Europeans Shift Focus of E-Commerce, Keep Investing

The burst of the Internet bubble and fears of a worldwide recession haven’t stopped European businesses from investing in e-commerce, according to an Accenture study.

Sixty percent of the senior executives interviewed for the study said they would increase their e-commerce spending by an average of 15 percent over the next 12 months, while 50 percent expect to be pursuing major opportunities in wireless commerce within three years.

The study did find one glaring change among European businesses and their attitudes toward e-commerce. Where once the goal of e-commerce initiatives was the acquisition of new customers, it is now the deepening of customer relationships through the delivery of more tailored services. Businesses are now seeking the efficiencies that e-commerce can deliver by investing in initiatives in their back office and supply chain as well as in sales and marketing. Sixty-one percent will increase their dependency on service-based revenues and 75 percent will make the delivery of these services more tailored over the next three years.

“It may come as a surprise to many observers that e-commerce is alive and well and thriving in Europe,” said Rosemary O’Mahony, Accenture’s Managing Partner, Technology for Europe, Middle East, Africa and India. “In the face of deepening economic gloom, most European businesses are using e-commerce to consolidate their competitive position and prepare for the future. Those who hesitate will be left behind when the economy picks up.”

The study is based on interviews with more than 800 board-level executives across 25 countries in Europe, Asia and the United States during the summer of 2001.

Last year, 74 percent of executives said their primary motivation for investing in e-commerce was to keep pace with their competitors. This year, that figure is just 54 percent. Most businesses are focused now on consolidating their existing opportunities; a process they admit has taken them longer than expected. Executives across Europe report that e-commerce is penetrating more deeply into their organization, moving beyond sales and marketing into back-office areas of purchasing, logistics and human resources. European companies also expect to double their use of B2B exchanges, despite the doubts that are expressed currently about their viability.

The survey also found more executives than ever before reporting that their e-commerce initiatives have been a success — an increase from 34 percent last year to 51 percent this year. This success is being enjoyed by larger businesses. In fact, executives believe strongly that e-commerce favors the large and established. About half think it is increasing the level of market concentration in their industry and two-thirds say e-commerce increases the benefits of being a larger business. Significant economies of scale are being achieved by large organizations in crucial areas such as marketing, branding and software investment, the study found. And a new focus on entrepreneurship and flexibility — long considered the sole preserve of start-ups — is reinvigorating larger organizations.

While understandably concentrating on consolidation and competitiveness today, European executives still plan to deploy new forms of e-commerce in the near future. Nearly half (49 percent) intend on using wireless commerce, 24 percent voice commerce and 25 percent television commerce within three years. Significant growth will also come from “silent” commerce — the use of radio frequency chips to tag, track and monitor objects as they move within an organization or through its supply chain. In fact, 83 percent of executives expect these new technologies to deliver more opportunities than traditional “wired” e-commerce.

The gap between Europe and the United States in the adoption of e-commerce has narrowed to 12 months, the study found. Yet European executives maintain a lack of confidence in Europe’s ability to take the lead in new forms of e-commerce. While most expect to be leading in wireless commerce in three years time, they see the United States leading in all other areas: television, voice and silent commerce, as well as traditional e-commerce.

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