London, August 21, 2002 . . . A new report by Forrester Research (Nasdaq: FORR) projects that the EU's modest €77 billion of online trade in 2001 -- representing less than 1 percent of total business trade -- will skyrocket to a massive €2.2 trillion in 2006 or 22 percent of total business trade.

"Electrical equipment, chemicals, and logistics will ramp up in 2003, and 11.7 percent of trade in electrical equipment will be conducted online -- up from a mere 4.3 percent today, said Forrester Analyst David Metcalfe. "In chemicals and logistics, more than 7 percent of orders will be routed over the Net. Net 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 a massive €945 billion in 2004, representing 9.9 percent of total business trade. Laggard sectors like food, textiles, and household goods will move online in 2005, and the online trade in the region's huge €1.3 trillion food and beverages sector will triple between 2004 and 2006."

While European industries are poised for rapid growth in online trade, growth rates and timing will vary across countries, Forrester asserts. Scandinavia will charge ahead, powered by high IT spend; Europe's "big three" of France, Germany, and the UK will bring volume online; while Southern Europe will fail to take off.

Sweden and Denmark invest more than 150 percent of the €588 average annual European IT spend per capita. In these geographies, 17 percent of business will be conducted over the Net in 2004 and the two economies will account for 10 percent of total online trade in Europe -- more than double their share of total B2B trade.

"In 2006, Europe's three major markets -- the UK, Germany, and France -- will transact at least 23 percent of sales online, and their combined trade volumes will represent a whopping 64 percent of the European Union's total online trade," Metcalfe added. "The rapid growth and high volume of Net-based trade in France, Germany, and the UK will pressure proximate countries with deep trading relationships -- like Belgium, Austria, and Ireland -- to accelerate their migration to the Net.

"Despite the size of the Italian and Spanish economies, their historically low level of IT investment -- 57 percent and 46 percent of the EU average, respectively -- will retard online trade growth. In 2003, for example, online trade in Italy will flounder at 2.2 percent -- 11 percent behind Sweden. Prospects for Greece and Portugal are even bleaker, and if current attitudes to IT spending persist, neither country will have more than 10 percent of B2B trade online by 2006."

For the report "The Future Of Europe's Online B2B Trade," Forrester analyzed growth drivers in 13 industries across 15 European countries. Based on this analysis, Forrester built an online business trade forecast -- for each industry and country -- that examines growth patterns, saturation levels, and takeover time. The forecast uses data on IT investment per capita to account for national variations in online trade. To estimate the maximum value of an industry's trade that will be transacted online, the forecast defines four structural assumptions: 1) product complexity; 2) product perishability; 3) industry concentration; and 4) the level of intra-industry trade. Finally, the forecast predicts industry growth using five behavioral assumptions: 1) technology risk tolerance; 2) executive commitment to eBusiness; 3) IT spend as a percentage of revenues; 4) data standards adoption; and 5) network hub capabilities.

Forrester Research identifies and analyzes emerging trends in technology and their impact on business. Forrester's WholeView™ Research, Strategic Services, and Events help Global 3,500 clients understand how technology change affects their customers, strategy, and technology investment. Established in 1983, Forrester is headquartered in Cambridge, Mass. For additional information, visit http://www.forrester.com/.