European E-Commerce

The next two years are set to bring dramatic changes in Europe: not only are most European countries going online at an unprecedented rate, but 11 countries of the European Union are phasing out their own currency and accepting a common currency (the Euro) during 1999 and 2000. The combination of these two factors is widely thought to give strong stimulation to e-commerce.

Examples of virtual stores throughout Europe

Here are some examples of good sources for European online shopping, all with secure payment systems:

Multilingual Shopping Sites

England:

France:

A French marketing research company, Motivaction made a comparative study of 5000 French people online and their online buying habits. 44% of them have seen an online merchant, and 40% have already bought something online. Of those who have bought online, 80% said that they paid by sending their credit card number via the Net. What do the French buy? 40% of those interviewed had bought software, 27% books, 22% CD-ROM, 22% computer equipment, and 18% audio CDs. The survey also asked them what they wanted to see developed, and they replied theatres tickets (50%), travel tickets (46%), banking services (33%), and publication subscriptions (33%).

A sampling of online French e-commerce sites can be seen at http://www.euromktg.com/gbc/fr/shopping.html


Germany: ZD reports that 57% of German surfers have already bought something online. Horizont reports that e-commerce in Germany will triple in the next two years. (Source: Horizont)

A sampling of online German e-commerce sites can be seen at http://www.euromktg.com/gbc/de/shopping.html


Italy has a popular shopping mall called Virtual Shopping in Italy (www.visit.it). It offers Italy's finest products and services at very competitive prices. Italian designer products, perfumes, sunglasses, Italian watercolors.

Sweden:
There are several food shopping Websites, with delivery in Stockholm: http://www.nk.se and www.kf.se. Another site contains 15 restaurants that deliver dinners in Stockholm: www.aptit.se.

Outside Europe:

Latin America:
And e-commerce in Brazil?
Cadê?/Ibope Research in Brazil has just finished a new study of Brazilian ecommerce. They found that 19% of brazilian internet user have already shopped on the Net and another 62% showed interest on buying through the Net in the future, thus showing the potencial for e-commerce in Brazil. 72% of the users declared to possess a credit card, 52% of which were bearers of international credit cards.

While most Brazilian supermarket managers are worrying about keeping the produce section stocked, Pao de Acucar is scrambling to revamp the chain's site on the Web, with the homedelivery service at www.grupopaodeacucar.com.br/delivery/. They deliver (next day delivery) to Sao Paulo, Alphaville, and some places in Brasilia, every day except Sunday (and planning on adding other locations soon).

Brazil is setting the pace for online shopping in South America. Universo Online (Brazil's biggest ISP, content provider and web developer group -- http://cdf.uol.com.br) includes a virtual mall featuring 26 stores and companies: flowers, compact disks, books, and clothing are sold, as well as PCs. They operate in Brazil as well as other countries in Latin America. Another Brazilian shop is "Shop Brazil (www.uol.com.br).


Payment mechanisms

U.K.
There are three ways for a virtual shop to collect moneys online in Britain:

British Telecom (BT) proposes a 6-month trial for a new payment service - BT Array (www.btarray.bt.com) - created for small value purchases (between a few pence and a few pounds). The service is simple to use: it only requires a once-and-for-all secure SSL (Secure Socket Layer) registration, complete with credit card details, and an account name and password. Users are then able to purchase items from any merchant displaying the BT Array micropayment logo from any WWW access device. BT Array consolidates the account and charges it to the customers¹ VISA or Mastercard periodically. BT, which is acting as an intermediary between merchants and customers, takes a percentage from every purchase.


Germany:
E-cash software was just put into beta-test last October by Deutsche Bank (Germany's largest bank: www.deutsche-bank.de/wwwforum/e-cash/). Many German people do not use checks and credit cards to pay for merchandise or services they purchase; they use bank transfers instead. E-cash had to devise a secure method for customers to fill out a form on a Web page, which debits their bank account for the amount of the purchase. This is the only such application for debit payments in Germany.

U.S. software vendor Cybercash (www.cybercash.de) has made deals with the Dresdner Bank and Landesbank Sachsen to provide cybercoins, and more banks should be added to this list soon.

InternetWorld magazine (Germany) tested six e- commerce solutions in their Dec., '97 edition. Intershop, who makes software for creating an online store, hails from Germany (they just moved their main headquarters to San Francisco last year.) Their German operation continues to be the top supplier for this application in Germany.

A recent survey of people online in Germany and Austria showed that 40% of those surveyed have already bought something online. Most popular was the automobile/motorcycle/sport area (16%), followed by the computer area (15%). (source: Global Online magazine, 11/97, p. 8).


France:
There are five securised payment solutions in France:

France Telecom offers a Web-based E-Business solution that was developed by Open Market, called TeleCommerce, in association with banks BNP and Credit Agricole. It goes much further than other solutions, as it does not require users to input their credit card numbers, since they already have given their credit card details the first time they bought on a Telecommerce merchant. $2500 installation cost, plus $150 per month and 3% of transactions. Since France Telecom has vast experience in setting up virtual stores in their 17 years of Minitel experience, this should prove to be a success, as it carries the credibility of one of the national telecom operator. It has been installed first for Le Marche de la France, a virtual shopping mall of French luxury products. TeleCommerce is a complete buying system with a virtual basket, commands management, automatic calculation of VAT tips, customs rights, and statistics. Since France Telecom has already been quite successful with the same sort of virtual shops for its Minitel (which contains today 25,000 virtual shops), this Web development is simply the next logical step. What makes it unusual is that the Web visitor does not have to give his or her credit card number to the merchant: TeleCommerce is responsible for this. The customer can shop in various shops and not have to fill out the payment and delivery form each time -- quite a convenience. Check out the progress at: Le Marche de la France, http://francecontacts.com/marchedefrance/.

Kleline software (www.kleline.fr) is the French leader in e-cash (similar to Digicash). which offers both a "virtual wallet" that resides on one's hard disk (for sums less than 100 FF = $17), and regular secured payment for more than $17. They are a tad expensive at $2500 for a license, plus $5000 for setup and installation, plus 3% of transaction costs. Online shoppers can pay for their purchases in 20 different currencies. Kleline is currently testing the "millicent" feature (for spending very small amounts). Virtual shopping centers that have chosen Kleline's software for payment mechanism include Globe Online (www.globeonline.fr), Trois Suisses (a large French mail-order store) and BR Shopping (in Brazil - www.br.homeshopping.com.br). It works by means of a virtual wallet kept on the user's desktop to make purchases.

Payline is promoting itself as the top payment solution on the Internet in France for virtual store, costing $85 per month, plus setup charges.

SIPS, which handles back-office work and can even work with multiple languages and currencies.

The first French bank to get into the securized payment business was Credit Mutuel. Their lower price has permitted them to attract more clients than the other solution (around 200 in France): a merchant pays $17 per month, and each transaction is charged $0.17 + 1% of the transaction. Despite these technical solutions that work in conjunction with French banks, it is not a straightforward process for a small company to obtain bank authorization to accept credit card payments online.

Switzerland:
Computer World GmbH has launched a service for Swiss companies to sell online (www.swisskaufhaus.ch). For a $235 setup fee and $50/month, they will host a Swiss company's Website and provide the backend services to collect credit card purchases.

Elsewhere in Europe:


Other Payment Methods

Since each national market in Europe is much smaller than the U.S. market, with consequently more control over local currency use, smart cards were developed faster in Europe than in the U.S., where regulatory bodies bogged down their introduction. At the recent CeBIT show in Germany, there were several alternatives to paying for online purchases by credit card. GEMPLUS (www.gemplus.com) has a small input device for smart cards that plugs into a PC. It reads smart cards that have been loaded with e-currency, and can deduct amounts as one spends money onilne. The reader costs $70 or so now, but the price will drop to $30 late this year. This payment method may well become the most popular, since it replicates how Europe pays for its public telephone and many other commodities: through smart cards. Ideal for paying reasonably small purchases ($5-$250). The equivalent for credit card use is going to take longer to implement, however.

On-line banking in Europe starting to take off:

Non-traditional banks are taking advantage of the tremendous cost savings realizable from on-line banking. Leading banks includes:

CountryNameSubscribersURL
GermanyAllgemeine Deutsche Direktbank300Khttp://www.direktbank.de
GermanyBank 24 (Deutsche Bank)310K http://www.bank24.de
GermanySantander Direkt Bank100K http://www.santander.de
UKFirst Direct Bank850Khttp://www.firstdirect.co.uk
SpainBanco Direct110K
FranceCortalN/A http://www.banque-cortal.fr
FranceBanque DirecteN/Ahttp://www.banquedirecte.com

All of these users bank either by Internet, or by telephone. The Boston Consulting Group forecasts that 51m Europeans will bank by Internet by the year 2001, which would make banking one of the leading applications, as the total number of Europeans expected on-line by 2001 is only 65-70m (source: EITO).

A key driving force is the cost of banking on-line versus banking by telephone or by teller. Bank 24 of Germany estimates the on-line cost per transaction at $0.01 versus $1.12 by telephone, and double that amount in person.

With the transition to the Euro, which is scheduled to be fully implemented in 11 EU countries by July 2002, we expect that on-line banks will be well positioned to offer European-wide on-line banking services, by taking advantage of economies of scale and the lack of need of physical bank branches.


Conclusion

The e-commerce market is growing steadily in France & Germany, both from the technical side (back-end payment systems) and the number of online users purchasing online. As European e-commerce becomes more established, marketing will have to follow in each language, to drive more prospective customers to a given e-commerce site -- precisely the way it does in the traditional business world. There is a very strong need for companies to adapt to global marketing and to use localized approaches, country by country. This means not only translating a Web site, but also giving it the "look and feel" of other Web sites in each country that one is targeting. Furthermore, online stores need to make it easy for people in other countries to purchase from their Web site, if they do not have a credit card. As the rest of the world outside English-speaking countries comes online faster than imagined and e-commerce follows closely behind, it becomes imperative to market to each country in order to attract more visitors to these e-commerce sites.


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Last revised on 7 Sept., 1998
URL: http://www.euromktg.com/eng/ed/art/eur.ecommerce.html