After 65 years in Dublin's city centre, Sheila's Flowers is closing its Baggot Street outlet and shifting its business to the virtual high street. The move may signal a change in the way repentant husbands and boyfriends buy flowers, but it also highlights how e-commerce is transforming the way companies do business.

No longer is e-commerce simply about buying books or music, ordering airline tickets or selling stocks over the Internet. From a business point of view, it can encompass everything from procurement to inventory control, distribution, billing, electronic funds transfer, and communications with suppliers and customers.

It enables companies to reach a global market, automate routine procedures such as procurement, billing and stock control, boost efficiency and productivity, cut costs and provide a better level of customer service.

Predictions of the size of the global e-commerce market by 2002 vary wildly. Some international research organisations say it will be around $350 billion by 2002, others put it over $1 trillion. The key point is that the e-commerce market is huge and that businesses ignore it at their peril.

"E-commerce is not a technology issue. It's a strategic business issue," says Graham O'Keeffe of Enterprise Ireland's e-business unit. "It's changing the way business is carried out worldwide. It redefines market structures and changes the economics of doing business. It means even companies in Ireland can compete easily with the big boys."

Sheila's Flowers has no plans to compete internationally, even though it has attracted orders from Americans wanting to send bouquets to friends in other American cities and apparently willing to choose a company halfway around the world to do that, an indication of the global power of the new marketing medium.

Sheila's decision to close its Baggot Street premises was as much to do with traffic congestion - customers couldn't get parking, so passing trade had dropped off - as it was to do with cornering the Irish online flower market, says managing director Nigel Banks.

Online sales currently account for about 10 per cent of the flower business, but Mr Banks expects that to increase significantly as more people buy computers and become familiar with surfing the Web. "We want to be firmly placed at the start rather than coming in at the end when everyone else is there. This was a bold move for us but I think it will pay off in the end."

Few companies at present are willing to switch completely from a real world to a virtual world model. Even Sheila's Flowers plans to keep its Dun Laoghaire and Bray shops.

"The advantage of going online now is being first to market and build the brand," says Mark Henry, senior research consultant with Amrach Consulting. "But the thing most businesses have to consider is: are there enough of their customers online and are they willing to buy online?

"At the minute, it's unlikely you would see a return on investment in the short term, but you will see a return in the long term if you become a leader in providing your service or product online."

In Ireland, e-commerce is still in its infancy despite the hype, although awareness of its potential is growing. Some 55 per cent of businesses now boast their own websites, although the majority still use them as brochureware to describe company products and services. Only 9 per cent of companies with websites are trading online, according to research by the Information Society Commission (ISC).

Of particular concern to business groups and Government agencies is that only a quarter of very small businesses see e-commerce and information technology as having any relevance for them.

"Its not as if they haven't heard of the Internet or new technology generally. One of the issues is persuading them of its relevance to themselves. They would think of the Internet as Amazon.com. They don't see the opportunities for themselves," says Brenda Boylan, secretary to the ISC.

"Business to business commerce is going to be one of the bigger elements of e-commerce. Small companies will find themselves in a situation where they are acting as suppliers to bigger businesses. If they can't interact and provide services electronically, they could lose business."

One company that has wholeheartedly embraced the Net is Megazyme, a biotechnology firm based in Bray that produces diagnostic kits and reagents for the cereals, food, animal feed and fermentation industries. Established by Irish emigrants to Australia in 1989, Megazyme was one of the first companies onto the Net, launching its website in 1994.

Initially, Megazyme just used the Internet to market its products and communicate with customers. This not only cut marketing, mailing and advertising costs but also got over the time zone problem that had made communicating with overseas customers, the bulk of Megazyme's customer base, a major difficulty.

Shortly afterwards, the company added an ordering facility, thereby cutting the hefty annual costs of producing paper catalogues for the European and US markets. Now, about 40 per cent of sales and half of all new customers come via the Web, Ms Kennedy says.

Since the company relocated to Ireland in 1996, she has been surprised at the lack of awareness of what e-commerce can do for the SME sector. "People say it's the way we'll conduct business in the future. But its not. Its the way we conduct business today. People who are not embracing e-commerce are businesses that will suffer in the future."