The Current State of European E-Commerce
Web Commerce Today, Issue 16, November 15, 1998
While the U.S. is undergoing an historic development in the introduction of e-commerce, Europe is catching up, as it goes online faster than ever in 1998. Several countries, such as France and Germany, have tripled their online populations in the last year, and they are migrating e-commerce customers from the teletext era to the Internet era.
Connectworld (the daughter company of the French media group Havas) has made a study of European e-commerce, and concludes that the real explosion in Europe will be in 2001-2002, when 80-100 million Europeans will be online (there are 35 million Europeans online today). They predict that European e-commerce sites will quintuple by 2002.
A recent IDC survey gives an overview of the current situation of European companies in terms of e-commerce:
|
France |
Germany |
UK |
|
|
Situation today |
|||
|
Companies selling online |
9% |
26% |
17% |
|
Companies buying online |
11% |
17% |
17% |
|
In a year |
|||
|
Companies selling online |
39% |
49% |
32% |
|
Companies buying online |
32% |
40% |
39% |
Source: Distributique
German
The German Internet market has quintupled this year, according to the study of eco-Verbandes (http://www.eco.de), who sees for 1998 a total volume of $1 billion. This breaks up into $300 million for professional Internet use, $150 million for home use, $120 million for online ads, $250 million for computer-related products. (http://www.electronic-commerce.org)
French
According to the E-Commerce Observatory, transactions by the French on the Internet will represent $600 million in 1998, of which $410 million will be paid offline. This is triple the 1997 transactions of $218 million. However, the Minitel is still very popular in France: by comparison, the French spent over $2 billion via their Minitel in 1997. For payment, 47% of the French Internet shoppers favor payment by check for purchases over FF50 ($9), 28% credit card (up from 15% in 1997), and 25% electronic wallet (Kleline). (http://www.mediangles.fr/medonline98/Online3.html)
Holland
By comparison, the Dutch will have spent nearly as much as the French (Holland is one-quarter the size of France, and has half the amount of people online as France), according to Pro Active: $573 million.
The conclusion can be summarized by the average amount spent per (online) person, a statistic equivalent to "GDP per capita" in economic tables:
|
U.S./Canada* |
$250 |
|
Germany |
$ 83 |
|
France |
$200 |
|
Holland |
$400 |
*Assuming around $20 billion for the U.S./Canadian Internet Economy
Comment: it is not clear in these articles whether the figures represent, individually, only the transactions resulting from a website visit, or whether they include Internet subscriptions, Internet hardware, etc.
The high per capita figures for France and Holland might be due to both countries' past experiences with teletext, where they could buy online for over a decade. It's easier to migrate former online buyers to the Web than it is to "jump-start" new electronic buyers (as in the U.S.).
News in European E-Commerce Sites
Online store have really developed well in Germany. Take a look at this database of some 15,000 German online shops (http://www.shop.de)The largest German music shop is http://www.audio-on-demand.de, where visitors can buy music by title. It is supported by the largest German recording companies (such as BMG and EMI). Visitors must have ISDN connections to the Net, but that is very common in Germany. The end is in sight for CD stores.
A German review of the top CD sites (http://www.focus.de/D/DD/DD99/DD99A/dd99a.htm) lists nearly all German sites, and only a single American site.
One real success story in Germany is the department store Neckermann (http://www.neckermann.de), which has tripled its online sales in the last year, to $12 million. Lingerie has been very popular, but the best selling department is consumer electronics.
The Advance bank (http://www.advancebank.de), a subsidiary of Dresdner Bank, now offers interactive financing for the construction business. With this new service, bank advisors consult with customers on PC and by telephone to offer customized financing. Since the end of last year, the bank offers old age pension insurance at particularly favorable conditions exclusively over the Internet.
A small company in Marseilles, France is giving 1-800-FLOWERS and Interflora a run for their money -- Floritel (http://www.floritel.com). The site is available in seven languages, and their personnel (20 employees) are able to respond in any of these languages. They have gone so far as to accept payments in 160 currencies, and have arrangements throughout the world with partner florists to deliver flowers ordered on their Web site in less than 4 hours (by comparison, Interflora takes 3-4 days). Besides offering their flowers on the Web, they use Minitel (for French customers, by far the largest online means of ordering) and direct marketing. It is interesting how many people find their website outside of French and English languages. (French accounts for 40% of the orders and English 10%). A full 50% of their Web customers prefer to speak their own language rather than French or English. This should say something about the value of multilingual marketing.
Selling to Swedes. It is illegal for Swedish businesses to accept credit card payments online unless they are in possession of the customer's actual signature. As a result, the Swedish postal service is serving as a go-between, accepting credit card payments on behalf of merchants. But since this requires the customer to make a trip to the post office, it defeats the purpose of completing a transaction online in the first place.
However, online merchants in other countries, whether they be in the U.S. or nearby Norway, are not subject to the Swedish restriction when doing business with Swedish customers. Obviously, this discourages Swedish merchants from participating in the e-commerce phenomenon.
For a more thorough view of European e-commerce sites, see http://euromktg.com/.
Replacement of Cash By E-Money in Europe
Twice this year there have been reports in Europe about cash disappearing because of the introduction of the Euro at the same time as many people start to go shopping online. And both from important figureheads.
Last March at CeBIT in Germany, the largest high-tech show in the world, the Chief Technology officer for Siemens-Nixdorf, Germany's equivalent to General Electric, addressed the press in the following way: The introduction of the Euro, the new pan-European currency being launched January 1, 1999, will "wipe out cash," said Peter Page, chief technology officer at Siemens-Nixdorf. The replacement of cash with e-money will be repeated later in the United States and in the Asia-Pacific region, but will lag behind Europe, Page said. (http://www.techweb.com/wire/story/TWB19980323S0014)
More recently, the department of the European Commission responsible for Europe's unified market and financial services, declared its support for developing electronic money. Mario Monti said, "Electronic money has the capacity to replace an important part of cash payments, especially during the period preceding the final replacement of individual European currencies by the Euro (2002)."
This is all very good news to those who are selling online. There is a very real online market outside the U.S. and Canada. The only real concern is how to reach these online buyers, if an online merchant only has a website in English. After all, Germans prefer to buy on German sites in German, French in French, etc. They feel much more at home in their own language. A multilingual site is without a doubt the prime way of addressing many of the European markets simultaneously -- promoting the German site in Germany, the French site in France, etc.
By Bill Dunlap (ema@euromktg.com), Managing Director, Euro-Marketing Associates (http://www.euromktg.com) Telephone and fax (415) 680-2423 (U.S.) or +331 5301-0741 (Europe). U.S. toll-free 888-EUROMKTG.
