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E-biz hopes rise in Europe
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July 26, 1999: 11:53 a.m. ET
Freeserve counts on coming boom in e-commerce, where Europe trails the U.S.
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LONDON (CNNfn) - Britain's first free Web access provider, Freeserve, is inspiring hopes that e-commerce is set to take off in Europe, especially in the important business-to-business sector.
Criticism of Freeserve has centered on the potential profitability of its free Web access offering, but fans say it is e-commerce that will decide the company's ultimate success.
"E-commerce revenues are key," said Chris Bell, manager of Framlington's Net Net investment fund. His fund applied for shares in the Freeserve flotation.
"In two years Freeserve wants half its hits to come from people who don't use it for Internet access," Bell said, highlighting Freeserve's goal to become a Web portal, rather than only an access provider.
Freeserve shares rocketed to a near-45 percent premium Monday, as Europe's first major Internet stock offering began its first day of trade on the London Stock Exchange and the Nasdaq.
Web surfers will come to check out online auctions, chat and other features, but it's the business-to-business side of e-commerce that has analysts smiling.
Whatever revenue Freeserve may receive from consumer-oriented sources, Framlington's Bell predicted "80 percent of e-commerce revenues in five years time" will come from business-to-business transactions.
E-commerce in Europe is still "embryonic," added John Mallinson, managing director of consultant Yankee Group Europe. He pointed out that European corporations are still well behind their U.S. counterparts when it comes to using the Web for business.
Mallinson calculated big corporate users in Europe "are six months to a year behind the United States" and Europe as a whole is "two, three years" behind in terms of e-commerce advances.
Freeserve is banking on Europe catching up fast. In its listing prospectus, Freeserve quoted figures from market research firm IDC that project U.K. Internet business-to-consumer commerce revenues will grow to $10.8 billion in 2002 from $502 million in 1998.
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