Europe’s commercial embrace of the internet is tightening, and according to new research from KPMG Consulting, the old world’s present $288bn annual internet sales total is set to hit $2004.4bn by 2002. But while KPMG’s fourth annual report on e-commerce shows that Europe has accepted the inevitability of an e-world, it warns that the next several years may be painful as e-competition intensifies and the real costs of trading over the internet start to bite.
Based on the responses of senior directors responsible for e-commerce within 375 European companies, KPMG’s report notes that gap between the electronically sophisticated companies and the rest in Europe is narrowing. The sophisticates include the 23% of respondents who are already conducting transactions over the internet, as opposed to the 63% of companies who say they now make sales which are attributable to the internet, either as the result of a marketing exercise or through some other indirect mechanism. 83% of companies say they will be trading directly over the net by 2002.
Predictably Germany, Scandinavia and the UK are identified as the regions leading Europe’s e-commerce development, but KPMG says Italy, which often lags behing other countries, is also among the pace setters. In the latter cases, KPMG calculates that as much as 4.3% of corporate sales is now attributable to the internet.
If the future, overall, looks rosy for Europe’s e-commerce sector, at the individual company level, the situation may start to become more difficult soon. There are now no more easy markets to enter, and European companies will have to ramp up the proportion of sales and marketing investment they allocate to the internet. The average corporate e-commerce sales and marketing budget presently stands at $220,600 (although in the UK and Scandinavia the average is closer to $500,000), but KPMG expects this average to rise to $290,000 within three years.
