Study: Euro E-Commerce to Top US$1.6 Trillion

Electronic consumer and business commerce trade in Europe is expected to grow at a dizzying rate in the next few years, reaching $US1.61 trillion by 2004, according to a new study from Forrester Research.

More users and richer Internet services will foster the growth, the market research company said in the study entitled "Europe: The Sleeping Giant Awakens." However, Europe must continue to foster e-commerce development to overcome resistance to new business models, the study added.

"To realise its potential, Europe must remove cultural and social resistance to e-commerce and focus on pragmatic issues like shortages in skills and infrastructure," Forrester said in the report. "Firms must progress as networks rather than as individual enterprises and resist the vain temptation of recreating virtual closed economies -- joining global e-commerce networks will strengthen the region's competitiveness."

Nonetheless, online growth will continue to accelerate, with Northern Europe outpacing its southern counterpart, the study said. However, e-commerce in the countries of Southern Europe will fail to reach 6 percent of total trade, hampered by low technology penetration and lagging investment.

About 16 million Europeans began using the World Wide Web this year, doubling the Internet's home penetration to 13 percent of the population, the study said. E-commerce trade is expected to reach $36.3 billion this year, the study concluded.

E-commerce growth rates in Europe will top 100 percent annually through 2003, equaling 6.3 percent of total trade by 2004, the study said. Online business-to-business trade should reach $1.31 trillion of all e-commerce trade by 2004, the study said.

The development of commercial networks will be crucial to sustained online growth, Forrester said. Businesses, government and social organisations should encourage further integration of buyers and sellers and build support systems for companies that are late in moving to online operations.

In addition, local and national networks should seek to cooperate with global networks. For example, the European car industry now works with US counterparts to gain access to buyers and suppliers, Forrester said.

Network development will bring rich rewards, the study said.

"This year indicates strong growth, but decision makers should not be blinded to the remaining hurdles -- real and perceived," the study said. "To realise its potential, Europe must overcome its fears, face social and organizational change, and tackle pragmatic issues like infrastructure weaknesses."

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