Sunday, May 6, 2001

European Internet Commerce Is Growing Steadily

According to a recent report from IDC, 117 million Europeans - around 30% of the entire population - were using the Internet at the end of 2000. This figure is set to increase to 233 million by the end of 2004, representing almost 60% of the entire population. Despite the much publicized dot-com shakeout and economic slowdown, Internet commerce continues to grow and is expected to surpass $1 trillion by 2004.

"The dot-com shakeout has done nothing for the reputation of the Internet and ebusiness as a whole; however, it has allowed both consumers and companies to develop more realistic expectations of what can be accomplished using the Internet," said Daniel O'Boyle Kelly, program manager of IDC's European Internet Economy research. "Virtues such as profitability and efficiency are finally becoming widespread in the virtual world and the collapse of certain dot-coms may actually help ebusinesses achieve more sustainable development in the future."

According to IDC, the business-to-consumer (B2C) sector saw promising growth last year, with European consumers spending $12.2 billion online, which is double that of the year before. However, these growth rates are unlikely to be carried over to the near future, although the business-to-business (B2B) sector will drive ecommerce as a whole, despite the apparent economic slowdown.

New business models, such as emarketplaces and eprocurement, are helping to make B2B ecommerce increasingly relevant to decision-makers who previously found it hard to relate to a direct sales model. "Managers will also feel comfortable with focusing on the Internet-enabled process of optimization, reduced cycle times, and cost control," O'Boyle Kelly added.

"Currently, ecommerce represents a single-digit fraction of total domestic expenditure in each European country; therefore, there is plenty of opportunity for substantial growth," O'Boyle Kelly concluded. "With this in mind, the Internet represents a way of increasing productivity and reducing costs, which in some respects increases its importance, especially in time of economic downturn."