Shift to Single Currency to Drive E-Commerce in Europe

The implementation of the single European currency, the euro, will boost the uptake of electronic commerce in Europe, according to new research from IT industry analysis firm Gartner Group Inc.

Starting from January 1999, 11 of the 13 European Union countries will begin to phase in the euro.

"The euro is a driver for electronic commerce," said Nick Jones, research director at Gartner Group Europe in London. "It's going to increase e-commerce in much of Europe."

Business-to-business commerce will grow the most, but consumer e-commerce will also be boosted by the advent of the single currency, Jones said.

A recent Gartner Group report predicts an increase in the number of cross-border, business-to-business e-commerce transactions in Europe of between 60 percent and 100 percent by 2001. In the business-to-consumer market, the increase will be more modest, with the market research company putting the rise at between 25 percent and 50 percent.

Price transparency and the elimination of the risk and expense of currency exchange are the two main reasons for the expected increase in e-commerce activity in Europe, according to the report.

When goods are prices in euros, businesses and consumers will be able to easily compare the price of items across borders, without having to calculate exchange rates. Also, without currency fluctuations or commissions, buying across borders will actually be cheaper, Gartner Group said.

While these two factors are expected to boost all types of cross-border commerce, the Internet will make international price comparison and shopping easier still, Jones said. By being able to sign on to commercial Web sites instead of having to travel to compare prices, consumers and businesses are going to be more inclined to purchase products from other countries, he said.

Prices for many commodities will fall throughout Europe, predicted Jones, because of e-commerce and alternative distribution channels. As consumers in more expensive countries purchase books, CDs and other items from Web sites based in less expensive countries, many retailers will have to lower their prices, Jones said.

Gartner Group has advised its clients to implement and promote euro pricing on commercial Web sites from Jan. 1, 1999.

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