The proportion of European Internet users buying online will increase to 70 percent by 2004, according to a survey by Datamonitor. This means the total European online ordering population will increase from 19 million in 2000 to nearly 100 million in 2004.
This prediction, should it come to fruition, would have a huge impact on buying patterns for consumers and businesses, large changes to business models, and manifold opportunities for software and hardware companies as content providers and device manufacturers play on the digital trend.
The Datamonitor IMPACT survey reveals that Europe is quickly catching up with the US with its online culture, as 49 percent of European consumer spending power is now online either at work or in the home, and ready to be tapped into for online commerce. More than one-third (34 percent) of Europeans have accessed the Internet compared to 57 percent in the US. This growing percentage can be partly attributed to the growing range of devices from which the consumer can access the Internet and proprietary interactive services; the PC, mobile phone, games consoles, and iTV (interactive television).
Falling PC prices and the increasing popularity of interactive devices such as interactive TV, mobile phones, PCs, and games consoles mean that interactive services are now mass-market in Europe, appealing to a wider audience than the traditional PC user, including children and lower income groups.
Despite large predicted percentage rises in the number of consumers online and the number of devices to get online with, more than 25 percent of Europeans belong to an “Offline Underclass,” as they still do not have a PC, digital television, a game console, or mobile phone. This group is mainly composed of those in the elderly and low-income categories. However, the proliferation of interactive TV among the less affluent, the continued drop in PC prices, and the growth of the “gray economy” (age 40 and older), means this underclass will drop to 14 percent by 2004.
Datamonitor predicts that 79 percent of Europeans will be interactive by 2004. Not only will consumers be connected, they will also be living in “digital homes,” with 76 percent having two or more digital devices by 2004. Datamonitor predicts that a consequence of this proliferation of digital devices in the home could be the divide of the family unit.
One heavily marketed access channel for businesses is the mobile phone, using WAP (wireless application protocol) to deliver a mobile Internet. Forty-eight percent of Europeans currently have a mobile phone and by 2004, 59 percent of mobile phones will be WAP enabled. However, 80 percent claim to be uninterested in “m-commerce” (mobile e-commerce).
Datamonitor sees enormous opportunities for iTV (interactive television) services as 97 percent of the European population owns a color television, which they spend more than five times longer watching than they spend online. The UK and Spain are the prime iTV targets with 31 percent of the British population and 16 percent of the Spanish population having digital television or intending to get it in the next six months. Datamonitor predicts that in six months time, the iTV platform will reach more consumers in these countries than the PC Internet — a huge target audience reach.
However, Datamonitor also predicts that Digital TV will only become truly mass market in the second half of the decade. iTV will however not be a full “Net on the Set” offering, and consumers will only have access to a limited number of participating vendors.
Mass ownership of multiple interactive devices such as WAP-enabled phones and interactive TV, means more access channels through which business can conduct online sales and services to multiple audiences. One example of a beneficiary of interactive services is the financial services industry. European financial services will generate almost one-fifth of their revenues via interactive devices by 2005, representing approximately £51 billion — an increase of 1,700 percent from today’s figure.
But are Europeans really buying online? Eighty percent of European consumers have browsed the Internet for information on products and services, but only 28 percent have actually ordered online, and only 15 percent have paid online. Britain takes first place, having a higher percentage (26 percent of those online) carrying out complete electronic transactions online than anywhere else in Europe, despite Sweden (12 percent) often being quoted as the most advanced online country in Europe.
“An online and digital Europe is here to stay,” said Doug Wilson, Director at Datamonitor. “As the number of devices for accessing the Internet and interactive services grows, there will be opportunities for ubiquitous networks with less than a quarter of Europe isolated from such services.”
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