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Forrester: Northern Europe Will Close E-C Gap with U.S.

According to the new Forrester Research report released Tuesday, Northern Europe will be alone in significantly closing the gap with the U.S. in the field of e-commerce.

Forrester says that Europe's online business and consumer trade will grow at triple-digit rates during the next five years, and will reach $1.6 trillion by 2004. However, only Northern Europe will compete effectively with the U.S.

"This year, 16 million European consumers started using the Web, doubling Internet home penetration to nearly 13 per cent of the population," said Dr. Therese Torris, director of European Internet Commerce Research at Forrester Research B.V. in Amsterdam, Netherlands.

Torris added that 30 per cent of new Internet users can be attributed to free access and its publicity. As a result, online trade will surge to $36 billion this year.

With growth of e-commerce sustained at over 100 per cent each year until 2003, Europe will shrink the gap with the U.S., says Forrester. Yet only Northern Europe will achieve more than 6 per cent of total sales purchased online.

Forrester predicts a North-South imbalance within Europe, replacing the current U.S-Europe divide.

Also in the report, which is entitled "Europe: The Sleeping Giant Awakens," Forrester says that better online stores in Europe will fuel the growth of shopping on the Internet, with sales increasingly 140 per cent annually.

Eventually, by 2004, 100 million people -- 17 times the current number -- could be shopping online, claims the report.

"To realise its potential, Europe must overcome a number of real and perceived hurdles to sustained growth," said Torris.

"Companies need to ignore yesterday's clichis and hype and focus on pragmatic issues like hiring personnel with the right skills and building the necessary infrastructure for e-commerce to succeed."

Necessary action includes the formation of e-commerce networks linking independent business units so that they can trade in real time.

Forrester suggests that three different types of network are required. First, value chain networks to integrate buyers and sellers; second, environment support networks for laggard companies which come late to e-commerce; and third, global nets for participation in the global market.

In preparing the report, Forrester interviewed 70 online vendors, merchants, and industry experts.