|maui realtor - The European online retail market is expected to grow to 152 billion Euros in 2006, and retailers must focus on capturing the 103 billion Euros in potential gross profit generated over the next six years by targeting ripe categories and countries, according to Forrester Research.
"The days of easily justified online retail investment are long past -- Euros committed to the Net will only be approved through sound business cases," said Forrester senior analyst Julia Woodham-Smith. "But while retailers fear that media reports of dying dot-coms will erode demand for online shopping, the hard data tells a different story."
In the first six months of 2000, as dot-coms crashed, the share of Europeans online grew by 20 percent from the previous six months to 32 percent of the population 16 and older. In Britain and Germany, the percentage of consumers online reached 40 percent and 39 percent, respectively. It has been proven that the longer people are online, the more they buy. Consumers in their first 12 months online spent 134 Euros on average on their last online purchase; those online for 13 to 24 months spent 150 Euros; and online shoppers with more than two years online spent 176 Euros. This upward trend has been seen in all European countries.
As consumers make purchases across more diverse product categories, online spending
||patterns will more closely approximate offline retail spending, and Forrester predicts the products Europeans purchase online will diversify beyond low-value books and music. Only a small fraction of sales in Europe's biggest retail categories -- groceries, clothing, leisure travel and new cars -- must shift to the Net to dramatically boost online spending per shopper. The 5.8 percent of groceries sold online in 2006 will be bigger than Europe's entire market for books, both online and off.
Forrester also contends that European countries will fall into three distinct groups. Switzerland, Germany, Britain and Scandinavia will form the vanguard, accounting for more than 8 percent of online sales. Austria, France, Ireland, Finland and the Benelux countries will occupy the middle lane, driving 4 to 8 percent of online sales. Laggards like Portugal, Spain, Italy and Greece will contribute less than 4 percent of all European online sales in 2006.
"A supply-constrained environment creates opportunities for retailers to exploit unmet demand, but investments only make sense if enough gross profit will be generated to put them in the black," Woodham-Smith said. "By building additional layers to our model we calculate that online retail will generate 103 billion Euros in gross profit through 2006 -- gross profits will rise from 3.9 billion in 2001 to 35 billion in 2006."