E-Commerce sales in Western Europe to Double in Three Years

eMarketer: Web retailers in Western Europe will sell $97 billion worth of products and services in 2006. That's a 37% increase over last year. By 2010, the market will more than double to $234 billion,

The UK dominates the e-commerce market in Europe, generating half of all online sales in Western Europe. However, the UK is reaching growth limits just like the us. Most UK users interested in e-commerce are already doing so, meaning that the market will continue to grow, but at a slower rate. By 2010, eMarketer predicts that the UK's market share will fall to 44.5% as France and Germany ramp up their online sales.

Although Germany has the most Internet users and broadband households of any country in Europe, Germany's online retail sales are only half of what the UK generates. This is because online buyers in Germany spend much less on average online than UK or France, most likely because Germans prefer debit rather than credit cards and they have a lingering belief that bargains cannot be found on the Internet. This lag in e-commerce has Germany poised to post some of the strongest annual sales growth rates in Europe as more competition among Web retailers will drive down prices and increase the average annual spend.

Meanwhile in France, the success of Minitel–a popular pre-World Wide Web online service–and a preference for retailers who are in touch with the pulse of the French consumer have caused France to fall behind in e-commerce. Unlike the UK and Germany, it is the increase in new buyers rather than the average annual spend per online buyer that will fuel France's strong projected sales growth.

The UK, Germany and France are not the only e-commerce markets. There are a number of very small, but active online markets in Europe. Spain and Italy will outpace all three, growing at a compound annual growth rate above 30% through 2010. Beyond 2010, look to Eastern European countries like Poland and the Czech Republic for strong e-commerce sales.

Europe Retail E-Commerce: Spotlight on the UK, Germany and France. Publ 20060925