Study: high costs in European cross-border sales

Like their peers in the US, European online retailers are finding a mediocre revenue return on the high cost of websites.

          Like their peers in the US, European online retailers are finding a mediocre revenue return on the high cost of websites. The results are that most exclusively online retailers are ailing and that brick-and-mortar companies will claim more than 88% of Europe's online retail market, according to a research report.

          In a survey by Forrester Research of 19 dot-com companies and 11 traditional retailers, analysts found that European online companies try to stay competitive by attracting business from consumers in other European countries and by capturing and improving supplier relationships. Traditional retailers open commercial websites to serve existing customers and to get more and better suppliers, the report said.

          According to Forrester, many online retailers develop partnerships to reduce costs or to enter a new market. Establishing a new site in one country costs about $US22.8 million, and expanding into new countries can double that cost because of the added expenses of marketing, content and logistics, the study says.

          Of those surveyed, 73% say expanding into new countries had a negative impact on their profitability, but that they expect to start making a profit in the next couple of years. By then, however, the report suggests that all but approximately 100 European dot-coms will have shut down.

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