million.

"It's a small acorn, but from small acorns big trees grow."

Up until about 2001 IDC expects business-to-business e-commerce will be the most attractive option because there are clearly demonstrated business benefits.

"They tend to be a lot more administrable and secure in that they happen regularly, are fairly predictable and involve a small or closed universe of trading partners."

He says intranets have exploded on to the scene from nowhere 18 months ago, and extranets are also growing. Both are providing cost savings.

He says security seems to have become less of an issue this year, and that will continue as the US relaxes its encryption standards.

The number of devices accessing the Web at the end of 1996 was 71,650, and by 2001 the number is projected to be 1.4 million.

Pilcher says that figure is not too surprising given the different ways people will be able to access the Internet by then, such as Web TVs, smart handheld devices and intelligent appliances.

He says the number of Internet users in New Zealand by 2001 is expected to hit about 668,680. In 1996 it was 117,680, and by the end of this year it is projected to hit about 411,000.

In New Zealand new e-commerce ventures are springing up all the time.

For example, TaxWebNZ (www.tax-web.co.nz), which has in the past allowed taxpayers to fill in tax returns using software on the site (but not send them electronically), is now allowing taxpayers to actually send their 1998 tax return to Inland Revenue electronically.

It uses the IRD's E-File, income software which enables electronic documents to be transmitted between the IRD and outside parties, using Telecom's PACNET.

IRD national processing manager Bernard Ward says E-File software has been available since 1992, and since then 2.85 million income tax returns have been received via E-File — mostly from tax agents.

He says whether the department develops and supports software used by customers in the future will be considered as part of its strategic business direction within a project on electronic commerce.

TaxWebNZ director James McCullagh says TaxWebNZ is trying to automate the process as much as possible to keep the costs down.

At the moment, people can return IR5 forms through TaxWebNZ, but McCullagh is looking to add other forms such as an IR3 in future.

He says the benefit for users is access to a user-friendly online return with help menus and wizards to guide them through the process, and which calculates their taxes and rebates automatically.

Meanwhile, the Regency Duty Free two-month-old site allows shoppers to buy their goods on the Web before they travel and pick up the items when they leave or return to New Zealand (www.regency.co.nz).

Retail manager Andrew Laird says the site gives people flexibility in how and when they purchase.

"All you need is a laptop in your hotel in New Delhi or wherever and you can place an order over the Internet and pick it up when you come home."

He says it's still early days, but the site gets at least one email order a day, and often multiple orders. Regency marketing manager James Brodie believes it is the first duty free site in the world to provide sales.

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