Sustained eCommerce growth of more than 100% per year through 2003 will drive Europe to $1.5 trillion in online sales in 2004. This will make Europe a major contributor to the global Internet economy, which Forrester Research, Inc. (Nasdaq: FORR) estimates will reach $6.8 trillion in 2004. While Europe and Asia-Pacific both have comparable online sales totals, Europe has a more balanced overall Internet economy with faster adoption expected across the region as a whole and stronger growth in consumer eCommerce.

“eCommerce in Europe benefits from a number of inherent strengths — a coherent regional trading bloc, a strong technology infrastructure, and deep connections to global supply chains,” said Dr. Therese Torris, director of research at Forrester Research B.V. “Despite these advantages, eCommerce will not develop in the same way or at the same rate across all countries. To achieve its full potential, European companies must be prepared to take advantage of new eCommerce opportunities, wherever they are present.”

In the next five years, Europe’s online consumers will quickly turn from surfing to shopping, with sales of retail goods and services growing 140% annually. Forrester believes that one of the factors fueling this growth will be improved online stores, which will inspire 100 million Europeans to shop online by 2004. But the real driver behind Europe’s eCommerce growth will be online business trade, which will account for nearly $1.4 trillion of Europe’s total online trade in 2004. These revenues will come from the efforts of industry leaders to pull entire sectors online and the emergence of eMarketplaces to facilitate online business trade in the region.

While online trade will approach 6% of Europe’s total sales in 2004, eCommerce will develop much more quickly in Northern Europe, with Germany and the UK leading the way. In Southern Europe, eCommerce will be hindered by a weak infrastructure and cultural resistance to doing business online, although France will represent the third-largest Internet economy in Europe. However, the emergence of new form factors, including WAP phones and interactive TV, may help these countries overcome the hurdles to eCommerce acceptance.

“Europe will achieve eCommerce maturity very quickly, effectively closing the gap between it and the US in the process,” said Matthew R. Sanders, associate analyst. “Despite some minor development hurdles, Europe’s prospects as a global eCommerce leader look very good.”

Global Outlook For eCommerce
Forrester estimates that eCommerce will account for 8.5% of the global sales of goods and services in 2004. The expansion of online trade, however, will be highly concentrated, with 12 countries representing nearly 89% of worldwide Net sales. North America will continue to be the global eCommerce leader with online sales reaching $3.5 trillion in 2004. Asia-Pacific will hit $1.6 trillion, led by significant business-to-business trade in the computing and electronics industries. Plagued by infrastructure deficiencies, eCommerce will reach $82 billion in Latin America, while Eastern Europe, Africa, and the Middle East will contribute a combined $68.6 billion in 2004.

For the Brief “Global eCommerce Approaches Hypergrowth,” Forrester examined the conditions underlying eCommerce growth in 52 countries. These conditions include the regulatory environment, technology infrastructure, connection to international supply chains, and existence of regional trading blocs.