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Report: Northern Europe Closing E-Commerce Gap with U.S.

Business and consumer e-commerce in Europe will grow at triple-digit rates over the next five years, and Northern Europe will significantly close the gap with the United States, says a new industry study.

E-commerce in Europe will reach 1.6 trillion Euros by 2004, predicts the report from Forrester Research B.V., which outlines how e-commerce networks can help Europe, the world's largest potential online trading block, overcome the cultural and social resistance to doing business online.

"This year, 16 million European consumers started using the Web, doubling Internet home penetration to nearly 13 percent of the population," said Therese Torris, director of European Internet Commerce Research at Forrester Research B.V. "Not surprisingly, 30 percent of new Net users can be attributed to free access and its publicity."

As a result, Forrester projects that online trade across the pond will surge to 36 billion Euros this year.

Forrester said Europe is likely to sustain e-commerce growth above 100 percent per year until 2003, reaching 6.3 percent of total trade by 2004.

This growth will progressively shrink the e-commerce gap with the U.S., bringing Europe to more than half of the U.S. e-commerce market and cutting the current 30-month lag in half. Forrester said. However, only Northern Europe will surpass 6 percent of total sales purchased online. Southern Europe will continue to lag, threatening a North-South imbalance, which will replace the current U.S.-Europe divide.

In the next five years, Europe's online consumers will turn from surfing to shopping, with sales of retail goods and services growing 140 percent annually. Forrester believes that one of the factors fueling this growth will be better online stores, which will inspire 100 million to shop -- 17 times the current number.

And business-to-business trade will outgrow consumer trade by a wide margin, accounting for 1.3 trillion Euros of Europe's total online trade in 2004.

To realize its potential, European companies "need to ignore yesterday's cliches and hype and focus on pragmatic issues like hiring personnel with the right skills and building the necessary infrastructure for e-commerce to succeed," Torris said.

Forrester believes that success will come from the formation of e-commerce networks -- groups of independent business units that transact on the Net to deliver seamless e-commerce in real time. These networks will bring buyers and sellers together across industries and borders that do not easily link off-line.

For the Report "Europe: The Sleeping Giant Awakens," Forrester spoke with 70 online vendors, merchants, and industry experts. Forrester also used a number of secondary sources, including reports from the OECD, The European Commission, and The International Telecommunication Union.

Forrester also recently analyzed data from its Technographics Field Study of 17,000 European consumers in France, Germany, Netherlands, Sweden and the UK.

Here are the highlights:

  • Twenty percent of wired Europeans actually spend online today. The convenience of Net shopping inspires 73 percent of them to buy
  • As in the U.S,, books, CDs, and software capture the lion's share of online sales

However, beyond these categories, national differences emerge. Fashion-conscious French are the most likely to buy clothing, whereas Brits snatch up travel packages at the fastest rate.

  • Another 34 percent go online to research the goods and services they buy off-line. They review product and pricing information at company sites before visiting a physical store
  • Seventy-two percent of wired Europeans won't shop online because they don't want to share personal and financial information with retailers
  • Sixty-eight percent say t