Europe jumps online

Jun 01, 1999 9:30 PM  By

Most U.S.-based online catalogers target the U.S. market exclusively-displaying copy only in English, pricing only in U.S. dollars, and shipping only within the U.S. But of the 158.5 million people currently online worldwide, more than half live outside the U.S., according to research firm Nua Internet Surveys. And Cambridge, MA-based Forrester Research predicts that European online sales could reach $69 billion by 2001, the equivalent of 1% of Europe’s economic output.

“By definition, the Internet is global,” says Ken Hawk, president/ CEO of 1-800-Batteries, a Reno, NV-based cataloger of batteries for mobile professionals, “and if we want to build a global brand, we have to be out there.”

But it’s easy to see why many online marketers are content to stay within the U.S. Online shopping last year accounted for $1.2 billion of Western Europe’s $1.9 trillion in retail sales, with business-to-business adding another $4.4 billion in online revenue. On the other hand, online spending accounted for $8 billion of the U.S.’s $2.6 trillion in sales. And research firm Intelliquest estimates that 100 million Americans-36% of the population-will be online by 2000. By comparison, research firm IDC estimates that only 10% of all Western Europeans will be on the Web by 2000.

Some European countries have greater cyberpenetration than others. For instance, an estimated 10.6 million Britons-almost 18% of the U.K.’s population-were online last year, according to market research firm NOP Research, and 10,900 new U.K. users log on every day. The U.K.’s relatively high penetration is due largely to a promotion in which Internet service provider (ISP) Freeserve offers free access (excluding the cost of the local phone call) for all PCs bought from retailer Dixons. That offer prompted so many similar deals across the U.K. that now there are more free-ISP users than subscription-paying users.

On the other side of the English Channel, Nuremburg-based GfK Consulting estimates that as of March, 8.4 million Germans, or 10% of the population, had Internet access-a 40% increase from the six months prior. GfK also estimates that there are more than 2 million Internet users in Italy, a 25% increase over 1998.

And governments across Europe are making a concentrated effort to bring still more people online. In February, European Community antitrust officials took steps that could lead to lower Internet prices across Europe. Already, the Italian and French governments have persuaded ISPs and telecommunications companies to drop their rates. Similar efforts in Ireland led to the deregulation of the telecommunications market last December, resulting in increased competition and rate cuts.

But even in the face of such promising developments, many U.S. online catalogers may hesitate to market to Europe. For one thing, there’s still the high cost of shipping overseas. In addition, tax laws, customs, and languages vary from country to country, making marketing abroad tricky and time-consuming. Then there’s the question of overseas infrastructure. “As the volume of international orders increases, we’ll think about housing the products overseas,” says 1-800-Batteries’ Hawk. “It’s still a logistical nightmare.”

And just because the number of European Internet users is growing, that doesn’t mean there’s a market for every U.S. product. “We need to evaluate each market as it develops,” says Angela Kapp, vice president of special markets and new media at $4 billion cosmetics company Estee Lauder, which mails the Origins catalog. For instance, “a large majority of Scandinavians might be online, but they might not necessarily be an attractive market for our products.”