FACING REALITY
(October 1999)
by Katrina Nicholas

Services - not products - will become the prime focus of retail e-commerce as consumers return to the bricks and mortar environment for many purchases, according to marketing analysts who specialise in the Internet and e-commerce.

However, Melbourne company Secure ID-Net, which will this Friday change its name to Senetas Corporation, believes it may be able to reverse this trend with a technology that allows shoppers to simulate the physical handling of a product online.

The company, which so far has focused mainly upon its fingerprint security system, eCrypt, has acquired an option to purchase a system called Touch and Feel.

It is designed to make Internet shopping more like real life shopping, allowing people to read labels on food packaging, leaf through books or open a CD to examine the liner notes.

Such technology - as yet unproven - seeks to remove some of the uncertainties in online retailing. Retail e-commerce is growing quickly - from a base of zero a few years ago - along with the continuing increase in new Internet subscribers.

Research from Jupiter Communications predicts that by 2002 the largest e-commerce market will be travel, worth $US11.7 billion ($17.9 billion), followed by PCs $US6.4 billion, books $US3.7 billion, groceries $US3.5 billion and software $US2.4 billion. However, even popular categories such as online music sales are at present so far behind ''real world'' sales that it is difficult to imagine them catching up in the short to medium term. For a variety of reasons, the gap may be too far to catch up for some online retail segments. For example, selling goods which usually required two people to be involved in the decision making process, such as furniture and whitegoods, would prove difficult online.

And whereas browsing in shops was pleasurable for many consumers, it can be a frustrating process online.

Online product sales will only be successful where consumers know exactly what they wanted to buy, said IDC research manager Mr Graham Penn. ''Fashion goods have the highest rate of return on the Internet,'' Mr Penn said. ''Sure, you can look at a [product on the Internet] but it's not the same as picking something up and touching it.''

This is not lost on Secure ID-Net director Mr Francis Galbally. ''So much science has gone into where products are displayed and the look of a product - its packaging and its feel,'' Mr Galbally said. Despite the investment in Touch and Feel - although Secure ID-Net paid only a few thousand for the rights - Mr Galbally said he thought product-oriented retail e-commerce would eventually dwindle and the Internet would be used mainly for information.