While the U.S. is undergoing a 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. This article quotes much of the recent European press about what's been happening in Europe.

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 Internet products/services and e-commerce spending.
The Internet market has quintupled this year in Germany, 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.
(www.electronic-commerce.org)

French e-commerce spending.
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 the triple of 1997 transactions ($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% the credit card (up from 15% in 1997), and 25% for the electronic wallet (Kleline).
(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 summarised 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 these 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 the last 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 -- shop.de.

The largest German music shop is www.audio-on-demand.de, where visitors can buy music by the 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 review of the top CD sites (from the German perspective -- www.focus.de/D/DD/DD99/DD99A/dd99a.htm) gives all German Websites, and only one American one.

One real success story in Germany is the department store Neckermann, 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, 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 a 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 Marseille, France is giving 1-800-FLOWERS and Interflora a run for their money -- Floritel (www.floripro.com). The site is available in seven languages, and their personnel (20 employees) is able to respond in any of these languages. They have gone so far as to accept payments in 160 currencies, and they have arrangements throughout the world with partner florists to delive the 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 (40% of the orders, but then their company is in France) 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 the 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 is discouraging Swedish merchants from participating in the e- commerce phenomenon.

For a more thorough view of European e-commerce sites, see euromktg.com/eng/ed/art/eur.ecommerce.html.

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 on Jan. 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. (www.techweb.com/wire/story/TWB19980323S0014)

More recently, the department of the European Commission in Brussels that is 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./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 Website is without a doubt the prime way of addressing many of the European markets simultaneously. And promoting the German site in Germany, the French site in France, etc.

Written by Bill Dunlap
Managing Director, Euro-Marketing Associates
ema@euromktg.com

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Last revised on 18 Nov., 1998
URL: euromktg.com/eng/ed/art/rep-eur12.html