Dramatic Internet usage in Italy belies sluggish e-commerce

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ROME--Share prices of Italian Internet companies have risen dramatically in recent months and predictions for the future are bright, but so far e-commerce in Italy has little to brag about.

According to a study from Milan's Politecnico University, only 294,000 financial transactions took place on the Web in Italy during the second half of 1999, a 19% increase from the first half. In late 1999, only 14% of Italians who use the Internet made online purchases compared to about 70% in the U.S. and 44% in the U.K.

In spite of sluggish e-commerce sales, Internet usage in Italy grew a healthy 41% over the second half of last year, and predictions are for it to grow by nearly that rate in 2000.

But uniquely Italian problems will likely slow the growth of Internet sales, experts say.

"We're in the middle of an Internet boom," says Giacomo Fusina, director of polling firm Onetone and Doxa. "But it's not an Internet commerce boom."

Payment is one problem. Whereas 98% of worldwide Internet purchases are paid for by credit card, the low usage of plastic in Italy means that around 70% of purchases are paid for in cash upon delivery.

Italy's anemic postal service is another problem, adding about 25% to thecost of purchases and taking nearly 16 days to deliver products, compared to 2.2 days in the U.S. and 4.1 days in the U.K.

Additionally, the sites themselves are less streamlined: placing an orderonline in Italy takes an average of 13.2 minutes, compared to 4.4 minutes in the U.S. and 8.4 minutes in the U.K.

CHL, a Florence-based retailer of consumer electronics, and the country'sleading Internet retailer, posted online sales last year of $46 million, butChairman Stefano Bargagni was frustrated. "We opened for business in 1994, the same year as Amazon.com." He adds: "But we're in Italy!"

Other examples make a similar point: Fiat, Italy's largest company, says it sold only two cars online last year.

The university study showed that 1,253 Italian companies had set up online ventures by the end of 1999 -- a 48% increase over the last six months-- but most are niche companies that have focused on their general area, where they can control distribution. The largest sector online is devoted to gastronomy, covering about 15% of all Italian Internet commerce sites.

Advertising companies have so far had a limited involvement on the Web in Italy, but that's something that experts say is likely to change.

"There's not enough money or usage to make the Internet attractive in Italy," says Rome-based Internet consultant Gregorio Trivoli. "But that'ssomething that won't last long."

Copyright January 2000, Crain Communications Inc.

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