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And The Web Race Is On In Europe


Sandrine Baudis considers herself a citizen of the world and regularly travels to India, Vietnam, and North Africa. Yet when it comes to shopping online, the 28-year-old French nurse sticks mostly to homegrown sites. Her first stop for CDs and books is FNAC.com, the Web site of the ubiquitous national store owned by PPR. Even her e-mail address is with La Poste, France's postal service. U.S. names like Amazon.com Inc. (AMZN) and MSN (MSFT) don't get a look-see. "They just seem less tuned in to my needs," she says, shaking her head.

French customers like Baudis are proving to be some of the toughest in Europe. Although U.S. e-tailers invaded the Continent early and are among the top online brands, their results vary widely. It's not for lack of spending. Gallic online shopping is set to grow 38% this year, to $9 billion, according to JupiterResearch (JUPM). It's just that French companies have the edge in charming their own compatriots.

Take discount retailer Cdiscount, created by three brothers in 1999 then bought by retailer Casino Group. It launched as an online CD store, but now hawks everything from washing machines to clothing. In 2004 it racked up sales of $275 million, vs. an estimated $100 million for Amazon.fr, which has faced pressure from strong rivals FNAC.com and France Telecom's (FTE) Alapage.com. Meanwhile, one glance at the poor selection on eBay.fr (EBAY), will tell you that the site is struggling to convince France of the merits of auctions.

It's a different story across the border in Germany. Stores are closed for most of the weekend, pushing shoppers to the Web. And unlike the French, Germans are big hagglers. "They love a bargain," says consumer markets analyst Hellen K. Omwando from Forrester Research Inc. (FORR) Ebay also got off to a fast start in Germany by buying up rival alando.de in 1999. It is now the most visited online marketplace in the country, according to Nielsen//NetRatings.

U.S. search engines and service providers have found more universal fame. One of the biggest success stories is Google Inc. (GOOG). By serving up documents in scores of languages, the site is now more popular in Europe than U.S. No. 1 portal Yahoo! Inc. (YHOO). Similarly, localized content has given Microsoft Corp.'s (MSFT) MSN deep market penetration, helping it to hold off strong players like Germany's T-Online, France's Wanadoo, and Italy's Tiscali.

But the mother lode for U.S. Internet brands in Europe remains Britain, where early adoption and cultural closeness have allowed stateside brands to make a lasting impression. Eight of the 10 most popular sites in Britain today are American, compared with just four in France. The Brits will fork out $366 per adult this year, double that of their French and German neighbors. And U.S. Net brands spend a third of their European advertising budget in Britain. It's different across the Channel -- but hasn't it always been?

By Rachel Tiplady in Paris


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