One Year Ago: Europe Closing E-Commerce Gap With U.S.

Originally published on December 21, 1999 and brought to you today as a time capsule.

According to a report released Monday by Forrester Research, Europe’s Internet commerce will grow by more than 100 percent per year for the next five years and will reach annual online trade of 1.6 trillion Euros by 2004.

The report, titled “Europe: The Sleeping Giant Awakens,” shows that the European Internet growth will be fueled by consumer demand and rich Internet offerings.

“This year, 16 million European consumers started using the Web, doubling Internet home penetration to nearly 13 percent of the population,” said Dr. Terese Torris, director of European Internet commerce research at Forrester. “Not surprisingly, 30 percent of new Net users can be attributed to free access and its publicity.”

Torris went on to suggest that the influx of new users and improved e-commerce offerings will drive trade to 36 billion Euros this year.

Multi-Year Growth

According to the Forrester report, Europe will sustain e-commerce growth above 100 percent until 2003, reaching 6.3 percent of total European trade by 2004. The growth will progressively shrink the gap between European and U.S. e-commerce, with European e-commerce reaching half the size of U.S. Internet commerce.

Southern Europe, however, will lag behind, and Forrester projects that the North-South imbalance will eventually replace the current U.S.-Europe dichotomy.

Surfers, Shoppers

Over the next five years, European Internet surfers are expected to become shoppers, with retail sales to grow 140 percent annually. The growth will be prompted by improved online stores that will inspire 100 million Europeans — 17 times the current number — to shop.

Even with these impressive retail gains, European business-to-business e-commerce will outgrow consumer trade, bringing the overall total Internet trade to 1.3 trillion in 2004.

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

E-Commerce Networks

The report indicates that the solution to these hurdles will come from the formation of e-commerce networks, groups of independent companies that transact seamless business on the Net in real time. These networks will facilitate trade that is currently inhibited by offline industry and geographic barriers.

Three types of networks are expected to bolster trade: Networks that integrate buyers and sellers, networks that help late-moving companies become effective quickly, and global networks that help European companies compete worldwide.

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