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Playing the Numbers Game on the Internet

The late Republican senator from Illinois Everet Dirksen – and you have to be pretty “late” to remember who he was – once said in that plum-jam voice of his that “a billion here, a billion there, and pretty soon you’re talking about real money.” The quote reminds me of the spate of e-commerce studies that have been pouring out of various think tanks, except they’re talking about a trillion here and a trillion there.

All right, in fairness only the Gartner Group has come out with a study that claims business-to business e-commerce will hit 1 trillion dollars by 2004, oh not worldwide, just in Asia-Pacific not including Japan. Worldwide, the study claims, e-commerce will reach $7.3 trillion.

A Boston Consulting Group study looking at Europe’s e-commerce potential comes up with a far more modest figure – a lousy $45 billion in consumer sales by 2002. Last year the total was in the $3.5 billion range. The Bathwick Group has a study out that says within two years 6 percent of total European retail sales will be online. I don’t have those totals in my head but they must be close to the “billiuns and billiuns” of stars the late Carl Sagan used to talk about with Johnny Carson on “The Tonight Show.”

Clearly, guessing future e-commerce numbers is getting out of hand. Serious studies are supposed to serve as serious guideposts. But how can one study predict $7.3 trillion worldwide two years after another study says that Europe, clearly No.2 behind the US in the e-commerce sweepstakes, will only sell $45 billion?

Yet there is a perverse logic behind this global numbers game. Over the last two or three years guesses have all been too low as more and more people rush online. Germany alone allegedly doubled their numbers in three months. At least that’s what one German study I saw in the respected newspaper “Die Welt” claimed.

Six months ago I went to a Jupiter conference in New York where one of the presenters claimed 14 million people were online in Latin America, a claim made weeks after another seemingly more serious study put the number at 4 million. When I asked the lady where she got the 14 million figure she said she would get back to me. She never did.

Month after month I dutifully publish results of these studies because of the reputation of the people who put them out. These are not fly-by-night operators out to make a quick buck. They’re serious people but perhaps even serious people can get caught up in the gold rush fever that has enveloped e-commerce.

But I do think some caution is in order. The new economy is a neat buzzword and as I write this the NASDAQ is doing far better than the Dow Jones. But is Alan Greenspan wrong when he warns over and over that the new economy has not repealed the business cycle, or The Economist when it worries that American markets have an eerie resemblance to Japan’s “bubble” economy in the late eighties? When it burst it was followed by a decade’s worth of stagnation and recession.

Good researchers report what they find. The Boston Consulting Group study was based on interviews with 546 retailers in 14 European countries. The society for consumer research said the number of German surfers had doubled to 15.8 million in a matter of months and broke the numbers down – 5.8 million household with Internet access, 8.4 million home surfers, 7.4 million office users.

So maybe it’s a chicken and the egg question. Are the studies a product of what seems a warped trend to traditional economists of the Greenspan stripe, or are they the sparks that trigger the rush?

Beats me. But I only write for a living.

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