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EUROPEANS SLOW TO MOVE SHOPPING ONLINE

Posted on July 18, 2001

      Almost half of Western Europeans have Internet access, but only one in five bought anything online in the past six months, according to a survey of 12,500 European consumers conducted by GfK Ad Hoc Research Worldwide.

      And even the purchases being made online are small. Just over one in three of the Internet shoppers questioned in the survey spent more than 200 Euros during the six-month period. This compares with what Forrester Research estimates is an average of $273 (or 320 Euros) spent each month online in the United States.

      Less than 1 percent of total retail sales in Western Europe are done via the Net (compared with around 3 percent in the United States), the research, which was published in the Wall Street Journal's European edition, shows that online retail sales are still growing at a reasonable rate as more Europeans move online and become more comfortable with the Web. Britain and Germany are Europe's most advanced e-commerce markets, even though Scandinavia is widely regarded as the most wired region in Europe. The survey also found that while U.K. consumers have relatively few qualms about buying online, in Internet-savvy Sweden there is an unusually strong reluctance to give out credit card details over the Web.

      Germans are more inclined to buy financial services online than anybody else in Europe, with electronic banking available to consumers way before the Internet. The British favor airline tickets and hotel bookings -- driven largely by the popularity of sites such as lastminute.com and low-cost airline Easyjet.com. In the past six months 36 percent of British Internet shoppers have either made hotel bookings or bought travel tickets online, compared with a Western European average of 21 percent.

      One of the key attractions of Internet shopping for British consumers is the convenience factor, while Germans also cite the ability to buy any time of the day or night. Italians more than anybody else think online shopping is fun.

      The French are put off by the expense of surfing, the survey found. Only 35 percent of French people have access to the Internet -- the lowest of any Western European country. Denmark tops the league with 75 percent of its population online, while Britain comes in at fourth place with 60 percent -- with most of those logging on at home.

      While the cost of surfing remains an issue for some, consumers' concerns about privacy, using credit cards online and delivery glitches are more likely to dampen their enthusiasm for online shopping, according to the survey. Nearly two-thirds of German and Spanish respondents don't want online retailers to collect information on their shopping likes and dislikes under any circumstances while southern Europeans are uneasy about purchasing goods from retailers they only know via the Internet.

      "Our research findings give a telling insight into the spending habits of European online consumers -- factors such as price, concern about security and a lack of familiarity all contribute to a general reluctance to replace a visit to the high street with a shopping spree on the Net," said Mark Hofmans, General Manager of GfK Ad hoc Research Worldwide. "However, even though we've got a long way to go before we reach the level of saturation experienced in the States, online retail sales in Europe are still growing at a reasonable rate as an increasing number of people become more comfortable with the Web."

      A total of 12,560 consumers in 14 countries were interviewed for the survey during March to mid-April 2001.

      While retailers seem to have little to fear from the Internet, research from Forrester found that cannibalization has begun with more traditional forms of media in Europe.

      "With the exception of travel, the Net isn't even close to the top source of information in the vast majority of our categories," said Forrester Technographics Analyst Paul Jackson. "The more Net users gain experience online, the less they watch TV. In markets with heavier TV-watching habits, those with online access are watching between 10 percent and 15 percent less TV each week than offline users. News isn't one of the initial draws of the Internet, and only 16 percent to 17 percent of those who have been online for less than six months state that the Internet is their primary source for national and world news. But this increases to around 35 percent to 37 percent for those who have two or more years of experience on the Web."

      Forrester advises broadcasters, publishers and advertisers to work together to ensure that consumers are acquired across multiple channels, see consistent commercial messages on each and are loyal to the brand and content rather than the medium.

      "Of all the traditional media channels, newspapers fare best as people move online," Jackson said. "Publishers should ensure that their newspaper properties continue to reach the loyal online readers in its 'hot metal' online edition and that those revenues from associated online editions, advertising and e-commerce are realized. When asked about the usefulness of comparative product reviews prior to purchase, 58 percent of online consumers said that they are useful -- compared with 38 percent of offline consumers. This presents an opportunity -- magazine publishers should be offering premium-priced comparison content and linking this to best-of-breed e-commerce sites.

      There are fewer opportunities for television and the Internet to work together.

      "For some time now, TV networks have been fretting as the advertising pie fragments because of multichannel TV," Jackson said. "Now they have another problem -- the pie is shrinking, too. Even when the market recovers, consumer behavior won't -- in fact, TV watching will fall further with growing consumer adoption of broadband online access."

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