September 22, 1999
Thank you so much for that wonderful introduction. I am extremely happy to be here today for the closing luncheon of such an historic conference - 17 years is quite an achievement and you should feel proud that you have contributed so much over the last two decades assisting minority businesses. My congratulations on such a great track record.
E-commerce is increasing almost exponentially. Internet traffic is doubling every 100 days, with a yearly growth rate of 700 percent. One study indicates that the Internet generated $300 billion dollars in revenue last year. Indeed, Forrester Research predicts that global Internet sales could reach $3.2 trillion by 2003.
New websites are added to the worldwide web hourly. You can use the Internet to purchase anything from tickets on the Concorde to Civil War antiques, clothing from shoes to hats, and books both paper and electronic. You can refinance your house, calculate your credit card bill and pay both your mortgage and credit card bill without ever leaving your home or office.
The possibilities of E-commerce are limited only by the imagination, as a young boy in New Mexico named Luke Merry recently demonstrated to me. Luke and his mother have had a computer and Internet connection for almost three years, since Luke was in first grade. The bill for their Internet access had always been $20 a month, until one month when his mother received a bill for $65. Shocked, she called her access provider and asked what had happened. The provider replied that the Internet access fee was still $20 a month but that the commercial account that had been set up was an additional $45 per month. She, of course, asked "what commercial account?" and was advised that "K and L Website Design" had opened an account under her access code.
She soon learned that her son Luke - the L of "K and L Website Design" - and his friend Kyle had decided that they could design websites for people through the Internet. They had seen a market opportunity and acted on it. Fortunately, the Internet access provider saw the humor in the situation and cancelled the account with no charges, telling Luke's mom that if Luke lived another 9 years to the age of 18, he should call about a job. E-commerce and entrepreneurs, the sky is the limit.
I believe E-commerce holds promise for minorities, as both consumers and entrepreneurs. I'd like to talk first about what E- commerce offers minority consumers.
In Santa Fe, New Mexico we have El Mercado, or the Marketplace. Now at that marketplace, usually open under wide blue skies, you can buy something to eat, something to wear or just something for fun. If we look at the Internet as a virtual Mercado, how do the two compare? We have already noted the vast array of things one can find on the Internet. But if the Internet is a marketplace, why do most people go there? Obviously, not for the sun or the blue sky. What are they looking for? What are they hoping to find? Jupiter Communications, a large E-commerce consulting firm, reports that the majority of Internet users search the web for utility, rather than for entertainment. That is, individuals use the Internet to research products and services, restaurants, and local events, as opposed to using the Internet for passive entertainment. And, although at this point most people are not making major purchases of cars or appliances over the Internet, many consumers regularly purchase smaller items such as books and CDs.
But, do these electronic consumers include minorities? Three minorities to watch for E-commerce use, are African Americans, Hispanics and Asian Americans: African Americans because they are the largest minority, Hispanics because they are the fastest growing minority and Asian Americans because they are the minority most likely to own computers and have Internet access.
In a recent Hispanic Market Weekly, an article indicated that the Hispanic presence on the Internet has reached a level where it is now feasible to use the Internet as a Hispanic-advertising medium. In 1995 there were less than 25 Hispanic targeted websites; as of May 1999 there were more than 200. Moreover, Spanish on-line content has arrived: Prodigy.Spanish, espanola.yahoo, and Spanish AOL to name a few. Some of the newest popular sites are the ethnic grocery stores. Kitchenlink.com has an African section that offers foods and recipes from Ethiopia, Mozambique and Kenya. Also available are AsianGrocer.com and LatinGrocer.com. eHOLA.com offers consumers a variety of Hispanic selections of food, beverages, movies, videos, and computer accessories. At last, a place to order Caf‚ Yaucono, so I don't have to bring it back from Puerto Rico when I travel.
But minorities are not just consumers of E-commerce, they are also entrepreneurs. USA Today reported that $8 billion in venture capital had poured into Internet companies between January and August of 1999. How much of that capital is going into the pockets of minority men and women? We don't know. What we do know is that there is a continual need for funding of minority E-commerce businesses. We also know that minority businesspeople are already out there working to tap into that well of venture capital. Many entrepreneurs believe that the Internet is color-blind and that the desire for profit will win out over racial stereotyping and prejudice. Nonetheless, Dwayne Walker, CEO of E-commerce company ShopNow.com, said he can feel the reaction when he walks into a room and the people he's meeting for the first time realize that he is Black. Entrepreneurs have run into the same barriers in raising capital for their Internet ventures as they have in other markets. Businesspeople want to network with people they know from graduate and business school, and those people are still predominantly White.
Funding for start-up businesses is critical. The major costs for an E-commerce business can be divided into start-up costs - typically advertising and production - and back-end system integration. A Chicago Tribune article estimates that the ratio of start-up costs to back- end costs is 1 to 4. Getting people to your website can be expensive. But once you sell the product or service, you incur even greater costs. You have to be able to deliver the product or service in a timely manner, or you lose the customer.
As businesspeople, minorities cannot count on color-blindness and profit motive to help make our businesses a success. We need to be working together and one place to do that networking is on the Internet. Two extremely successful networking groups - one for women and one for technology workers from India - have been started. As members of other minority groups we must do the same. We must help one another into this new marketplace, or many will be left behind. Can we imagine an AmigoNet or AfricaNetNow - networking groups to help with financing, start-up questions and business plan development for minority businesses in E-commerce?
But what about those homes and families where there are no computers and no Internet access? Between 1994 and 1997, ownership of personal computers increased 52 percent and e-mail access expanded by almost 400 percent. Not surprisingly, this growth has occurred to a greater extent in some communities than in others. The Commerce Department's latest report confirms that poorer families have much less access to computers and e-mail than families with more money. In fact, in 1997 there was an even wider gap in computer ownership levels between upper income households and lower income levels than there was in 1994.
The Report further states that "even though all racial groups now own more computers than they did in 1994, Blacks and Hispanics now lag even further behind Whites in their levels of PC-ownership and on- line access than they did five years ago." White households are twice as likely as Black or Hispanic households to own a personal computer and three times more likely to have on-line access. This gap holds true even at income levels greater than $75,000 a year.
We must work to ensure all Americans have access to this new technology. In particular, families, especially minorities in low-income households, must have access to computers and to the Internet through schools and libraries. This is one reason why I strongly support the schools and libraries program, better known as the education-rate or e- rate. The e-rate is the discount that schools and libraries receive for internal wiring, Internet connections and Internet service. The e-rate is funded by contributions from all telecommunications carriers as a small percentage of their revenues. The e-rate helps to expose Black and Hispanic children to computers and the Internet. It will make it easier for them to obtain important job skills and to seek employment.
The Internet offers minorities tremendous opportunities. On the Internet, we have a virtual Mercado, where we can buy and sell, where all indications are that shoppers will continue to increase in number if we can figure out how best to respond to consumer needs. The Internet also provides us with an opportunity to network, to help one another enter this new marketplace, to build solid businesses. Finally, with the Internet comes an enormous responsibility to our children. We owe a duty to the next generation to make sure that they have Internet access in order to gain the skills, the expertise, and the resources necessary to compete in a whole new marketplace.
E-commerce and entrepreneurs, the sky is the limit. And, if you don't believe me, just ask Luke.