December 29, 2006, 12:00 AM

Europe a new hot spot for online retail

It used to be a huge undertaking for U.S. e-retailers to launch a presence abroad, with interest in and adoption of e-commerce in Europe trailing that in the U.S., but e-commerce is on the upswing in Europe.

It used to be a huge undertaking for U.S. e-retailers to launch a presence abroad, with interest in and adoption of e-commerce in Europe trailing that in the U.S. But a look at traffic figures, the experiences of individual merchants and growing demand for services to support international sales signals that e-commerce is on the upswing in Europe-and that retailers both here and there are looking to the web as a quick route to international expansion.

At, for example, though still a small part of overall sales, international web sales are growing exponentially, with third-quarter e-commerce sales growing 259% year-over-year to $2.2 million. “One of the next steps for Blue Nile is expanding our business internationally, taking what we have done for U.S. consumers to consumers in other parts of the word,” says Blue Nile CFO Diane Irvine.

More U.S. providers of web infrastructure and services are gearing up to support online retailers’ expansion beyond the U.S., and retailers from outside the U.S. are eyeing the online market in this country. “The drive for international commerce is a huge focus because we are getting a lot of demand from overseas. We are not trying to stimulate it at all, but overseas marketers are coming here and asking us and other U.S.-based companies to help them,” says Ken Burke, CEO of e-commerce platform provider MarketLive. “And, U.S.-based companies want to go international or translate sites into other languages, so we are seeing more requests for it and we are building out more technology to support it.”

Apparel big online
European interest in the U.S. online market reflects the fact that e-commerce is finally taking off at home. In September, for example, apparel sites were the most heavily visited online destination by retail category in Europe, according to data from comScore Networks Inc., up 3% in total from the previous month. The category winner was the web site of retailer La Redoute, with 7.7 million visitors, unchanged from the previous month. German apparel site is coming up fast, up 13% from a month earlier with 6.2 million visitors, while was up 19% from a month earlier, with 6 million visitors.

In developments mirroring those in the U.S. market, Europe’s online search advertising market is rapidly expanding as consumers shift more buying online. European markets will spend €83 billion on online advertising by 2011, representing 8.3% of all European advertising spending, Jupiter Research forecasts in a report, European Online Advertising Forecast, 2006 to 2011. Search marketing will get the largest share, increasing from 41% of total online ad spending in 2005 to a projected 49% in 2001.

If Internet search affects European e-commerce as much as it has affected e-commerce in the U.S., today’s level of online retail sales may be just a harbinger of the growth to come.

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