European e-tailers gaining on US rivals

The UK online retail market grew almost three-fold last year, but experts warned that British e-tailers are still losing shoppers to US websites.A survey by the Boston Consulting Group found that online retail spending in the UK grew by 280 per cent in 1999 to 976 million euro (£601 million). The consultant predicts that the total European market could reach 45 billion euro by 2002.

However, the report, which is based on surveys of 546 European online retailers, warned that unless retailers become more aggressive in creating more ecommerce initiatives, they will continue to lose home market share to more experienced US competitors.

The research revealed that US Internet companies represent 20 per cent of the European online retail market.

"US players have already been able to scoop up 20 per cent of the European market by coming in with large scale pan-European businesses. This approach contrasts with that of typical European incumbents who have focused on their national market only," said Patrick Forth, Boston Consulting's vice president.

While European online sales are growing at a rate of 200 per cent each year compared with 145 per cent in the US, online sales in Europe account for only 0.2 per cent of total revenue compared with 1.2 per cent in the US.

The report also found that the UK online market is dominated by computers, travel, books and food and wine, which make up 83 per cent of the market. US companies account for 41 per cent of total online sales in the UK, and eight out of the top 25 UK retail sites are US-owned.

Boston Consulting predicts that the UK is likely to become the most competitive online market in Europe as US retailers set up UK operations and more local startups launch.