Improvements will Spur Growth of European E-Commerce

European e-commerce is set to undergo explosive growth but, according to Forrester Research, it’s going to take substantial investments and clean-up work to make it happen.

Having garnered the opinion of top European B2B execs, Forrester warned that steep labour costs and extensive investments in sell-side apps are prerequisites for fruitful online trading. A resultant report documented the costs involved in gearing up for online trading and came up with some pointers for realising European online potential.

According to the study, participating in e-commerce isn’t cheap. A typical leading European company, it estimates, needs to invest an average of 11 million euros ($9.72 million) to gain the ability to participate in e-commerce. Half of these expenses, it warns, will be consumed by unavoidable labour costs. Integrating applications and platforms will swallow the remaining costs.

At the beginning of the year, research firm IDC forecast that B2B e-commerce in Western Europe will undergo a significant explosion over the next few years.

The group predicted that the European eB2B market is set to burgeon from 2000’s 61 billion euros ($56 billion) to almost 1.5 trillion euros ($1.39 trillion) by 2005.

Forrester’s recent report harkened back to IDC’s estimates but warned that without significant improvements to Europe’s e-marketplaces these figures won’t be realised.

Forrester analyst Charles Homs cautioned that should European B2B sites wish to benefit from reduced costs and increased sales they need to actively employ collaborative e-commerce tools and integrate with customers’ business processes.

Horn also advised e-marketplaces to incorporate side-sell facilities and slot in more functionality.

“European firms are failing to deliver because a wealth of features don’t necessarily generate extra business,” noted Homs. “Poor access to applications invariably results in an failure to transact online.”

Any business, he continued, requires a sound marketing program and European e-commerce ventures are not exempt. Unfortunately, Homs found that many European marketplaces are sorely lacking in marketing strategies and clear visions for improving their online revenues.

“Substantial investments will be necessary, both to implement a site and to keep it up and running, but the return on investment will be worth it,” he concluded.