E-retailers exude confidence

Online merchants expect e-shoppers to buy more, despite Internet industry's downturn

In this story: Amazon leads the pack Travel services, books and finance RELATED STORIES, SITES

By CNN's Douglas Herbert

LONDON, England (CNN) -- The din from all those bursting dot.com bubbles is drowning out more melodious tidings elsewhere in cyberspace.

At a time when the dot.com downturn has many Internet players cowering for cover -- or collapsing -- Europe's Web merchants, or "e-tailers," are exuding a confidence in the future that bucks the industry's gloomy mood.

More than 75 percent of European companies that sell goods and services online expect their sales to increase over the next six months, as more investment is ploughed into recruitment and training, a new survey has found.

AUDIO Rebecca Ulph, Forrester Research: The winners are going to be companies that have built a brand already AIFF or WAV sound    VIDEO The nimbler e-retailers are set for growth, analysts say Real | Windows | QuickTime     QUICKVOTE Do you still shop online? Yes, regularly Yes, but rarely No View Results    CNN.com Europe More news from our Europe edition

Among those likely to benefit most from the upswing are companies that sell travel services, books, music and financial services, according to the report by Energis, a UK-based Internet solutions provider.

Energis sought to gauge Europe's e-tailing mood by polling 50 online firms in each of the region's key markets -- the UK, Germany, France, Holland and Italy -- about their near-term outlooks.

While findings varied from country to country, the overall impression is of an e-tailing sector -- led by a handful of nimble, well-established brands -- poised for a period of slower, but steadier, growth than has been the rule in the recent past.

"The shakeout of dot.coms got rid of those companies that had been built on hype and speculative business plans… and we're left with those companies who have a viable business plan," said Nick Sharples, an Energis spokesman.

Sales of goods and services online currently account for a tiny share -- less than 1 percent -- of the overall European retail market, according to Forrester Research.

For some products, however, such as books, music and video, the level was around 2 percent last year. Forrester Research expects these numbers to double this year.

In Europe's two leading e-commerce countries -- the UK and Germany -- online sales are expected to account for a respective 1.3 percent and 0.9 percent of total retail sales by the end of this year. (In the UK, that amounts to 5.4 billion euros spent online, compared with 5.2 billion euros in Germany.)

In France, the next-largest e-commerce hub, electronic shopping represented just under half of one percent of all sales -- or 1.8 billion euros.

In the brave new world of dot.com commerce, analysts say, survivors may rely more on expertise gleaned from traditional businesses in the off-line world.

Significantly, only four percent of the survey's respondents said they expected electronic sales to decline in the next six months, while just under 3 percent predicted a fall in employment opportunities in the sector.

Among the more high-profile online retailers to go belly-up in recent months are the fashion site boo.com and eToys. Another would-be Web vendor, letsbuyit.com, was left nearly bankrupt.

Amazon leads the pack

On the other side of the spectrum, heralding the e-commerce hopes is the world's largest online retailer, Amazon.com.

Sixty-four percent of respondents in the Energis survey voted the Seattle, U.S.-based Internet vendor the most successful European Web brand -- comfortably ahead of online auctioneer eBay (13 percent), and BOL, an online seller of books, video, DVDs and music.

In January, Amazon co-founder and chief executive Jeff Bezos told CNN that he expected his company to post an operating profit by the end of 2001. For all the company's sales successes, that feat has eluded Amazon since Bezos helped create it in 1994.

This week, Amazon's naysayers on Wall Street seemed to get more egg on their face when the company reported narrower first-quarter losses than many analysts had forecast.

"This is a piece of good news that the Internet really can use at the minute," said Rebecca Ulph of Forrester Research, an independent research firm that advises companies on how to gear up for the Internet economy.

Ulph said that, looking ahead, the success stories in the online retailing sector are going to be those companies with a solid brand that have earned the trust of consumers.

Travel services, books and finance

She added that buyers who shun brick-and-mortar retailers for their Internet counterparts tend to do so for reasons of convenience, speed and sometime, lower prices -- though certain goods and services, such as travel, books and music, or grocery shopping, may be better suited to Web commerce.

"Travel is going to be big. It lends itself to being researched," Ulph said, noting that many people appreciate being able to view pictures of travel destinations over the Web, rather than having to wait in line at an agency for brochures.

The Energis survey underscores those preferences. Forty-five percent of those polled said the travel industry represented the biggest online opportunity for e-tailing in Europe, followed by books and CD distribution (35 percent), financial services (29 percent) and music distribution (24 percent).

As for geographical hotspots, London was the resounding e-business-base-of-choice of 40 percent of those questioned. That may reflect the emphasis the Labour government has placed on e-commerce since Prime Minister Tony Blair famously pledged to make Britain the best place in the world to do business electronically by 2002.

Amsterdam ranked second, at eight percent, squeaking past Paris (6 percent) and Munich, with nearly 6 percent of the vote.

Amazon's loss narrows
Apr. 24, 2001
Report: Dot-com fallout may be slowing
April 6, 2001
Study: Online sales finish season strong
December 29, 2000
EU strengthens consumers' rights in e-commerce
September 25, 2000
Some countries being left behind in e-commerce
August 22, 2000

Forrester Research
Datamonitor
Energis

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