A Year Ago: Europe catching US in e-commerce says IDC

Europe is catching up with the US and will see huge growth in the use of ecommerce over the next four years according to figures published this week at IDC's annual European IT Forum in Paris.

"Europe has become much more aggressive in the use of Internet on the buying and selling side," says Frank Gens, senior VP of IDC. Whereas Europe has previously been one to two years behind the US in the takeup of Web technology Gens says it is now less than one year.

Currently, says Gens, there are 97 million Web users worldwide, 27 million of whom have bought something at least once over the Web. The IDC figures -- based on recent research including a survey of 70,000 users worldwide -- predict that by 2002 there will be 320 million users worldwide, of which 128 million (40 percent) will be buyers. Twenty-three percent of those users would be based in Western Europe.

Patterns of Internet commerce are the opposite of those in the economy in general, says Gens. Sixty-six percent of Web commerce is business-to-business, compared to only 39 percent in the general economy. As more businesses, develop a web presence, the proportion of business-to-business commerce on the Web will grow to 79 percent by 2002 before the ratio gradually changes to reflect that in the wider economy.

Currently, adds Gens, only four to five percent of web sites worldwide support commerce, and the initial cost of setting up a web site means that Internet commerce is not yet profitable. "In 1998, only the exceptions are making profit on the web," says Gens who predicts change by 2002.

Web takeup among businesses is still higher in the US than in Europe. Thirty-five percent of US companies have a web site compared to only 26 percent in Europe. However, a higher proportion of European companies with websites are commerce-capable - 19 percent compared to five percent in the US - suggesting that there is opportunity for European companies to leapfrog US companies. At the moment, however, most European buyers on the Web are buying from US companies.

A key factor in the increase of ecommerce opportunities will be bandwidth according to Gens. Currently only seven percent of homes are using high speed links to the Internet. By 2002 this will increase to 36 percent, with ISDN and DSL technology taking the lion's share.

The way people access the Internet is also set to change dramatically. The proportion of homes using PCs to access the Internet will decrease from 96 percent today to 57 percent in 2002, with more people using network computers and set top devices.

IDC also asked companies which IT suppliers are most important to the success of their web projects. In Europe well over half are unable to name a single supplier, although 11 percent name Microsoft followed by IBM with six percent.

Summing up his predictions, Gens says the market opportunities available in ecommerce are huge arguing that companies who do not yet sell over the web could still overtake those already using it: "There are a tremendous amount of leapfrog opportunities. The Internet community is here right now. A very large piece of it is in Europe. The stakes are extremely high for companies to compete.

"If your company is not looking at setting up a web site" warns Gens, "you are not going to be able to compete for a piece of that action in four years."