Internet Special Report Europe's Enticing E-markets (1,780 wo
While the U.S. e-marketplace may be experiencing a slowdown, some American online marketers are starting to invest in e-commerce's next frontier: Europe.
The Continent is enjoying its highest consumer-confidence levels in eight years, its lowest unemployment in a decade, and economies determined to go high-tech—all good signs. So while America's Internet boom has slowed, Europe's prospects appear relatively brighter.
Since it's impossible to cover in one article the marketing potential of all of Europe, I'll briefly examine the Continent's three main markets: Germany, the United Kingdom and France. Online sales in these three countries alone are expected to reach $12.7 billion by 2003. I'll also discuss Sweden, which is rapidly becoming one of northern Europe's most technologically advanced regions.
When taken as a whole, the European Union (EU), in many ways resembles the United States. Its population of 291 million is slightly larger than the United States' 283 million, and the EU's GDP of $7.5 trillion is near the United States' $8.7 trillion.
Currently, Europe's consumer e-market is less than $20 billion, while Forrester Research reports that online sales in the United States in 2000 were double that.
By 2005, European online sales are expected to reach $65 billion, not as high as North America's ($269 billion, according to Forrester), but a healthy climb nonetheless.
It's important to understand core differences between EU and U.S. e-markets. Unlike the United States, Europe cannot be treated as a homogenous market. It's home to numerous languages and cultures that make marketing much more patchwork and decentralized. Also, Internet penetration is uneven across the Continent. Currently, Germany has 14.4 million dedicated Internet users; the United Kingdom, 13.1 million; France, 5.6 million; Italy, 5.3 million; and Sweden, 3.8 million.
Unlike the United States, European ISPs tend to be free, while local telecommunications charges can be high. As a result, Europeans tend to spend one-fourth to one-third less time online than their U.S. counterparts—often planning their Web surfing ahead of time and quickly logging off to avoid phone charges. Other important differences include Europe's generally stricter privacy laws, as well as the Continent's high density compared with the United States, often translating into relatively lower shipping costs for those with warehouse assets in Europe.
Whatever the differences, your best plan of action, at least initially, is to target one European country at a time and build from there.
Europe's largest economy has a proven direct marketing history. Germany currently has more than 5 million online buyers spending about $2.2 billion. The country is expected to have 21 million adult online users by 2005, spending $18 billion online.
Germany is pursuing a national technology plan to have at least 40 percent of the population online by 2003. It has a relatively high number of online purchasers —currently every ninth German buys online. Many Germans shop online to avoid inconvenient retail hours that are far more inflexible than those in the United States.
Most online buyers are between 20 and 39 years old and spend an average of about $800 annually. A slight majority shop at least once a month; 45 percent shop online at least once every three months.
As mentioned, Germans, like many Europeans, tend to avoid Web surfing due to high local phone charges. They often conduct offline research before logging on, which spells opportunities for reaching these consumers through traditional direct marketing techniques to get them to visit your site. When they do buy, popular items include travel and tourism, computer hardware, and books.
Caveats: Germans tend to place a high premium on the quality of goods, and they don't expect high or additional costs such as shipping, handling and taxes. They also prefer consolidated shipments (don't send items separately), multiple delivery options, the ability to track orders online and paying by C.O.D. rather than with credit cards.
The bottom line: Germany is a lucrative market for U.S. e-tailers. But the key to success is demonstrating quality while providing excellent service.
The United Kingdom
The United Kingdom is an excellent entry point for U.S. e-tailers—not just because of the common language. It has a strong technological infrastructure, as well as a liberalized and open competitive e-market.
Like the United States, the United Kingdom has one of the most innovative e-business cultures, which includes strong content providers. It has a sophisticated online population that's expected to grow to 25 million users by 2003, and it includes many of Europe's early adopters who have a history of direct buying using credit cards, unlike most other European consumers.
Most U.K. online users generally have higher-than-average incomes and are most interested in buying travel products, CDs, books, videos, flowers, food, beverages and clothing.
Caveat: Don't assume the common language means it's an extension of the United States. Much more than the Atlantic Ocean separates these two countries. Do your homework to discover important cultural differences.
The bottom line: This country's excellent infrastructure and wide acceptance of the Internet make it a top European market.
For more than 20 years, France was a European technological leader with its Minitel system, an Internet precursor that allows users to buy theater tickets, check phone numbers, access train schedules and more. This system, which has 17 million users and $1 billion in annual purchases, is unlikely to compete well against the Internet in the long run, however. The Internet is gaining ground in France, and it's expected there will be about 15 million users online by 2003. Currently, most French online buyers look for computers, CDs, books, travel and tourism.
Caveat: Language is a key issue in this market. While most Internet sites are in English, French users prefer sites in their native tongue. Use local marketing help to give you an edge in understanding the cultural and linguistic nuances of this important market.
The bottom line: The conversion of Minitel users to the Internet will be a great boon, but your Web site must appear as local as possible.
Although smaller than the previously discussed markets, Sweden
offers excellent opportunities for U.S. e-tailers. This is a country that is highly advanced technologically, with almost half of its 8 million citizens currently online.
The country already is a leader in wireless technologies, has a highly developed Internet banking industry and is promising a national broadband network soon. Swedes are acclimated to online buying, and they actually prefer visiting English-language sites.
Chart a Path
Choose the country that makes the most business sense first. Do your homework, work with reliable partners and repeat the process for each market. Whichever country you target first, getting started now is clearly the best path to e-commerce's next frontier.
Rainer Hengst is country manager, USA, for Deutsche Post Global Mail. He can be reached at (703) 383-9561, or by