Europe's "Internet Economy" Takes Off

Preliminary findings from a new MORI study into the growth of electronic commerce in Europe, reveal that nearly a quarter of Europe's companies who have access to the World Wide Web, are already earning revenue through the Internet. Electronic commerce is defined as managing all aspects of the business process including sales, marketing, finance, recruitment, customer support and partnership development over the Internet.

The MORI study questioned 900 business directors in six European countries (UK, Germany, Italy, Spain, The Netherlands and France) from a cross section of large, medium and small companies. Across countries, almost half of the directors surveyed believe that the adoption of electronic commerce is the way of the future in their industry.

Sixty per cent of the companies who use the Internet expect the amount of business they do on-line to increase next year. On average, these companies are predicting an annual increase in electronic commerce of 24 per cent.

One element of electronic commerce, notably taking product orders over the Internet - is also poised to expand significantly. The majority (87%) of firms which have adopted this approach expect the quantity of orders they receive over the Internet to increase in 1998.

Around Europe, Spain is leading the adoption of electronic commerce, with 46 per cent of companies with web access already conducting business over the Internet. Spain is followed by France (33%) and Germany (20%) while companies based in the UK, the Netherlands and Italy are currently progressing more slowly.

The sample also agrees that, ideally, 30 per cent of their business should be undertaken electronically in future. But although three in five European companies are now connected to the Internet, and half of the rest plan to go on-line over the next year, the majority of firms have yet to harness the true potential of electronic commerce.

MORI partner Janette Henderson said: "Our research suggests that companies who restrict their use of the Internet to e-mail and Web searching could be left on the sidelines of an important new marketplace. Many of these companies could be left outside the fast emerging "Internet Economy", simply because they are not fully aware of the opportunities from doing business electronically,"

Henderson added, The research shows that businesses with Web access are three times as likely to be using the Internet to search for information or send electronic mail, than for electronic commerce".

Some companies have a narrow view of what they can do with the Internet," said Richard Freemantle, Vice President for Northern Europe, Cisco Systems, the world-wide leader in networking for the Internet and sponsor of the MORI study.

Our own experience has shown the tangible advantages of fully embracing this technology. Sales, financial transactions, marketing, customer support and partnership development can all be conducted very efficiently over the Internet. Cisco saves nearly $400 million a year by using the Internet in this way. We take nearly 50% of all product orders electronically - or more than $10-million-worth of business a day."

Fifty-eight per cent of companies currently involved in electronic commerce across Europe claimed savings had already been made by running at least part of their business in this way. Gains in productivity were also cited as the greatest benefit of the Internet by current users.

Spanish and UK companies are ahead of the pack in provision of customer service over the Internet - 38 per cent and 31 per cent respectively, compared to the average of 28 per cent.

Meanwhile, the UK and Netherlands lead in recruitment via the Internet. One in five firms with Internet access in each country recruit staff this way - at least twice as many as the other European nations surveyed.

A full report will be published in September 1998, along with analysis by KPMG Management Consulting.

Technical details

MORI was commissioned to conduct a study of European businesses looking at the extent to which companies are embracing the Internet. 900 telephone interviews were undertaken by On-Line Telephone Surveys Ltd. between 24 February and 24 March 1998 in six European countries: UK, France, Germany, the Netherlands, Italy and Spain. All respondents were directors with a variety of job functions from a representative sample of industry sectors.