Western Europe Pulls Ahead of United States

It happened. The number of people using the Internet in Western Europe exceeds the U.S. population of Internet users as of the end of 2001, according to IDC's recent Internet Commerce Market Model version 7.3 (see Figure 1).

Figure 1 - Internet Users and eCommerce Revenue, 2001

In addition to posting strong Internet user numbers, Western Europe also moved ahead of Japan to become the second largest source of ecommerce revenue (including both the business-to-consumer [B2C] and business-to- business [B2B] categories). Although Western Europe remains a distant second to the United States in ecommerce revenue in 2001, it will narrow the gap by 2005.

The whopping 86% compound annual growth rate (CAGR) of Western Europe's ecommerce revenue between 2000 and 2005 represents the synergies of a large population of Internet users and the advent of the euro currency.

The euro's arrival means individuals and businesses in participating European countries will no longer have to be concerned with currency conversion. The combination of the euro and the Internet should make the process of buying goods online almost as transparent as it is within the United States.

The passing of the torch to Western Europe as the region with the most Internet users symbolizes the increasing pace of Internet adoption throughout the world. The CAGR of Internet users worldwide between 2000 and 2005 will be 19%, compared with a mere 11% in the United States. By 2005, IDC forecasts 941.8 million Internet users worldwide, up from 497.7 million in 2001.

While Western Europe's population of Internet users will experience a 16% CAGR over this five-year period, one of the fastest-growing regions is Asia/Pacific (excluding Japan), which will post a vigorous 29% CAGR in the number of Internet users.

In fact, by the end of 2005, Asia/Pacific (excluding Japan) will surpass the United States as the second most populous region of Internet users and challenge Western Europe for the lead.

Worldwide, the 19% CAGR of Internet users pales in comparison to the 67% CAGR of spending via the Internet between 2000 and 2005, when ecommerce revenue (including B2B and B2C) will total $4.6 trillion (that's a T).

Despite the tribulations of the economy in 2001 in many parts of the globe, ecommerce revenue grew by 73.4%, from $354.9 billion in 2000 to $615.3 billion. IDC's definition of ecommerce includes the value of transactions that are committed over the Internet, but for which payment may be made by other means.

Clearly, the Internet is an economic force that cannot be derailed by economic dips in the road.

In 2002, IDC forecasts ecommerce revenue will break the $1 trillion barrier. Happy New Year!

--Molly Upton