A group of senior business people and technical experts recently delivered a report to the Government. It contained recommendations for improving telecommunications and developing use of the Internet for doing business.

The report was hailed by some people as a blueprint for the future of the Irish economy.

For some years now, it has been widely claimed that the Internet will change the way we learn, the way we use our leisure time and the way we do business. Now, the argument goes further: in a new view of the future economy, electronic commerce - or e-commerce - occupies the central position.

The argument is still very largely theoretical. It is based on projections of the growth of online commerce of which present activities give only a small hint. Every day, it seems, another report is published which predicts that the business done over the Internet will multiply by three, four or five every year over the next few years.

The Minister for Public Enterprise, Mary O'Rourke, has taken on the mission of transforming Ireland's telecommunications structures and business environment so that this State becomes one of the world centres of e-commerce. Welcoming her advisory group's report, the Minister said the total value of goods and services sold online would be $22 billion in 1998, but that this was projected to grow to over $350 billion by 2002.

Other predictions about the growth of e-commerce put total transactions in four years' time at twice that amount - or at half that amount.

One reason the figures are so varied is that the Internet is notoriously difficult to survey. For example, one survey of Internet users in Britain suggested that they total eight million people, 81 per cent of whom had never bought anything online; however, another survey indicated there were seven million users, and nearly half of them had done some business over the Internet in the previous six months.

An online survey of Irish Internet users found that 36 per cent had bought something online in the previous 12 months, a modest increase on the 32 per cent of those surveyed a year earlier who said they had made such a purchase.

Over-excited?

The excitement may seem rather out of proportion. There is a frenzy in the world's leading stock markets around some of the movers and shapers in e-commerce. These include the seller of books, CDs and videos, Amazon.com, possibly the single best-known online merchant. This company's stock market value has trebled this year; its founder, Jeff Bezos, is a paper billionaire several times over. But Amazon.com has yet to return a profit and is expected to lose $90 million in 1998.

What is undeniable is that the numbers of Internet users have grown very rapidly in the last three or four years. The capacity of the Internet has grown too and the services being provided over the online networks have become increasingly sophisticated, with massive stores of information, rich audio-visual features and many different types of interaction between the user and the information provider.

From a business perspective, the Internet looks like the perfect marketplace. It allows a business to reach the potential consumer directly, without agents, distributors, retailers and all the others who make up the world of "normal" commerce.

Freed by the Web

This is a very recent vision. It was unimaginable before the development of the World Wide Web only five years ago. Up to then, the Internet had been primarily a means for academics and researchers to communicate with each other.

It was also being used by groups spread across countries and continents to share their interests in topics as diverse as environmental protection, train travel and fusion jazz.

The technologies which have developed over the 30 years of the Internet's existence to promote this information exchange have been provided free of charge by different members of the Internet community - a search procedure developed here, a directory system developed there. The Web was just one more of these, and the browser, the piece of software for access to the Web, was another.

But soon the development of browsers became the object of intense commercial competition, which has pitched Microsoft against "the rest". The world of advertising embraced the new medium now that it had a more graphic and accessible face, developing new forms of advertising for the Internet.

Thousands of newspaper and magazine publishers set up web-sites in the hope of winning new markets for their products. Sports-event tickets, airline and hotel reservations, Christmas puddings, books, paintings, CDs, fine wines and, of course, computer software and hardware can now all be bought over the Internet.

Yet the story of e-commerce remains largely one about "potential". More than security concerns, or even lack of awareness, it may be the limitations of Internet capacity and the clumsiness of many of the commercial services on the Internet which are slowing the development of online business.

Clumsy services

A recent study tracked 239 experienced Internet users in the United States over two months and found that the majority of them simply gave up on at least one commercial transaction which they initiated during that period; over one-quarter stated they found online shopping difficult.

The report's authors commented that online merchants were slow to invest in sophisticated search engines because few online shops have so far recorded a profit.

In a curious attempt to reproduce the conventional shopping experience, online businesses present themselves as "malls" or shopping centres, allocating shoppers virtual shopping baskets, or trolleys, in which they place their goods. The online shopper, like the physical shopper, may have to take the trolley around several online centres to find what they want, or to assure themselves that they are getting the best price.

No single search procedure allows the shopper to shorten this circuit, even though all digital information can be made searchable.

The fact that three-quarters of what people buy on their regular weekly shopping trips to the supermarket is a repeat of what they bought the last time is cited by enthusiasts of online commerce to argue that these transactions could readily be done online.

But very many of those who do repeat shopping trips in the real world do them willingly. For them, shopping is also social, and brings with it the occasional surprise of finding something new or unexpected. E-commerce cannot easily reproduce that experience.

This Web page from the MSN (Microsoft Network) `plaza' shows how Web shopping currently consists of links to individual `shops', like in a mall. Jeff Bezos of Amazon.com says the success of electronic retailers will depend on their software's ability to analyse each customer's tastes, based on how they browse and shop, in order to create unique experiences from the moment they walk in the virtual `door'. "If we have 4.5 million customers, we shouldn't have one store," he says. "We should have 4.5 million stores." However, customers who have already found themselves targeted with electronic ads for particular products based on their shopping `profile' have often found the offers way off-target - stuff they aren't remotely interested in. Are individual people's tastes perhaps too quirky and complicated to be captured and targeted this way?