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Fueled By B-to-B Sales, French E-Commerce Spikes

Powered mainly by business-to-business sales, French Internet commerce surged by 1,280 percent in 1998 and should expand even more dramatically in the next five years, according to a report by International Data Corp.'s French subsidiary, IDC France.

"With a doubling of the number of machines connected to the Net (to 2.36 million) and of the number of online vendors, the year 1998 represented a turning point in the growth of this new type of business," IDC said.

Excluding Minitel revenue, French e-commerce totaled FF1.6 billion (US $ 262 million) in 1998, up from FF125 million the year before, the report's author, Thierry Hamelin, told Internet.com.

B-to-B transactions accounted for 75 percent of this revenue, or FF1.18 billion (US $193 million), although businesses making purchases online numbered only 35,000 compared to 310,000 general consumers, Hamelin said. However, the most spectacular growth is yet to come.

Internet commerce should outstrip Minitel revenue by next year and skyrocket to FF280 billion (US $49 billion) by 2003, with FF220 billion of that from B-to-B sales, Hamelin said.

"B-to-B sales will continue to generate the majority of e-commerce in the coming five years," IDC said.

For the report, the research company interviewed 200 online vendors and some 30 ISPs, site builders and managers, and software publishers.

It found that general consumers were being drawn to Internet shopping by a rapidly growing number of free ISPs and by online stores catering to the French market and offering secured payment options -- especially important in a country accustomed to the Minitel's safe commerce environment.

Currently, most online business purchases are for what IDC calls non-strategic goods, such as office supplies and electronic equipment. The computer industry accounted for more than 50 percent of 1998 B-B e-commerce.

However, the company predicted that, by 2003, strategic purchases for such things as primary materials and finished products for resale would carry greater weight. Hamelin forecast that, by 2003, France would have 120,000 online vendors.

Because only very large companies have the internal resources to create virtual stores, Hamelin said that the services segment, mainly setting up online sales sites, will by far represent the majority of this market. By the end of the year, some 2,000 companies will offer such services, up from 400 last year, IDC said.