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MEASURING ELECTRONIC COMMERCE
OCDE/GD(97)185
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Main points
The purpose of this report is to begin to outline the issues associated with measuring electronic commerce, propose an initial framework and begin to compare some of the disparate data on the subject so as to form a mosaic which gives a clearer quantitative picture of the current status and future direction of electronic commerce. From this position a better sense of the relative importance of the various policy issues can be obtained.
Defining and measuring electronic commerce
Measuring electronic commerce is difficult for a number of reasons including defining what constitutes electronic commerce, the speed of its growth and evolution and the fact that in many cases firms conduct both electronic commerce and traditional commerce simultaneously. Quantifying the value associated with electronic commerce activities can be challenging since many of its key qualities -- convenience, variety and ease of access to information -- are difficult to measure. This leads to a situation where it appears unlikely that official statistical offices will be able to provide accurate statistics on electronic commerce and quantitative insight into the nature of this activity will have to rely on private providers of data which suffer from a number of shortcomings, not the least of which is a transparent definition of what is meant by electronic commerce.
The definition of electronic commerce proposed in this paper is that of commercial transactions occurring over open networks, such as the Internet. Both business-to-business and business-to-consumer transactions are included. In order to make a better judgement of the economic impact of electronic commerce that portion of the network infrastructure primarily dedicated to this activity is also included. To date, the provision of hardware and software, as well as new intermediariary services are major sources of the activity considered under the broad definition of electronic commerce.
The current, and likely, near-term structure of the demand-side of electronic commerce
Nevertheless, it is the demand-side of electronic commerce where important policy issues such as privacy, consumer protection and taxation arise. By compiling statistics on the current and near-term structure of the demand-side of electronic commerce, the following conclusions are reached:
The volume of business-to-business electronic commerce greatly exceeds that between businesses and consumers. Thus, while consumer issues are important and represent a potentially large market in the future, this should not obscure the importance of policy issues that are more business specific such as adapting commercial business codes to this new environment, transborder data flows between businesses, establishing new means for engaging in contracts (e.g. digital signature, authentication and certification) and improving the reliability of the infrastructure to meet the quality-of-service demands of businesses.
Within the business-to-consumer segment, the leading activity is entertainment. This category is currently led by three activities: adult entertainment, online games which are frequently of a violent nature and gambling. Many of these segments raise cultural sensitivities and have been the source of discussion concerning their possible regulation. While these are important areas for political analysis and possible regulatory responses, the economic importance of these activities as a driving force of business-to-consumer electronic commerce should be acknowledged. Efforts to restrict these activities should be undertaken with some appreciation for the impact these actions could have on the development of electronic commerce.
In the business-to-consumer markets, digital products such as software, travel services, entertainment and finance are the leading electronic commerce products. Their intangible nature forces a re-evaluation of exiting policies, rules and practices that were designed for tangible goods, or services that were traded locally.
Electronic commerce is currently relatively small and will continue to be so in the near future, but it is growing very quickly (over 200 per cent annually). When compared to benchmarks such as mail-order shopping, credit card transactions and traditional retail trade, it is clear that while important, electronic commerce is at an embryonic stage where technology and the dynamics of the market are still casting its basic shape. This suggests that policies should be crafted with caution and in recognition of the evolving nature of electronic commerce.
The full document is available in Acrobat format.
See also:
Latest update 03 November 1998
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