European Companies Still Reluctant to Buy Online, Says IDC

Fewer than half of mid-sized and large European companies have purchased goods and services over the Internet, and the growth rate seems to be creeping at a snail's pace, judging by the results of a recent survey from research firm IDC.

In a survey of over 500 procurement managers from companies across Europe with 100 or more employees, the Framingham, Mass.-based firm discovered that only 38 percent of respondents had used the Internet as a purchasing vehicle in either the supply chain or for IT services and supplies. What's more, of those not yet purchasing via the Internet, only 10 percent expect to start doing so this year, says IDC.

Purchasing over the Internet has natural benefits, according to those companies that have focused supply chain efforts on e-procurement. The main bonus cited by buyers was speed. As with e-commerce, companies found that Internet purchasing yielded faster fulfilment and delivery.

Many buyers using the Internet also said that by purchasing online, they were able to cut administrative costs and find lower prices from suppliers.

But detractors had their own reasons for not buying online, says IDC. While one of the main inhibitors was a basic lack of available suppliers, several of the buyers questioned said they were simply not ready for e-commerce. "It may seem surprising in 2001 that there are companies that are still not ready to buy online because they do not allow the corporate buyers to access the Internet," says Rogier Mol, research analyst for IDC's eMarketplaces.

Online purchasing preparedness is a sticky issue, says Mol. Some buyers "require a level of backend integration from the purchasing function that they have not yet identified," he notes.

IDC surveyed firms in France, Germany, Italy, the Netherlands, Sweden, and the U.K. to find out how European companies use the Internet in e-commerce from a purchasing, not a sales, perspective.

In the process, the firm discovered that the adoption of Internet purchasing is generally following regional and industry trends of e-business maturity. For instance, Sweden was in the lead while French companies were most reluctant to buy online, and financial organizations, public sectors and manufacturing were the fastest adopters among verticals.

Will everyone eventually buy in to online purchasing at a B2B level? Survey says: no. Of those companies not actively purchasing online now, fifteen percent said they never expect to purchase their goods and services online.