Keep an eye on E-commerce. That's the buzzword for all the goods and services--travel, books, cars, groceries, real estate--now sold and purchased on the Internet. Business transacted on the Net, while only about 1% of the nation's economy, is skyrocketing, and that's helping drive prices of Internet stocks such as Yahoo and Amazon.com to astronomical levels, far beyond what's justified by their actual value and profitability.
If E-commerce takes off as projected--with consumer sales rising 233% to $20 billion by 2000--long-term investors will end up happy. But for all its Wall Street allure, E-commerce poses challenges to traditional ways of doing business, from pricing to employment.
Cities and states will have to rethink the current paradigm of economic development and taxation. Are mega-stores and shopping centers less essential in an E-commerce world? Can business on the Net somehow raise the same revenues for states and cities as stores and offices? Will jobs be lost? These hard questions are the thorny side of E-commerce; its rosier side is lower prices for shoppers, lower costs for businesses and more discretionary time for harried consumers and families.
Already, savvy consumers are buying big-ticket items like computers online, often from a supplier in another state. In many states, consumers do not have to pay sales tax on a purchase if the seller does not have an outlet or office in their home state.