Over the past ten years, both business and consumer users of the Internet have witnessed a roller coaster ride. We saw bright young MBAs spawning new Internet firms by the dozens each day, and high-flying initial public offerings (IPOs) wowing the investors, the issue underwriters, and no doubt a few other people. During that same decade, we also saw the bubble burst as tech stock prices began dropping in a free fall. Businesses were shuttered, and all their fancy toys auctioned off to the highest bidder. Now, we're seeing a resurgence of the Internet both for the consumer and the business user. And all of this has happened in the space of just ten years!

To be sure the Internet continues to dramatically change both business and consumer behavior—with some of the most visible changes associated with the latter. Consumers often check prices and features on the Internet before they enter a store to make a purchase. A recent study noted that one out of five customers who bought an electrical appliance at Sears had researched their purchase on the Internet. The same study found that three out of four car shoppers started their search online.

This process also works in reverse as consumers check features and styles at the retail store and then buy the product online. Then there's Aunt Matilda, who cleans out the attic and becomes one of the dedicated millions of eBay addicts. Popular Web sites are building extended trading platforms that include other sellers of related products (think of Amazon). Most consumers who purchase vacation travel services that involve transportation, cruises, or multiple-night stays at a resort or a hotel either check options on the Internet or buy online. These are just a few of the high profile, Internet-driven changes in consumer behavior that have survived and even gained momentum in the past decade.

What's behind these Web success stories? Probably the biggest factor is that they found a unique way to bring value to the customer. Link user-friendly search capabilities to a wide assortment and good prices, and you have a great combination for delivering value. Who would have thought that the old slogan of the telephone Yellow Pages—"Let your fingers do the walking"—would be an apt phrase once again. But in this reincarnation, it refers to shopping on the Internet. The majority of these shoppers are from the younger age ranks—that is, people who grew up with the computer at home or at school. They have limited time (at least that's their perception) and high expectations. They tend not to be loyal customers; if they do not get what they perceive as value, they are off to a new Web site with a couple of clicks.

The moral of the story at the consumer level is this: If retailers and their partners decide to play in this arena, their Web sites must be up-to-date and user friendly in terms of both Web site navigation and transaction processes. A finicky or frustrated Web site user will behave just like the "physical" shopper who encounters a stock-out in the supermarket. She might substitute another similar product or, more likely, search for it in another store. In the first case, the risk is borne by the product manufacturer, or brand owner. In the second case, the retailer bears the risk. But in either case, there's a chance that the shopper may not come back to the original store (or Web site).

The line on business usage of the Internet, or B2B, is more subtle. In my view, business-to-business Internet activity never crashed like the consumer-targeted side did. Certainly, some of the Internet offerings aimed at the business segment never made it to the IPO stage—or if they did, faltered soon thereafter. The players in this space typically have been entrepreneurial in nature and, as might be expected, have come and gone. However, the core technology has remained, and the players that did survive have added new capability to the technology stream.

The rational business purchaser (and they're not all rational) approached the technology adoption process as a cost/benefit/risk proposition. The Internet reduces transaction costs, improves inventory velocity and transparency, and often results in more accurate and timely decision making. What's not to like? In the past, the more formidable risk was network security. To solve this problem, many firms put financial, pricing, and other confidential documents on a proprietary electronic data interchange (EDI) system and used the Internet as a type of text messaging system. But the introduction of enhanced security to the Internet connection, coupled with the economics of this technology compared to EDI and proprietary networks, continues to bring more and more converts to Internet connectivity. In fact, entire networks of supply chain partners have now embraced Internet-based communications.

That movement toward wider connectivity is confirmed in two recent research efforts, which are the source of the graphics presented in Exhibits 1 and 2. The data in Exhibit 1 is taken from the most recent Career Patterns Study, conducted annually by The Ohio State University (OSU). The data source for Exhibit 2 is a study on third-party logistics (3PL) also done by OSU in 2003.

The first exhibit shows the overall level of connectivity between the shipper respondents and key accounts for the years 2002 through 2005. The second indicates the relative appeal of EDI and the Internet among 3PL firms for achieving connectivity. These were small samples (n=57 and 50 respectively), but they reflect the vision of a wide array of logistics leaders. Viewed together, the charts suggest that (1) electronic connectivity with key supply chain partners is of concern to a wide majority of manufacturers and (2) the Internet is gaining share in total channel communication.

Does all this mean that we have reached the Golden Age of the Internet? Probably not. This proposition would be hard to defend for those of us who spend more time eliminating spam from our computers each day than we do answering our legitimate messages. But certainly over the past decade, we have enjoyed some dramatic Internet-related benefits. Specifically, the Internet has brought the consumer and business user:

• Improved search productivity both in terms of speed and reach.
• Information transparency.
• Efficiencies in transaction cost and simplification.

To the supply chain manager, the Internet offers a high performance/low cost way of synchronizing the supply chain network. Done with planning and careful ramp-up, an Internet solution to supply chain data and information requirements can be a bonding experience for the partners in a supply chain. Done poorly or without continuous tending and update, a so-called solution can turn out to be a disaster. As we revisit our relationship with the Internet, we all need to keep these considerations in mind.