1. EUROPEAN DIGITAL DIVIDE: E-COMMERCE MARKETS IN EUROPE – OPPORTUNITIES AND PROSPECTS November 2011

2. INTRODUCTION INTERNET RETAILING AND EUROPE: IN CONTEXT INTERNET RETAILING IN EUROPE – A PRODUCT VIEW THE IMPORTANCE OF CROSS-BORDER SALES BARRIERS TO CROSS-BORDER SALES THE FUTURE OF INTERNET RETAILING IN EUROPE

3. © Euromonitor InternationalPASSPORT 3RETAILING: INTERNET RETAILING Disclaimer Much of the information in this briefing is of a statistical nature and, while every attempt has been made to ensure accuracy and reliability, Euromonitor International cannot be held responsible for omissions or errors. Figures in tables and analyses are calculated from unrounded data and may not sum. Analyses found in the briefings may not totally reflect the companies’ opinions, reader discretion is advised. Internet shopping has been a disruptive force in retailing in developed markets for a number of years. With the enlargement of the EU, increasing internet speeds, consumers’ growing acceptance of buying over the web and retailers looking to internationalise, consumers have looked to shop across borders, exporting trends from Western Europe into Eastern Europe. In the future, the internet and cross-border sales are likely to mean that competition throughout retailing will increase. Scope INTRODUCTION Retailing Store-based RetailingNon-store Retailing Internet Retailing  All values expressed in this report are in US dollar terms, using a fixed exchange rate (2011).  2011 figures are based on part-year estimates.  All forecast data are expressed in constant terms; inflationary effects are discounted. Conversely, all historical data are expressed in current terms; inflationary effects are taken into account.

4. © Euromonitor InternationalPASSPORT 4RETAILING: INTERNET RETAILING DemandSupplyInfrastructure  This global briefing will look at the interaction between demand, infrastructure and supply in internet retailing, and the differences between Western and Eastern Europe.  Demand will be shown in terms of sales data for countries and regions, and will be provided and analysed both in terms of the internet retailing channel and at a product level.  The report does not claim to be comprehensive, but rather seeks to offer high-level insight into key changes and developments taking place in the retailing industry in 2011 and in the period to 2016. Objectives and parameters of global briefing INTRODUCTION

5. © Euromonitor InternationalPASSPORT 5RETAILING: INTERNET RETAILING Differences exist between Western and Eastern Europe  The different paths of development of internet retailing in Eastern and Western Europe have affected the share of sales accounted for by different products.  The presence of higher speed broadband has enabled consumers in Western Europe to download digital media products much more quickly than those in Eastern Europe, to the extent that slow paced internet connections in the latter region are limiting growth in downloadable content. As such, media products account for only 9% of internet retailing sales in Eastern Europe, compared to 16% in Western Europe. Apparel and food and drink struggle to make headway in Eastern Europe…  Other product areas that account for a much larger share of sales in 2011 in Western Europe than in Eastern Europe include apparel and food and drink, which require more developed supply chains than those for other non-grocery products. For apparel, the need to be able to take back unwanted goods is something that retailers have struggled with in many instances, while food and drink necessitates warehousing and/or delivery vans that have the ability to keep fresh, chilled and frozen food in a state that is acceptable to consumers. In both instances, the maturity of the channel in Western Europe has benefited the retailing of these products, while further development is required in Eastern Europe. …But some products do not sell over the internet in either region  Beauty and personal care, consumer healthcare and consumer appliances account for comparatively small shares of sales through the internet in both Eastern and Western Europe, representing no more than 6% of total internet retail sales in either region. Consumers’ shopping habits, which centre on wanting to gain advice, trial and/or see the physical products, in respect of each item inhibits their sale over the internet, and is likely to continue to do so in the medium term. Sales by product: Western versus Eastern Europe INTERNET RETAILING IN EUROPE: A PRODUCT VIEW