Study: Lack of Options Thwarts European E-Commerce

European e-commerce is being hampered by a combination of inflexible payment schemes, strict governmental mandates, and small-scale business models, according to a study released Wednesday by Forrester Research.

"Cultural differences matter, but payment issues, regulations and domestic market size are the dominant reasons why consumers don't buy online," said Forrester analyst Jed Kolko.

"The world over, convenience and price top the list of reasons people shop online," Kolko said, "but their importance wanes where payments, regulation and scale hold back shopping."

To overcome these obstacles, the report said retailers must take into account specific local barriers and consumer Internet experience when creating online initiatives.

As part of its study on "What's Stopping Shopping," Forrester surveyed 26,700 consumers in 13 European countries.

Check Please

Among its chief findings, the study said that Europeans have "wildly different" expectations about payment for goods both online and offline. As a result, consumers who are already using credit or debit cards to conduct transactions are "much more likely" to shop via the Web, said Forrester.

For instance, while shoppers in France often rely upon checks when buying products, shoppers in Germany, Switzerland and Austria want the option to pay by invoice. Of those surveyed, only UK consumers said that credit cards were among their top three payment preferences.

"To succeed, retailers selling online across Europe must offer a multitude of payment options," Forrester advised.

Too Many Laws

Forrester also found that there is a strong correlation between strict retail regulations and decreased online spending.

The research firm cited the "light regulatory hands" of the UK and Sweden as a legal framework conducive to Internet shopping. In contrast, heavy-handed laws regulating pricing promotions and discounts in southern Europe, as well as strict business-hour regulations in German-speaking countries, are "emblematic" of the over-regulation of retail trade, Forrester said.

"While retail is tightly regulated, the decision to shop online depends more on whether consumers find online or in-person shopping more enjoyable," said the report. "Where regulations are less onerous, low prices stand out as the reason why people shop online.

Domestic Growth

Another stumbling block for the expansion of European e-commerce is the lack of e-tailers that have aggressively moved into local online markets.

According to Forrester, consumers who have Internet access in large countries such as Germany, the UK and France are half as likely to make purchases from online marketers as shoppers in smaller countries. However, the study said e-tailers should view their domestic markets as prime candidates for e-commerce initiatives.

"Online retailers need scale, and larger countries have domestic markets sufficient to provide scale without having to face cross-border challenges," Forrester said.

At the same time, the report said that consumers also stand to benefit from ramped-up penetration efforts. With more products available for purchase online, competition would thrive, bringing lower prices and improved service, the firm said.