Europe’s online business and consumer trade will grow at triple-digit rates over the next five years, reaching [EURO]1.6 trillion by 2004. Attaining this growth will not be easy, however, and only Northern Europe will significantly close the gap with the US. A new Report from Forrester Research B.V. (Nasdaq: FORR) outlines how eCommerce networks can help Europe, the world’s largest potential online trading block, overcome the cultural and social resistance to doing business online.

Increased consumer demand and rich offerings will quickly usher Northern Europe into eCommerce hypergrowth. “This year, 16 million European consumers started using the Web, doubling Internet home penetration to nearly 13% of the population,” explained Dr. Therese Torris, director of European Internet Commerce Research at Forrester Research B.V. “Not suprisingly, 30% of new Net users can be attributed to free access and its publicity.” As these new users meet with improved eCommerce offerings fostered by the investment of billions of euros, Forrester projects that online trade will surge to [EURO]36 billion this year.

Forrester believes that Europe will sustain eCommerce growth above 100% per year until 2003, reaching 6.3% of total trade by 2004. This growth will progressively shrink the eCommerce gap with the US, bringing Europe to more than half of the US eCommerce market and cutting the current 30-month lag in half. However, only Northern Europe will surpass 6% of total sales purchased online. Southern Europe will continue to lag behind, threatening a North-South imbalance, which will replace the current US-Europe divide.

In the next five years, Europe’s online consumers will quickly turn from surfing to shopping, with sales of retail goods and services growing 140% annually. Forrester believes that one of the factors fueling this growth will be better online stores, which will inspire 100 million to shop — 17 times the current number. Despite these gains in consumer eCommerce, business-to-business trade will outgrow consumer trade by a wide margin, accounting for [EURO]1.3 trillion of Europe’s total online trade in 2004.

“To realize its potential, Europe must overcome a number of real and perceived hurdles to sustained growth,” added Torris. “Companies need to ignore yesterday’s clichis and hype and focus on pragmatic issues like hiring personnel with the right skills and building the necessary infrastructure for eCommerce to succeed.”

Forrester believes that success will come from the formation of eCommerce networks — groups of independent business units that transact on the Net to deliver seamless eCommerce in real time. These networks will bring buyers and sellers together across industries and geographies that do not easily link offline. Firms should prepare to participate in three types of networks: 1) value chain networks that integrate buyers and sellers in online supply chains; 2) environment support networks that can help late-moving companies take advantage of the Net’s opportunities; and 3) global networks that help European companies compete worldwide.

For the Report “Europe: The Sleeping Giant Awakens,” Forrester spoke with 70 online vendors, merchants, and industry experts. Forrester also used a number of secondary sources, including reports from the OECD, The European Commission, and The International Telecommunication Union.