Low score for e-commerce.

Businesses urgently need to come to terms with e-commerce, or run the risk of ‘being taken out by .com companies which possess a quicker route to the market,’ according to a study by Arthur Andersen. The warning came this week as the firm – which has only recently launched a new corporate brand and a corporate strategy overhaul – published the results of an e-business report. The research revealed in Thriving in the New Economy: Perception vs. Reality, found an overall failure to recognise the importance of e-business. The study which quizzed 200 senior managers from large financial companies and new entrants, also found fewer than one in four respondents rated] e-business as more important than cost reduction, marketing mix and other issues affected by the Internet. John Tiner, Arthur Andersen head of worldwide financial services, warned: ‘Internet transactions grew 300% in 1999 and e-business is transforming the whole nature of the financial services industry. It is rewriting the rules of distribution. Companies which do not embrace the Internet cannot survive.’ According to the study, the major barriers to e-business development include customer perception of security and the ability of human resources to support e-strategy. Tiner added: ‘Customers do not think twice about handing over their credit cards in restaurants and bars, but for some reason they fear the safety of handing details over the Web, when in fact security mechanisms are good even now. ‘Additionally, uncertainty and overcaution are preventing financial services companies from realising the full potential of e-business. Doing nothing will result in their market share being eroded by aggressive new market entrants.’ Meanwhile, Internet friendly companies see e-business as a marketing platform rather than only a transactional platform, the report concluded. This was highlighted this week with leading e-business company which is set to reduce its workforce by 150 and has barely begun to turn in a profit. However through marketing prowess and spending it has amassed a market base to rival traditional, long profitable businesses.

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