French e-commerce struggles to catch up with Britain, Germany

French consumers may be keener than ever to shop online from the comfort of their own homes, but the French online retailing market still lags behind Britain and Germany, and the gap is likely to persist unless food retailers like Carrefour invest more in e-commerce and expand their delivery coverage, analysts say.

Internet sales in France have grown at double-digit percentage rates in the past few years, boosted by wider usage of the Internet and new online sellers, with the turnover expected to be up 25% this year at 25 billion euros ($36 billion) according to home shopping industry body Fevad.

But France has yet to catch up with its neighbours, with the German online retail market this year estimated to be worth 31.3 billion euros and Britain's to be worth over 37.9 billion pounds ($60.7 billion), said Forrester Research.

Using a narrower definition, Forrester sees French sales at around 17 billion euros this year and 19.6 billion in 2010, and reckons that a smaller percentage of French Internet users shop online, at around 56% compared with 74% in Britain and 65% in Germany.

France is seen as a less mature online market than Britain or Germany, partly because of the relatively slow transition over the past decade from its homegrown Minitel service — which is still available from France Telecom — to the World Wide Web.

Part of the problem is also that grocery chains like Carrefour and privately owned Auchan have yet to gain the kind of online traction seen at Britain's Tesco, which raked in online sales of 1.9 billion pounds for its fiscal year 2008.

"One big difference with the UK is there is effectively no e-commerce market in food (in France)," said Richard Perks, an analyst with market research firm Mintel.

He said French food retailers had never fully embraced home delivery because it was expensive to run, and also because France was a big country to cover.

One exception is Casino Guichard, which has found success with Cdiscount.com, but the site mostly sells consumer electronics and entertainment products.

There is a myriad of smaller Internet sites for specialist food products from the Basque country in the south to Lorraine in the north, using postal services and couriers for deliveries.

An improvement in home delivery coverage might bring in more online sales, according to Forrester Research analyst Patti Freeman Evans, who noted Casino and Auchan only delivered groceries in metropolitan areas such as Paris and Lyon.

Auchan is focussing on a combination of physical and online shopping, such as its "Drive" project, which allows shoppers to order online but asks them to pick the goods up in person.

"I think culturally, the French prefer to go to physical shops," said Isabel Cavill, an analyst with Planet Retail, who pointed out a French habit of wanting to touch fresh food in particular.