Friday, August 3, 2001

eCommerce Growing Rapidly in Central Europe

The total value of eCommerce transactions in the four Visegrád countries of Central Europe will jump from only $100 million last year to over $650 million in 2001, according to IDC's latest report on Internet developments in the region. Online ordering of finished goods and services by businesses (B2B 'end-use' eCommerce) will experience the highest growth and account for two thirds of all eCommerce in 2001. Online procurement as part of a supply chain (B2B 'process' eCommerce) will make up a fifth of the total, while the remaining $100 million will be consumer spending (B2C eCommerce).

Internet usage is also growing in Central Europe. At the end of 2000, about 8% of the population were accessing the Web at least once a month. IDC predicts that this figure will have risen to 23% by the end of 2005. Clearly, penetration rates will remain somewhat lower than in more economically advanced regions of the world. The main reason for the difference is low home usage in Central Europe, which is due to cultural factors, high Internet access costs relative to disposable income and low home PC penetration.

Into the medium term, eCommerce will become increasingly dominated by the B2B segment. Although developments are taking place in the area of online sales to consumers, with large traditional retailers setting up major online retail sites, a number of demand-side inhibitors will remain for the foreseeable future, including low salaries and traditional attitudes, as well as continuing concerns about privacy and security. Prospects for sales of finished goods and services to businesses (B2B 'end-use' eCommerce) are healthier, with the top IT vendors already paving the way. But it is the area of online procurement as part of the supply chain (B2B 'process' eCommerce) which has the greatest potential over the next few years in Central Europe. The high levels of FDI flowing into the region in recent times have laid the foundations for the adoption of electronic procurement systems in manufacturing industry, above all in the rapidly expanding automotive and electronics sectors in Central Europe.