By Marc Phillips

I was amazed at reading the recent statistic where Forrester Research estimated that 8.5 million U.S. households made an online holiday gift purchase over the Christmas period. Since about 28 per cent of U.S. households are online that translates to 30 per cent of online U.S. households. Since we have about 15 per cent of households online in Australia, there is significant upside to the e-commerce market in 1999.

With 21 per cent of Australian Internet users having purchased online as detailed in the 1998 Australian Portals Survey released by APT Strategies, we can clearly see that if Australia follows the US trends, e-commerce transactions and spending in 1999 is set to increase.

In order to ensure that websites ride the crest of this e-commerce wave, there are certain trends that need to be incorporated into the strategies of large e-commerce websites and in particular, the portals.

The first is that off line marketing will give e-commerce revenue a major push this year as advertisers and marketers use traditional marketing methods to promote online brands. Recently Peapod noted that as Peapod (www.peapod.com) turned up the offline marketing volume, advertising banner clickthroughs in various markets rose exponentially.

The second is that large websites like portals will have to do a lot more than be just that. Take for example the online brokerage house E*Trade. The US head office firm spent up to $100 million in a marketing campaign that has repositioned their website to what it calls its "Destination E*Trade". It opened up the vast majority of its content to all users with the hope that many would sign up to trade--hence the content-to-commerce portal strategy. So far, the service has been successful, having signed up more than 500,000 members since September, 1998.

The third is that portals that offer e-commerce will need to provide greater customer focus in order to retain their loyalty for usage and the commission they receive on the transactions resulting from retail sales made by visitors who pass through to or buy from merchants on their website.

One of the ways that this is being done is via personalisation of websites to individual users. Internet users are now becoming online shoppers and hence they want customer service with a technological edge of convenience. Take for example, Disney and Infoseek’s Go Network. Their strategy is to offer universal registration, personalisation, and navigation among all of their websites in the network. Therefore, a user only has to register once. For example, once registered on ESPN.com, he or she does not have to do so again on ABCNews.com, or any of the Go Network's other properties.

Another part of Go Network’s strategy, has been called creeping personalisation, which allows users to personalise as much as they want to on any of the websites, with all the other websites on the network recognising the user's choices.

This approach appears to becoming more evident in the portal marketspace. An example of this is where Yahoo recently added the functionality to synchronise with Microsoft Outlook and Palm Pilot.

By offering greater functionality the portals are hoping to keep their users at their websites longer instead of having them just pass through. This is aimed at improving the number and dollar amount of e-commerce transactions. Harry Motro, president and chief executive of Infoseek, recently said that their website earns almost two-thirds of its revenue from banner advertisements, about one-third from sponsorships, and a small fraction from e-commerce. However, in the next two years, he expects to the majority of revenue derived from e-commerce with less than 50 per cent from banner advertisements.

Given that a recent Boston Consulting Group study reports portals drive less than 30 per cent of online retailing revenues directly, the portals e-commerce strategies will most likely involve acquisitions as opposed to organically grown applications or commission deals.

Interestingly, a recent survey by Decision Tree found that three-quarters of all employees would rather access news, receive financial information and conduct business through the company Web site, rather than go elsewhere. Maybe intranet portals and e-commerce will take off this year?

For more information contact APT Strategies at info@aptstrategies.com.au