IBM E-Commerce Chief Sees Boom ComingIBM E-Commerce Chief Sees Boom Coming

E-commerce, which broke out with soaring sales during the recent holiday season, is poised for across-the-board growth, the head of IBM's E-commerce unit says.

Noting that smaller retailers have learned from following the recent success of large online retailers, Bart Lautenbach, director of IBM's WebSphere Commerce, said his company is "seeing a tremendous increase in sales in the midmarket." WebSphere is IBM's central E-commerce location, which provides software and services to automate its customers' Web-business processes.

At the same time, larger retailers with Internet sales experience are beginning to purchase E-commerce products and services in heavier volume, as a new cycle of upgrading gets under way. Lautenbach sees another trend, as well--IT managers, who had been acquiring E-commerce products on their own, are increasingly being joined by product-line managers, who are getting more involved in the nitty-gritty details of E-commerce.

"The old business models have gone away," Lautenbach told CMP Media's TechWeb. "In the last three years, line-of-business people became more interested in E-commerce. Before that, the IT people could do it on their own."

Midsize companies, which Lautenbach described as those with about 1,000 employees, are coming to IBM's WebSphere Commerce Express in growing numbers. Many of them are making innovative use of E-commerce. For instance, Recreational Equipment Inc. has installed Web kiosks in some of its stores. If a customer can't find an item he or she wants, he simply goes to a terminal in the kiosk and searches for the item on the company's Web site. This gives Recreational Equipment a third sales channel after its stores and catalogs. Said Lautenbach: "We're finding that people who buy from two channels buy more, and people who buy from three channels buy even more."

An E-commerce installation at National Geographic offers its photography archive for sale. The magazine's traditional sales technique went something like this: a prospective customers looking for photos would call the magazine and then view photos, usually on a CD. Now the customer simply logs onto the National Geographic site and conducts the transaction on the Internet.

Some new trends have been emerging in recent months. Lautenbach noted the growth of digital media in E-commerce, with its "sound and feel" importance. Teenagers using mobile phones are interested in ring tones, not data-transmission speeds. Online delivery of the ring tones is not only easy, but also very profitable for its providers.

Another emerging growth area is the gift-giving business, which Lautenbach said began taking off this past holiday season. Previously, E-commerce gift-giving had focused mostly on books, flowers, and toys offered by large established companies using the Web. Now, Lautenbach said, it's attracting small and midsize businesses.

When IBM released its fourth-quarter earnings Thursday, it noted that its WebSphere business had grown 10%.