Ian Peacock of Netcraft looks at the development of Web based e-commerce in countries in the European Union (EU). By monitoring the extent of e-commerce in the EU and in other comparable regions, an idea of the position of the EU within the global e-commerce arena can be obtained. Then looking at the distribution of e-commerce within the EU, we can identify the key players within e-Europe. This article does not attempt to provide explanation for the results, an analysis of which is likely to involve economic, political and geographical factors.
The approach used in the survey is to take the number of secure servers in a region as indicative of the number of electronic commerce sites in that region. This approach to estimating the extent of e-commerce has been adopted by a number of other surveys [1] and [2].
Server counts are presented as 'raw counts' on a regional basis and also as the corresponding per-capita metric. Both measurements have been used as estimators of regional e-commerce revenues. The economic significance of these different measurements is left to the interpretation of the reader. We implicitly assume that a majority of e-commerce per region is conducted within that region. An estimation of e-commerce revenue flows on an inter-district basis would make an interesting future analysis.
The introductory section What is e-commerce? provides a background for the article, and is not intended as a full introduction to electronic commerce and the many issues that it raises.
For starters, e-commerce is a resonating buzzword. Its very visible presence and growth on the Web, and publicity from the likes of IBM [3] advertising campaigns, has perpetuated the term, if not the concept, to almost household status. But the concept of e-commerce (or e-business) has been with us for some time; a major industrial country processes some 5-10% of business transactions electronically - but this is a precious slice, accounting for 85-90% of the total monetary value of the transactions.
A broad definition of e-commerce is the use of telecommunications and computers to facilitate the trade of goods and services. From this definition, e-commerce emerged in the 1960s, with automated payment systems and telephone services. Since then, e-business such as telephone banking, credit card services, fax orders and EDI have been developed, culminating recently with the use of the Web and the Internet. The kind of e-commerce supported by the Web is often called e-tailing and embodies the sales media, such as virtual storefronts, virtual malls and browseable product catalogs, as well as the mechanisms for placing orders.
Electronic commerce has been growing, and the ease of accessibility of the Web as a medium and its interactive nature has led to a recent surge in the number of sites conducting electronic business (trading online). This is consumer marketing based e-commerce, and there are many benefits including:
Such is the confidence in the benefits of Web e-commerce that in early 1999 the projected e-commerce revenues for e-business was billions of dollars, and stocks of companies which could make a name in e-commerce rocketed. Dell [4] is often cited as an example, who reported orders of a million dollars per day as early as 1997.
However, Web e-commerce give rise to a number of issues, not limited to regulation, legislation and encryption. One issue receiving a lot of attention is the payment mechanism: how should consumers pay for their goods, and will the payment transaction be secure? This is a very wide subject that covers standards such as SET [5] and proprietary solutions, such as Microsoft's Merchant Server [6]. For the purpose of this article it is important to know that credit cards are the most popular method of payment, with credit card numbers being transferred over a secure Web connection.
Netscape developed the SSL protocol [7] to provide transport layer encryption. The most common application of SSL is https over TCP/IP - HTTP over an encrypted transport layer link. https is the secure 'tunnel' through which customers credit card details are transferred when shopping on the Web. Since credit payments account for the majority of online payments, it is natural to use counts of SSL servers (secure servers) per geographic region, as a metric for establishing the extent of e-commerce in that region.
Since the important search engines, such as AltaVista [8] do not currently index https sites, there are few ways to assess the extent of SSL usage. However my company Netcraft [9], a UK based consultancy, undertake a monthly SSL survey which examines the use of encrypted transactions on the Web through extensive automated exploration. Interested parties may subscribe to the survey [10], which is produced monthly. The figures used in this article are reproduced with the permission of Netcraft. The data plotted in the charts is a snapshot from Netcraft's August 1999 survey. Charts illustrating development over time cover the period August 1998 to August 1999.
The geographical mapping of server to country are made via the country field of the X509 certificate received from the server. Readers interested in examining these certificates for an arbitrary secure server may do so at Netcraft's site [11].
Figure 1 shows the raw number of SSL servers in five key regions, including the EU.
 Figure 1: Secure Servers Per Country, Regional Breakdown |
Figure 2 shows the same metrics per capita.
 Figure 2: Secure Servers Per Country Per Capita, Regional Breakdown |
As both figures show, the United States is well ahead of other regions. This probably isn't a surprise for most readers. Respected estimates of e-commerce revenues agree that the e-commerce revenue of the US is well ahead of most other countries. According to figure 1, we would expect the EU to have the second largest revenue from e-commerce. Figure 2 however, shows an interesting transform on the data of figure 1, and that e-commerce revenue spread over the population promotes Australia and New Zealand to profit second best from e-commerce, pushing the EU into third place.
An inspection of both charts shows that all regions apart from the EU improve their position relative to the US under the per-capita measurement. We can see that roughly, the EU fares the same against the US regardless of measurement type.
The growth in e-commerce in these regions over the interval August 1998 to August 1999 is shown in Figures 3 and 4 (the per-capita version of figure 3).
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| Figure 3 & Figure 4: Growth in e-commerce over selected regions |
Although both charts will have the same shape, both versions have been supplied to illustrate the different rankings that occur under the different measurements. The change in the position of Australia and New Zealand is markedly illustrated. Note that the relative positions of the different countries remains the same over the 12 months of measurement, and that there is virtually no observable crossover (one region overtaking another). It would be interesting to monitor the gap between these different regions and how it is changing over time. The dip seen over January to February does not likely reflect a dip in global e-commerce. This is probably related to more limited internet connectivity at the time of the February survey.
On the basis of the charts, it appears the the top three growth rates have been experienced by the US, Australia and New Zealand, and the EU.
Figure 5 shows a breakdown of number of secure servers per EU member country.
 Figure 5: Secure Servers Per EU Country |
Figure 6 is the per capita counterpart.
Figure 6: Secure Servers Per 1M population per EU Country |
A glance at Figure 5 may lead us to believe that the UK is the US e-commerce equivalent of the UK. However, it does not remain in position in the per-capita measurement shown in Figure 6 (which the US does above). The two charts present very different views - especially noticeable is the rise of Luxembourg at last position in Figure 5 and at the top in Figure 6. The gap between the top three countries of Figure 5, the UK, Germany and France is lengthened in Figure 6 from 0 to 2. Only the Netherlands, Greece and Portugal appear to have (roughly) similar positions in both charts. The trend of Figure 5 showing the West-most EU countries at the top is also changed in Figure 6.
Note that the ratios of the bars in Figure 6 are generally smaller than in Figure 5, i.e. that the per-capita measurement appears to equalise the differences between countries somewhat. The large gaps of Figure 5 ([UK,DE], [FR], [IT,ES,SE] etc) appear less severe in Figure 6. This is also noticeable in Figure 8, where countries are much less bunched together than Figure 7.
Figure 7 and 8 show the growth of e-commerce in each EU member country.
 Figure 7: Growth in e-commerce per EU country |
Figure 8: Growth in e-commerce per 1M population per EU country |
Notice that all EU countries are experiencing growth in e-commerce, the rates of which are changing. From Figure 7 it can be seen that the gap between the UK and Germany is decreasing. Figure 7 also shows that these countries are experiencing a growth in secure servers in excess of the EU average. A number of crossovers can be seen in Figure 8, where the extent of e-commerce in some countries has overtaken others (locating the countries is left as an exercise for the non-colourblind reader).
The EU is a relatively well-developed global hub for e-commerce. This is illustrated by its high ranking (second place after the US) for raw server counts and dropping down to third place (after Australia and New Zealand) for the per-capita measurement. The rate of growth of e-commerce within the EU is steady (as can be seen from Figure 3 and Figure 4), though behind the US and Australia/New Zealand.
All EU member countries have some e-commerce presence, and these are also growing individually. As can be seen from Figure 8, Luxembourg has one of the highest growth rates. In terms of raw servers, the UK comes top, closely followed by Germany, and the gap between the two countries is slowly decreasing. France has significantly less servers, but comes in at third place. The per-capita measures for EU countries paints an entirely different picture, with Luxembourg being elevated from last place (with the lowest number of SSL servers) to top place. Many other countries also switch places. In Figure 6, the UK drops to fourth place, while Germany drops to seventh place.
Watching the development of e-commerce, both globally and within Europe is a fascinating task that observes this relatively new and significant phase in the evolution of the World Wide Web. E-commerce now affects the personal lives of many, in addition to changing the way that many businesses operate. These changes have also given rise to entirely business areas. Observing the future development of e-commerce looks set to be very exciting, as factors such as legislation, new protocols and telecoms development take effect. E-commerce is an increasingly important concept and its development is significant from many angles, be it personal, technological or commercial.
Ian Peacock works for Netcraft:
a networking consultancy based in Bath, England. It is well known worldwide for its
Web Server Survey, which is widely considered a primary empirical metric for the
number of web sites and the relative popularity of web server software on the internet.
Clients include IBM, Hewlett Packard, Sun Microsystems, and Microsoft. |
For citation purposes:
Ian Peacock, "E-Commerce in Europe",
Exploit Interactive, issue 3, October 1999
URL: <http://www.exploit-lib.org/issue3/ecommerce/>
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Last Updated: 25 October 1999 |