European Retailers Still Behind in Internet Use

Consumer online shopping is finally becoming mainstream in Europe with 18.6 billion Euros expected to be spent online in 2003, according to research by Jupiter Communications, but traditional European retailers are still failing to use the Internet.

Only 35 percent of Europe’s top retailers are offering e-commerce opportunities, Jupiter found. This puts them in danger of losing potential online customers to US retailers who are increasingly aggressive in welcoming new international shoppers, and local Internet-only rivals.

By neglecting to use the Internet as a sales tool, traditional retailers are losing the market share to Internet-only rivals whose innovation captures the eyes and wallets of the European shopper and to US merchants, 38 percent of which already sell to non-US consumers.

“Traditional retailers have to meet customers where they are, and be there the day they decide to shop online,” said Nick Jones, an analyst with Jupiter. “This means doing more than building an online store, it requires distributing that store as widely as possible across the Web.”

Jupiter estimates that 4.2 million Europeans shopped online in 1998, representing 13.5 percent of the online population. Jupiter expects tenfold growth to 41.5 million by the year 2003 — 43 percent of the online population.

Online consumers in Europe spent 677.8 million Euros ($718.4 million) purchasing books, hardware, software, and travel and music products in 1998. The UK, France, and Germany accounted for 63.8 percent of the online sales, while Scandinavia accounted for 20.3 percent. This online shopping represents a 1.3 percent shift to the Internet from traditional shopping channels. By 2003, Jupiter predicts the channel shift will have grown to 11 percent. The UK, France, and Germany will remain the dominant markets with a combined spending of 12.7 Euros ($13.5 billion). Travel (35 percent) will replace hardware (16 percent) as the biggest-selling online product online.

According to Jupiter, European retailers should evaluate portals as distribution for their online stores. Only 15 percent and 25 percent of British and French merchants use portals as distribution for their online stores.