Euro Won't Affect U.S. Web Merchants Any Time Soon

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Introduction of the euro this month will both ease and complicate how U.S. Web retailers do business in Europe, experts on both sides of the Atlantic agreed.


A single currency will ease conversion into dollars, give goods a universal value and eventually increase the Internet customer base. "Eventually" is important, the experts said, because European direct marketers are having a hard time exploiting the Internet's potential, largely because the potential isn't that great yet.


"Europe is off to late start," Emily Nagel Green, managing director at Forrester Research in the Netherlands, told a recent meeting of the Federation of European Direct Marketing in Brussels. "According to our analysis of e-commerce, online retail sales by 2001 could total $4 billion. BTB trade in 2001 will be around $56 billion."


Euro coins and notes won't go on sale before Jan. 1, 2002, and won't formally replace local currencies before July 1, 2002. The euro exchange rate can be used for traveler's check payments, credit card purchases and other noncash transactions.


The 11 so-called euro zone nations are Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain. So far, Britain, Denmark and Sweden aren't participating, and Greece didn't meet economic requirements for membership.


E-commerce in Europe is expected to develop differently than in the United States. While Europe's Internet penetration is currently 4 percent, Nagel Green said, it's expected to reach 13 percent in 2001, although it's already much higher in some smaller markets, particularly Scandinavia. Most Europeans access the Internet at work.


On the plus side, a London-based IBM executive said, is the euro and the Internet will take off together and online shoppers will be more ready to recognize the euro and be comfortable using it.


For the next three years, however, that advantage will have the negative side effect of triangulation -- products sold on the Web must be converted from dollars into euros and then into marks or francs, which isn't too different from the currency conversion in use now.


What worries U.S. merchants most, however, is a cultural factor -- how quickly will Europeans accept the euro during the three-year transition period when it can only be used in cashless transactions?


"What does a price tag of 57 euros mean to most online customers?" asked one British financial services executive. Less than the dollar, he added, which at least is familiar. And at that, he noted, Americans have a hard time selling goods in Europe denominated in dollars.


To the extent that consensus exists, experts said preparing for the euro won't hurt U.S. Web merchants in Europe but won't bring them any tangible benefits soon. But companies that don't implement the needed conversions and other preparations could face future problems.
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