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According to Forrester Research, on-line trade in Europe will amount to EUR2.2 trillion by 2006 as industrial companies increasingly buy and sell products and services over the Internet.
Forrester said that over 20 percent of sales on-line will be transacted in Europe's three biggest markets -- the UK, Germany and France -- which will compel countries with trading partnerships with these nations, such as Ireland, to invest heavily in e-business.
"In five years' time, the combined trade volumes in the UK, Germany and France will represent a whopping 64 percent of the European Union's total on-line trade," said David Metcalfe, an analyst with Forrester, in a statement. "The rapid growth and high-volume of Net-based trade in these countries will pressure proximate countries with deep-trading relations, like Belgium, Austria and Ireland, to accelerate their migration to the Net."
Forrester estimated that on-line trade in Ireland will increase from 0.6 percent of total business trade in 2001 to 4.6 percent by 2004 and within five years will amount to 14 percent.
"To date, Ireland has been slightly behind the EU average of 0.9 percent and although it will improve, it will continue to lag leading on-line trading nations such as Sweden, which should have around a third of its trade being transacted over the Internet by 2006," Metcalfe told ElectricNews.Net.
He added that Ireland will remain in the second-tier of European e-business nations in the coming years because of the size of companies based here, and the relatively few businesses in key industrial areas such as chemicals and plastics that have Irish facilities.
According to Forrester, the value of on-line trade taking place in the EU will increase from EUR77 billion in 2001, or one percent of total business trade, to EUR2.2 trillion in five years' time, or 22 percent of total business trade.
This increase, said Metcalfe, will be due to businesses in areas such as electrical equipment, chemicals and logistics conducting more of their trade over the Internet.
"Electrical equipment, chemicals and logistics will ramp up in 2003, and 11.7 percent of trade in electrical equipment will be conducted on-line, which is up from a mere 4.3 percent today," remarked Metcalfe. "In chemicals and logistics, more than 7 percent of orders will be routed over the Net."
Forrester also predicted that Internet trade in industrial sectors, such as industrial machinery, vehicle manufacturing, metals, energy, and utilities, will double from 2003 to 2004, as firms transform sales processes and adapt to new trends like strategic sourcing. Growth in Europe's industrial sectors will account for EUR945 billion in 2004, representing 9.9 percent of total business trade.
Such rapid growth will be mainly concentrated in Scandinavia and in the UK, Germany and France, said Forrester.
For instance, Sweden and Denmark, who invest more than 150 percent of the EUR588 average annual European IT spend per capita, will account for 10 percent of total on-line trade in Europe by 2005.
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