A strategic analysis of the current e-retailing trading Environment, revealing how retailers are taking advantage of these new media to promote and sell their products. Case studies examine the various strategies adopted by retailers for selling via the Internet and other electronic channels, highlighting the problems encountered and the solutions that have been devised.
The 687 page report contains a detailed study of the evolution of electronic shopping, beginning with its origins in the USA and continuing with more recent developments in Europe. It also profiles Internet usage, ordering, delivery and the range of trading formats available.
e-shopping is here to stay. Its impact on retail sales, customer service, branding, operations and trading formats is a vigorously debated subject. Electronic Shopping in Europe, published by Retail Intelligence, aims to exposes the myths and highlight the facts behind the hype. The report explores how retailers are taking advantage of this new medium to promote and sell their products. With the aid of case studies, it examines how different retailers have approached selling via the Internet, what problems have they encountered and the solutions they have devised.
Electronic Shopping in Europe will provide you with a highly strategic analysis of the current trading environment, along with forecasts of future trends and prospects. The report provides a detailed analysis of the evolution of e-shopping starting with the USA. It highlights the more recent developments in Europe, profiling Internet usage, ordering, delivery, and the various types of trading formats available. This practical analysis of retailing’s newest challenge will provide you with a clear understanding of the market, the major players, the opportunities and the threats.
Some Key Findings from Electronic Shopping in Europe
The number of online shoppers reached over 10 million in the USA in 1998, and a third of all online users now use the Net for purchasing goods and services. Travel and PC related purchases accounted for nearly half of all online spend in the USA in 1998.
Since 1997, the advent of e-retailing in Europe has been proclaimed as a phenomenon which will revolutionise the retail landscape. However, it remains true that for many European consumers, the Internet remains a method of collecting and sourcing information about products rather than buying the product itself.
We believe that 30% penetration rates across Europe could be a reality in the early years of the millennium. Given the fact that the Scandinavian countries have already achieved 30% penetration there is no reason why the same factors should not drive growth in the other major markets of France, Spain, Italy, Germany and the UK.
In the first three months of 1999, almost a quarter of the Web-using population in the UK and Germany purchased a product online. The percentage in France was much lower. However, two thirds or more of all Web users in all three countries had sourced or researched information on products and pricing. The implications for retailers are clear – competitive advantage lies as much in providing relevant information and support for researching products online as in offering the transactional process itself.
A new report on ‘Electronic Shopping in Europe’ from Retail Intelligence says that the European Internet market, though still lagging behind that of the USA, is now ready to move from an information medium to a transactional one.
Leading the way in Europe are the Scandinavian markets where Internet penetration rates have already reached 30% or more. The second tier markets, with penetration rates around the European average of 12%, include Germany, the UK and the Benelux countries. Finally, at the lower end are markets such as Spain, France and Italy, where penetration has lagged behind. There are now signs of increased interest in, and growth of, the Internet in these countries.
Although fewer than 5% of adults in Germany or the UK have ever made an online purchase, the report provides a number of reasons why this figure should increase rapidly and offers a range of forecasts on how the European online retail market will progress over the next few years (see Appendix).
- Operators from the USA have moved into Europe or have made their websites accessible to an European audience.
- Services such as lastminute.com or boo.com have been created which recognise the cultural and linguistic differences that exist in Europe.
- The introduction of new and secure download solutions is making digital content more accessible. For example, MP3 – a technology format that allows CD-quality audio files to be downloaded over the Internet – looks set to revolutionise the music industry. In the process, the online purchasing advantage is becoming clearer.
- Use of the Internet at home has now surpassed that at work in Europe. Web users are more likely to purchase at home in an environment which allows more privacy and time to carry out such a transaction.
The report points out that electronic shopping is not for everyone, be they consumers or businesses. While virtually all businesses can benefit from introducing e-commerce into their dealings with supplies, there are some for whom an electronic shopping offer will never be suitable or profitable.
The chart below highlights those product sectors which Retail Intelligence expects to dominate electronic shopping purchases in Europe. A range of products and services have been rated on a 1 to 5 scale in terms of their potential to achieve strong growth via electronic channels, with 5 indicating the greatest potential.
As the target audience expands beyond the stereotypical young male, so the product mix will alter to reflect this. As more women start to use online shopping facilities, sales of clothing and groceries are expected to increase, as well as those of personal care and children’s product. Certain products, such as software and home entertainment items, have already met with strong success in terms of Net sales and Retail Intelligence expects this to continue into the early years of the next millennium. Indeed, these products have already been radically changed in the sense that they can be delivered over the Internet digitally, thereby minimising transaction and transportation costs.
However, the report argues that there will be a natural restraint on purchasing luxury and upmarket goods via the Internet, as consumers like to touch or try on such merchandise prior to purchase. In the early stages of electronic shopping, customers tend to stick to low-value purchases, and it is usually at least a year before they graduate to big-ticket items as they become more confident about the whole process.
THE ONES TO WATCH
The likes of Amazon and CDNow have already established themselves as serious players within the US retail market. Virtual retailers still operate on a very small scale in Europe, but the report highlights a number of sites which have strong growth potential. By and large, these are start-up ventures by Internet specialists, rather than sites set up by traditional retailers, many of whom are still struggling to co me to terms with this new market. These ‘ones to watch’ include:
Alando (www.alando.de): Launched in early 1999, this is Germany’s leading auction site, offering computers, antiques, music, cars and numerous other products. It was acquired by US giant e-Bay in June 1999 and will form the basis for the development of the e-Bay brand in Europe.
Chateauonline (www.chateauonline.com): Launched in October 1998, this site offers around 2,000 quality wines and claims to be 30% cheaper than average retail levels. The site can be viewed in English, French or German and includes strong editorial content and wine recommendations.
Letsbuyit (www.letsbuyit.com): Swedish-based marketer which aggregates consumer demand for specific items to demand better prices from suppliers. The more browsers order a product, the lower the price at which they have to buy it. Letsbuyit.com will soon be available to UK shoppers too.
Electronic Shopping Sales in Europe
Rather than simply throwing another figure into the public domain, we have produced a range of possible outcomes from 1997 to 2002, reflecting what might be termed the ‘pessimistic’, ‘realistic’ and ‘optimistic’ views of how online shopping sale have and will develop. These ranges are based on our own views and models and also on an objective appraisal of the other research which has been conducted on this market. The electronic sector is deemed to include non-retail goods such as travel for the purposes of these forecasts, but excludes services such as online banking.
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