E-retailing booms in Europe as 40% of online users now buy online

In the last three years, online retail in Europe, once little more than a shadow of e-retail in the U.S., has started to come of age, according to new findings from Forrester Research Inc. About 40% of online European consumers actually purchase online, up from 19% in 2000.

And European consumers aren’t just making simple purchases such as books and CDs online, according to Forrester. Even those who are relatively new to the web with only one year of online experience are purchasing more complex products, such as the 18% who buy apparel and 16% who buy travel online.

The current health of online retail in Europe is underscored by another metric: 87% of 15 top retailers surveyed by Forrester report their online operations are profitable, with an average conversion rate of 6%. That’s a significant boost from a 2000 survey by Forrester, in which only 28% of 50 retailers surveyed reported profits from their online operations, at an average conversion rate of 5%. As in the U.S., “The dot-com shakeout clearly left its mark” in Europe, says Forrester.

The task for Europe’s online retailers who want to continue growth in a maturing market is to expand from a sole focus on profits to being more appealing to more consumers, Forrester says. For example, attracting new customers was listed by 60% of retailers as a primary goal of their web site, the most frequently cited goal; followed by the 53% who cited increasing sales as a primary goal. Only 27% cited as a primary goal making shopping convenient for the consumer; and only 20% cited customer retention as a primary web site objective. 40% of those surveyed, the largest segment, said that offering great customer service was their biggest challenge in operating their site.

“Online retailers have to get down to the nitty-gritty of merchandising to raise conversion and retention; they must adopt consumer advocacy--doing what is right for the consumer, not just focusing on the bottom line,” says Forrester.