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

“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

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

    want to see the product before committing to it.

Forrester’s European Research Center is
located in Amsterdam.

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