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Study: Consolidation Coming to E-Commerce Sector

The e-commerce industry can expect to see a consolidation before long that may change the face of the Web, according to a new Advisory Report issued by Current Analysis examining the implications of Yahoo!'s acquisition of Viaweb.

The report, written by David Baltaxe, contends that while it has been relatively easy for anyone to set up an online storefront and sell online, the concept has not filtered down to the lowest levels of Web users.

Yahoo!'s brand name and promotional budget should ensure that Viaweb's technology will reach the most basic online audience, the report said.

"Just about everyone online will know how to sell online," said David Baltaxe, Internet Commerce research analyst at Current Analysis. "As competitive portals are sure to match this functionality, prices will drop, and we could be in for a new rush of commerce-enabled sites similar to the explosion of personal Web pages and free e-mail accounts that litter the Internet."

This is the first time one of the major portal or directory services will provide the tools for commerce site building and host the stores itself, the report said. Netscape is already moving in this direction. Current Analysis expects Lycos and Excite to respond quickly--whether through acquisition or partnership--to add similar commerce service provider features to their own portals.

Commerce product developers, and the commerce service providers (CSPs) that utilize storebuilder tools in their services, ought to enjoy a short-term jump in sales as Yahoo! increases small merchant consciousness about online selling opportunities, the report says. However, companies like Intershop and iCat that target the small and mid-sized merchant directly and through CSP partners, could find their ongoing customer base eroded by Yahoo!'s entry into the market.

"Yahoo!'s acquisition of Viaweb appears to be a significant event in the evolution of Internet commerce and the World Wide Web," said Baltaxe. "As the portal wars continue, we expect to see further consolidation within the commerce industry and believe that the partnerships will slowly work their way up the levels of the market."

For a copy of the full Current Analysis Advisory Report: Commerce as Commodity: Internet Selling for the Masses, contact Kristine Brown.

Current Analysis Inc., based in Sterling, VA, is a source of competitive information for the business, financial, vendor and end-user communities. Founded in 1996 by Fred J. McClimans, Current Analysis uses a Web-based publishing system to deliver analysis of industry trends and events as they happen.