Online business-to-business transactions (B2B) are poised to escalate, according to data from Forrester Research. The firm projects that the European Union’s (EU) online trade will surge from the 2001 figure of €77 billion to €2.2 trillion in 2006 – increasing from less than 1 percent of total business trade to 22 percent.
“In 2006, Europe’s three major markets – the UK, Germany, and France – will transact at least 23 percent of sales online, and their combined trade volumes will represent a whopping 64 percent of the European Union’s total online trade,” said Forrester Analyst David Metcalfe. “The rapid growth and high volume of Net-based trade in France, Germany, and the UK will pressure proximate countries with deep trading relationships – like Belgium, Austria, and Ireland – to accelerate their migration to the Net.”
The forecasts, from Forrester’s analysis of growth drivers in 13 industries across 15 European countries, indicate that IT investments will be a key influence among each country’s online trade figures. Forrester finds that Scandinavia will charge ahead, powered by high IT spending, and Europe’s “big three” of France, Germany, and the UK will bring volume online, while Southern Europe will fail to take off.
Metcalfe added, “Despite the size of the Italian and Spanish economies, their historically low level of IT investment – 57 percent and 46 percent of the EU average, respectively – will retard online trade growth. In 2003, for example, online trade in Italy will flounder at 2.2 percent – 11 percent behind Sweden. Prospects for Greece and Portugal are even bleaker, and if current attitudes to IT spending persist, neither country will have more than 10 percent of B2B trade online by 2006.”
Interestingly, the online trade levels of some countries runs parallel to its online consumer spending, as found in an examination of global business-to-consumer (B2C) e-commerce by Taylor Nelson Sofres (TNS).
For example, the Scandinavian countries are expected to increase IT expenditures and propel a significant amount of online trade, and Norway and Denmark both experienced increases in e-commerce during 2001 and early 2002. Norway had a decrease in overall Internet usage but showed an increase in online shopping, mostly in the holidays/leisure travel segment, and TNS reported that Denmark exhibited an increase in the amount of money consumers spend online, due in part to the Internet population becoming more confident in the shopping medium.
Italy, which Forrester predicted a floundering future in online trade, also exhibits resistance to online shopping, according to the TNS report. The main reasons cited are: fear of paying with credit card (22 percent); feel more secure buying in a store (21 percent); considered too difficult (10 percent)
In addition to the B2B growth, Forrester also forecasts €172.4 billion in B2C Net-influenced sales in 2007. Forrester Analyst Hellen K. Omwando believes that this segment will represent three times the revenue as online sales today and will keep growing at a compound annual growth rate of 18 percent, representing 5 percent of total retail in Europe by 2007.
“During this time, German retailers will enjoy the bulk of cross-channel sales, as the number of cross-channel German shoppers will reach 16 million, yielding €40 billion in Net-influenced sales. UK retailers will pluck the value from cross-channel shopping, as Net-influenced sales outweigh online turnover by a factor of two in 2007, driving €38 billion of Net-influenced sales. Less hindered by payment issues, Net-influenced sales in France will account for about three times as much as Net sales do by 2007, a sum of €23 billion,” said Omwando
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