<div align="justify"> <p><b>In the darkest days of the dotcom collapse there was a lot of speculation about the 'bounce back'. It took a couple of years before the world woke up to the fact that the boom days were never coming back.</b> </p><p>And then we had the backlash: businesses pulled investments, venture capital dried up and analysts fought over who could be most pessimistic. </p><p>To a certain extent the doom-mongers were right. The dotcom boom was a collective loss of business sanity on a colossal scale, and the crash was spectacular. It may have been a necessary part of the evolution of the internet, but it was no less dizzying in its descent for that. </p><p>Since the turn of the millennium, when tech stocks accounted for a quarter of the total market capitalisation, nearly 5,000 e-business ventures have gone under or have been bought out, according to researcher Webmergers. </p><p>The idea of an e-commerce revival seems pretty limp.Try finding a venture capitalist now to fund your online business. Yet, while we were rubber-necking the wreckage of big name businesses, we missed the good news about the companies that have succeeded in the online business. </p><p>New businesses, such as the search engine Google, became household names during the 'bust', and icons of the dotcom era like Amazon, eBay and the UK's own Lastminute.com have started turning a profit. And many supposedly old economy businesses, particularly in retail and banking, have made serious advances in taking customers online. </p><p>So if it's not exactly a recovery, can we at least see a sustainable upward trend? If we compare this year's performance to last, the answer is clearly yes. Happily, the UK is at the forefront of the upward trend, with 28 million people online, up six per cent on 2001. </p><p>The Office of National Statistics says internet shopping now accounts for six per cent of all retail sales, and this at a time of declining high-street sales. Consultancy Booz Allen Hamiltonmeanwhile, reports that we are now the second-best place in the world as a competitive online business market. </p><p>"It's an achievement many thought impossible four years ago," said Trade and Industry secretary Patricia Hewitt. "We've made real progress in key areas: a growing IT sector, among the world's lowest prices for internet access, and the highest penetration of digital TV in the world." </p><p>Even given a little spin doctoring, there are provable changes for the better. </p><p><b>Technology issues</b> </p><p>Many of the previous technology problems are now at least close to resolution. </p><p>Security is considerably more sophisticated, married to better business models and tighter regulation. The remarkable growth of broadband adoption in the UK is now killing off one of the biggest letdowns of e-commerce: the discovery that shopping online was as slow and depressing as a Radiohead album. </p><p>Back in the boom days, dodgy operating systems, bug-ridden software and snail's pace modems were a permanent headache. It felt like you could have popped down the shops, knocked back a couple of pints and embroidered a relief map of the Himalayas in the time it took for your online transaction to be successfully completed. </p><p>Now broadband brings an always-on service at something approaching real time. And then, of course, there are new delivery mechanisms, such as wireless networks and smart phones. </p><p><b>Confidence building</b> </p><p>One of the plus points of the new wave of technologies is that they take out much of the fear factor. </p><p>The author Germaine Greer pointed out that successfully using the internet via a modem meant adopting both the skills and thinking of a geek. But more intuitive technology and education has changed all that. </p><p>According to internet pioneer and Netscape founder Marc Andreessen, confident users are driving the current upturn, and smarter, safer and simpler services will encourage e-commerce virgins to become more adventurous. </p><p>"I spent a year at AOL and we did a lot of research and found it takes consumers three to five years to really get into the internet," he said. </p><p>"In year one, they might do email. In year two they might surf the web as well; in year three they might buy a book on Amazon. And then they're emailing, processing digital pictures, buying their groceries, booking their holidays and so on. They love it and they'll never go back." </p><p>This gradual building of customer confidence means that online businesses, or businesses online, can achieve something like organic growth. </p><p>"A lot of the monthly variability has gone," said Meta Group vice president Jeffrey Mann. "For most shoppers, the novelty and hype of buying online has worn off, which is helping the sector to stabilise." </p><p><b>Back to boring</b> </p><p>Maybe Andreessen goes a bit far in talking about 'love', but simple efficiency will go a long way. </p><p>Tim Miller, a senior analyst at the Interactive Media in Retail Group (IMRG) said 36 months of pain is at last beginning to give way to a conservative degree of gain. </p><p>"We are certain that the shake-out is nearly over and that has cleared the decks for a second wave of rapid-but-sane growth," he added. </p><p>His emphasis on sanity is echoed by most of the leading commentators. </p><p>Perhaps Richard Holway, of analyst Ovum Holway, put it best when he characterised this period as "back to boring". That's the key to the new e-commerce era. </p><p>By boring we mean conventional, customer-focused and planned along traditional business models. </p><p>E-commerce pioneer and Amazon chief executive Jeff Bezos has one of the best reasons to crow about this year's improvements. The online bookstore was often used as the prime example of dotcom excess: all hype and no profits. Now his business is regularly in the black. </p><p>But you won't hear him talking about a return to the gold rush mentality. He is interested in more conservative business plans, like selling on the Amazon technology to third parties. </p><p>"Many retailers are deciding that web sales will represent only five to 10 per cent of their business, not 50 per cent as so many had anticipated," he said. But he will tell you that's a pretty healthy, and potentially highly profitable, return. </p><p><b>Price, convenience, choice</b> </p><p>It's tempting to think that e-commerce has slotted happily into a comfortable and relatively minor business niche, but the smart companies don't see it that way. For them, online and offline trading should be one coherent and preferably seamless part of a strategy. They understand and ruthlessly exploit the advantages of e-commerce. </p><p>The dotcoms talked the talk, promising huge price advantages by cutting out the middlemen, but found it difficult to walk the walk. The truth is that many of the existing retailers have been smarter than most of the 'pure-play' internet businesses. </p><p>Take Easyjet, an airline that unashamedly makes low cost its reason for existence. It quickly realised that traditional booking methods were an expensive overhead, just like the in-flight meal. </p><p>It now takes 95 per cent of bookings through its website. The feat was achieved simply enough: it just made e-flights cheaper. </p><p>Simon Pritchard, the airline's web manager, said: "Online fares are all discounted, we run deals exclusively online and provide online-only access to a number of routes. </p><p>"And we're constantly thinking about how we can improve the easyjet.com platform with other deals and products that can drive even more customers online." </p><p>Retailers face more complex challenges, such as deliveries and inventory, problems which killed dotcoms like Webvan. The convenience of home shopping is a winning message for many retailers but one that only a few have been able to turn into healthy profits. </p><p>John Lewis Direct - the online arm of the John Lewis chain - boasts three times the demand it had three years ago by keeping to simple business rules. </p><p>According to managing director, Simon Palethorpe, the art is to listen to customers and let your business be guided by their growing needs and aspirations. </p><p>"We see people who had previously only been buying books and CDs branching out to more ambitious purchases as they become more sophisticated internet users," he said. </p><p>The dotcom era was dominated by businesses talking about how they would change the customer, but now it's the other way around, he believes. That does not necessarily make price the silver bullet; the web has been able to exploit the increasingly bland Americanism of the high street. </p><p>Hockey Heaven is an award-winning specialist selling the kind of sports equipment you'd be hard pressed to find in any department store. Founder Deep Bassi believes online businesses can build the kind of relationships with customers that one might once have associated with the specialist store that has disappeared from most UK towns and cities. </p><p>"Today's users are far more sophisticated than before and they expect value. But they like something more, and with smaller sites like us they can have a close and friendly relationship," he explained. </p><p>It's a trend that IMRG chief executive James Roper called: "The wholesale reinvention of self-service shopping, with the internet becoming a 'super-supermarket' that is tenanted by merchants of all sizes, with thousands of SMEs nibbling away at major brands' trade." </p><p>So if the net has a winning formula, a growing and sophisticated customer base and a new business focus, how come the recovery is so modest? </p><p>A Department of Trade and Industry (DTI) report shows that only 20 per cent of businesses are transacting online. And, according to Hewitt, only one in 10 UK citizens have used online government services, compared to half of the Canadian population. </p><p>DTI e-commerce minister, Stephen Timms, said: "The issue that comes up time and time again is trust. People see the new technologies not only as an opportunity but also as a threat." </p><p>Fear of becoming a target of spam or the victim of online fraud may bear no relation to the actual threat, but that does not make it any less dangerous. </p><p>A Pricewaterhousecoopers survey in July showed that just one in five incidents of business fraud was internet-related. Yet the study revealed that nearly half feared they would be a cybercrime victim in the next five years. </p><p>The consumer is even more wary. A Mori survey on behalf of IT security firm RSA estimated that six million potential customers were shunning online banking because they feared their transaction would not be adequately protected. </p><p>Confidence isn't helped by the attitude of business. The National Hi Tech Crime Unit states that only 56 per cent of larger companies report electronic crime to the police. The figure is lower among small businesses. </p><p>How can you establish trust with a company that lets criminals off the hook for fear of tarnishing its brand name? The widespread adoption of e-commerce is being hindered by a failure to consider the human aspects of transacting online. </p><p>A DTI report published in July says businesses are too focused on the technology supporting their e-commerce strategies - only three per cent of companies take into account how e-business affects people. </p><p>"There is evidence of an undue focus on technology and a lack of attention to human and organisational issues," said Timms. </p><p>Add to that list the lack of venture capital, reduced IT budgets, new legislation and skills shortages and you get a sense of the challenges ahead. </p><p>But, however modest this revival, it is clear that today's online businesses have a working model on which to build, in stark contrast to the unplanned mess of the dotcom era. Then the entrepreneurs and gurus promised revolution, to overthrow the existing order and change human nature. </p><p>Today, the words and tone are much more modest. We all found out that the dotcom emperor had no clothes and we're back to hailing the customer as king. E-business is just, well, business. </p><p>It's boring in the best possible sense. And that's why, this time around, it will succeed. </p><p><b>Winners and losers</b> </p><p>If you're really looking for a site representative of the current upturn, try Global Recycle, the winner of last year's prestigious National eCommerce Award, sponsored by UK Online for Business. </p><p>It's simple, fast, efficient and, for anyone not directly in the business, pretty dull. </p><p>It's a trading exchange for producers, consumers and traders of scrap, recycled and secondary materials around the world. In other words, you use it to find people and companies to do business with - and it's a major success. </p><p>The site has quadrupled business in the last year because, explained managing director Warren MacLeod, it gives customers control. </p><p>"We are a barebones operation with hardly any overheads at all. Our main philosophy is 'keep it simple'," he said. </p><p>The company moved from trying to charge for transactions to a membership model, which acts as a meeting point for would-be business partners. They contact each other online, talk business and often deal later offline. </p><p>"We learned that you can never know better than your customers. We originally put in features that we thought were great but people weren't using them, so we learned to step back," added MacLeod. </p><p>The contrast with the dotcom failures could hardly be greater. They knew best and the customers were expected to adapt. </p><p>The collapse of British fashion site Boo.com says it all. The original (the brand now has a new owner) lasted just six months despite huge hype, £100m and big-name backing. </p><p>One of its biggest problems was that it insisted on cutting-edge fancy graphics. They were way too advanced for the average customer and took an age to appear when using any kind of modem, as broadband just wasn't affordable or much available at the time. </p><p>With brilliant ideas and no-one buying, the founders burned cash at an astonishing speed. Fortune magazine called it 'cool'; customers just wanted efficient. </p><p>The collapse spawned a fascinating book, Boo Hoo: a dotcom story. It's a cautionary tale that any would-be e-commerce business should read. The dotcom tale ended with the not very astonishing discovery that, yes, the customer did know best. </p><p>And that's where the new e-commerce trend begins.</p></div>