It's Beginning to Look a Lot Like an E-Christmas

Online shopping in Europe is growing at a jolly pace

Don't tell Roland Honekamp that online shopping isn't taking off. The CEO of Munich-based, which sells pet supplies over the Internet to customers in Germany, Austria, and Switzerland, expects sales this quarter to top $3 million, four times what he booked during the holidays last year. Half that growth is from new customers, while the rest comes from repeat buyers spending more. Honekamp now figures, which launched two years ago, will be profitable by the end of 2002, at which point he aims to expand into other parts of Europe.

He's not the only European Netrepreneur feeling upbeat these days. Although e-commerce got off to a slow start in the Old World, online sales are on track to jump 50% this holiday season, to as much as $8.6 billion. That's far more than the 10% to 20% increase predicted for the U.S. and Canada, where revenues could hit $12 billion. Does that make 2001 Europe's first true e-Christmas? Brent Hoberman, CEO of Britain's PLC, a site that hawks gifts and discount travel, thinks so. "Last year was the learning period," he says. "Now it's for real."

The signs are certainly promising. Robin Terrell, managing director of, says his customer base recently hit 4 million, twice the number last Christmas. At Lastminute, Hoberman says fourth-quarter revenues are running 70% above last year's, while German media giant Bertelsmann reports sales through its site are up 50%. Klaus Eierhoff, CEO of parent DirectGroup Bertelsmann, says online shoppers aren't just "young Internet freaks" anymore. "Herr and Frau Schmidt" have jumped on the bandwagon, he says.

Only problem is, a lot of messieurs and señoritas still haven't. According to Forrester Research Inc., Britain and Germany alone will account for 65% of Europe's fourth-quarter e-shopping spree due to their relatively high Net penetration. France comes in a distant third, with just 8%, while Italy and Spain are barely on the e-tailing map. Although Web shopping is popular in Scandinavia, those small economies together amount to just 9% of the regional total.

"MORE SECURE." That situation is improving, thanks to sharply rising computer and Internet use. The number of Europeans on the Net has grown nearly 40% this year, to 140 million, figures New York-based researcher eMarketer Inc. All told, some 36% of European households are online, vs. 55% in the U.S. Meanwhile, widespread fears of online fraud, credit-card theft, and loss of privacy have receded. "People feel a lot more secure and confident," says senior analyst Jaap Favier of Forrester Research Inc. in Amsterdam. One reason: Many dot-coms have folded, leaving the majority of online sales in the hands of established brick-and-mortar retailers. France's No. 1 e-tailer, for instance, is music-and-media megachain FNAC.

Meanwhile, surviving dot-coms have gotten savvier. Many redesigned their sites to be faster and more user-friendly. They tailored payment and shipment options to differing cultural norms: Swedes, for instance, prefer to pay for merchandise when they pick it up at the post office. To trim costs, netrepreneurs like Zooplus' Honekamp are eschewing TV and radio ads in favor of more targeted direct mailings. And while few sites are profitable now, most e-tailers predict they will be within 6 to 12 months.

For all the Christmas cheer, though, online shopping in Europe still has a ways to go. Despite its higher growth rates, the Old World will trail the U.S. in e-commerce usage for years to come. European e-tailing remains heavily skewed to just a few product categories: Electronics, media, travel, and apparel will account for nearly 75% of holiday sales, Forrester says. Until online shopping catches on across Europe and delves deeper into the retail sector, Roland Honekamp's dream of a Continental pet supplies empire could remain just that.

By Andy Reinhardt, with Carol Matlack in Paris and Jack Ewing in Frankfurt

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