The internet economy will grow by more than 10% annually for the next four years in G20 nations, new research shows, with online retail, banking, advertising and IT services set to thrive.
According to a report by the Boston Consulting Group, the internet economy in the world’s G20 nations will nearly double between 2010 and 2016, creating an additional 32 million jobs.
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The proliferation of web-enabled smartphones is expected to help a total of three billion people access the internet by 2016, the report said.
Mobile devices will account for four out of five broadband connections by 2016. Meanwhile, online retail, banking, advertising, IT services and demand for internet-related goods will thrive.
BCG senior partner and report co-author David Dean says the internet economy offers “one of the world’s few unfettered growth stories”.
With regard to Australia, BCG estimates the size of the Australian internet economy at $44 billion, or 3.3% of gross domestic product, but expects it to reach $67 billion by 2016.
About half of that $67 billion will relate to consumption. Not surprisingly, the report said the rise of offshore online retailers is a major factor in measuring the size of the internet economy here.
With imports deducted from the value of the internet economy, the size of the economy is diminished by 1%, which “highlights the missed opportunity for Australian retailers”.
The report also said the actual influence of the internet on retailing is larger than the value of online purchases because consumers spent about $44 billion online in 2010 after researching their purchases online.
The news comes after Harvey Norman chief Gerry Harvey renewed his attack on online retailing, telling Lateline local retailers can’t compete with offshore online players.
“The guy overseas has none of the on-costs. He’s got none of the rent, none [of] the wages, none of the GST and none of the duties, so of course he can sell it a lot cheaper,” Harvey said.
According to the BCG report, retail may be ripe for a transformation, similar to that experienced by the media industry, where, in developed economies, 15% to 30% of advertising spending has migrated online.
It forecasts online advertising – a $US65 billion business in 2010 – to grow at 12% per annum in G20 economies through to 2016, to about $US125 billion.
In Australia, the report predicts online advertising to grow from 18.4% of total advertising spending in 2010 to 34% in 2016, making it the largest advertising medium.
The other significant conclusion from the report is the opportunity it outlines for SMEs.
In 11 of the G20 countries, “high web” SMEs have experienced revenue growth that was up to 22% higher than that achieved by SMEs with no or low web usage, BCG said.