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Dramatic growth andpotential3.7 As already indicated, the speed ofadoption of e-commerce is unprecedented.Whilst Electronic Data Interchange betweenlarge companies has developed steadily overthe last fifteen years, there has been anexplosion of growth in retail e-commerce andin transactional use by small business.3.8 Industry forecasts have consistentlyunderestimated e-commerce growth. In theUS, business to business e-commerce is nowexpected to reach $1.3T by 2003. 1 Similarlybusiness to consumer e-commerce is thoughtto have reached $7bn in 1998 and to be ontrack to reach between $40bn and $80bn by2002. This suggests that the current pattern,where at least 80% of e-commerce revenuesfall in the business-to-business segment, isbeing maintained. In the UK, e-commercerevenues are expected to reach $4.5bn forcalendar year 1999, rising to $47bn by 2002. 2Major impact on barriersto market entry3.9 A key aspect of e-commerce is theextent to which it demolishes many existingmarket barriers. It is vital that UK businessesprepare for the impact e-commerce will haveon their markets. These historic barriers cantake several different forms. They may be:Geographic. Box 3.2 illustrates the US/UKdifferential on portable minidisc playerprices, now avoidable by electronicpurchasing;DIFFERENTIAL ON PORTABLE MINIDISCPLAYER PRICES UK V USSony MZ-R55:IMPACT ON INTERMEDIARIES876543210Typical US airline transaction cost ($)At travel agentthroughreservationsystemAt travelagent directto airlineE-ticket viaInternetSource: US Dept. of Commerce Figure 3.2Market separation. Box 3.3 illustratesCharles Schwab's entry into the Europeanmarket; orBusiness scale. Figure 3.3 illustrates thepotential cost saving on electronicpurchase of books, whilst Figure 3.4documents Amazon.com's revenue growth.CHARLES SCHWAB’S PROGRESS FROM USTO EUROPEAN MARKETSApril 1998: Launch of on-line investing servicesin UK (online trading, portfolioscreening, real time prices, marketand economic news...).April 1999: Launch of UK Individual SavingsAccount (ISA) on the Internet.May 1999: Offer US trades via UK web site.Now more than 14,000 registered users.Box 3.3• Not yet released in the UK market, currentlytargeted at the US and Japanese markets only.• Available for £208 from www.minidiscnow.com• Expected minimum price when launched inthe UK £249.Source: the net magazine July 1999Box 3.2Custom and practice. Figure 3.2 showsthe transaction cost saving throughavoiding the use of a travel agent;1Forrester Research Report December 19982IDC 1998E-commerce@its.best.uk11