The UK may not have the largest economy in Europe, but retail e-commerce in the UK has hit its full stride.

"UK online buyers outspend their European and even American counterparts on an annual per capita basis," says Jeffrey Grau, eMarketer senior analyst and author of the new report, Europe Retail E-Commerce: Spotlight on the UK, Germany and France. "eMarketer projects that the average online spend on all products and services, including travel and event tickets, will be $2,171 in the UK in 2006, compared with $1,831 in the US."

Internet usage and broadband adoption are basic technology building blocks that support an e-commerce economy. As of last year, Germany had the largest base of Internet users (37 million) and broadband households (nine million) in Europe.

"But the UK is the most mature market," says Mr. Grau, "by virtue of having the highest percentage of Internet users, at 47%, and broadband households, at 35%."

Meanwhile, Spain and France are the fastest-growing Internet user populations, and Germany and Italy lead in broadband uptake.

"These five leading economies are not the only e-commerce markets in Europe, however," says Mr. Grau. "The Netherlands, Switzerland, Sweden and Norway have active online consumers. And in the next decade Poland and other Eastern European countries may become serious online retail marketplaces in their own right."

In 2006, according to eMarketer estimates, Web retailers in Western Europe will sell $97 billion worth of products and services (including online travel, event tickets and digital downloads).

"To put this in perspective," says Mr. Grau, "similar e-commerce sales in the US will reach $186 billion in 2006, or nearly twice the value of European online sales."

The market is currently growing at a 37% rate, but will slow down to half that pace by the end of the decade. By comparison, eMarketer estimates the US retail e-commerce market will experience growth rates in the 15%-25% range over the next four years.

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