The Numbers Game

In addition to the difficulty of generating accurate predictions from minimal historical data, e-commerce forecasts have foundered on the definition problem. Individual research organisations use different yardsticks to measure the impact of e-commerce. They range from e-spend to e-business transactions to e-commerce transactions to Internet-based commerce. Each term comes shrink-wrapped in its own subtle distinctions, which often elude the uninitiated while producing dramatic changes in final figures. The haze deepens when reports mix business-to-business (B2B) stats with business-to-consumer (B2C) figures.

This definitional dilemma can descend to very basic levels. IDC, for example, defines "user" as anyone who accesses the Internet at least once a month. If others base the term on once a week use, or once a year, the potential for confusion becomes obvious.

Not surprisingly, the definition of e-commerce itself is flexible. IDC defines it as "an online commitment to buy a product". That includes placing an order online (though it doesn't embrace actual payment). Under other definitions, simply browsing for products online, with no order placement, qualifies as e-commerce.

Clued-up customers of research firm products have their own rules for extracting value from the swamp of ambiguity.

"We tend to look at all the reports and take a view based on a number of them [the research organisations]," says Oracle Australia MD Brian Mitchell. "Gartner and IDC tend to have a broader perspective and Forrester has good information. Because of the different definitions, there are a myriad of ways in which these numbers can be viewed. We don't pay much attention to the figures in a micro sense. It is more in the macro sense of just seeing if the numbers are still big and going up."

Ramin Marzbani, the often-controversial CEO of market research firm ACNeilson.consult, echoes that sentiment. Forecasts at most should be treated as signposts telling you whether to turn left or right, Marzbani says. More than that, such as relying on them to tell you how quickly to turn, is putting more weight on them than they are designed to support.

"There are 20 numbers out [purporting to describe the dimensions of Australian e-commerce] and almost all of them are useless because they don't make clear what is being included and what isn't," Marzbani says. "Taking the total value of electronic transactions in Australia, you could argue it is worth trillions already because all the payments and clearances between banks are electronic transactions."

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