Origin: NewsFactor Network (E-Commerce Minute)
Date: 16-08-2002

Report: Global Internet Growth Slowing

Worldwide Internet use grew slowly in the second quarter, with 553 million people now connected to the Web from their homes, according to a Global Internet Trends report from Nielsen//NetRatings. That figure represents a 4 percent growth rate, down from 7 percent growth in the first quarter of this year.
According to the report, the United States continues to dominate the Internet population with 166 million users, or 30 percent of the total, followed by Europe with 24 percent, Asia-Pacific with 14 percent and Latin America with 3 percent. Germany, with 32 million users, the United Kingdom, with 29 million, and Italy, with 22 million, are among the largest non-U.S. markets.

"The vast majority of the world's Internet audience is still centered in the major Internet markets," said NetRatings director and senior analyst Lisa Strand. "Combined, these countries account for almost half of the total Internet audience worldwide."

Market Saturation?

For that reason, Strand told the E-Commerce Times, slowing growth rates make sense. "The growth does slow down when you reach a point where most of a population is already online," she said, citing the United States as an example. "We're seeing much faster growth in countries that have only begun to come onto the Internet."

Meanwhile, e-commerce appears to be gaining strength, with more adult Web users around the world browsing or buying online. For instance, surfers in Sweden were 4 percent more likely to buy online in the second quarter of 2002 than they were in the year's first quarter.

Speed Freaks

The report also found that the rate of broadband Internet adoption in the United States is slowing, likely as a direct result of the economic slump and a lack of availability. Strand noted that nearly 10 percent of active broadband users in the United States live in and around New York.

Worldwide, Hong Kong residents are embracing broadband at a rate far higher than people who live anywhere else. About two-thirds of all Hong Kong Web users have high-speed connections, compared with just 17 percent in the United States.

"In every other country, including the U.S., the majority of surfers use a 56k or slower modem to access the Internet," Strand said. She noted that the Hong Kong figures show "a well-developed high-speed infrastructure and the consumer desire to attain information at faster rates."

Just Surfing

But those higher connection speeds have not substantially altered how Hong Kong residents use the Internet, though they are the most voracious consumers of Internet radio, with 36 percent accessing an online radio station in the last quarter.

And despite its fast connection speeds, Hong Kong has one of the lowest rates for purchasing online, on a level with such countries as Brazil, Italy and Spain.

That may be troubling news to the host of e-commerce companies, many based in the United States, that have targeted Hong Kong for expansion. For example, several travel companies, including Priceline.com, have launched partnership ventures on the island.

Nature of the Place

However, Strand noted that Hong Kong's dense, urban nature may help explain why e-commerce is slower to catch on there.

"For someone who lives in an urban setting like that, it's much more convenient to make a purchase at the corner store than for someone who lives in rural or even suburban America," she said. "There might be an unintended cultural bias, in a way, against e-commerce. A lot of the differences in adoption we see have more to do with local environments and cultures."

For instance, Strand added, the low e-commerce adoption rate in Brazil may be attributable to shipping problems. Many Latin American countries suffer from a lack of consumer confidence in the mail system.

Back at the Ranch

Meanwhile, NetRatings said in a separate report that traffic to home and real estate sites has been peaking of late as mortgage rates continue to drop. Century21.com saw a 25 percent increase in traffic between the first and second quarters of this year, while Homestore.com saw a 12 percent gain.

Retail sites also saw gains, driven largely by promotions and back-to-school shopping. OldNavy.com was up 56 percent, with 35 percent of all visitors registering for a chance to win US$10,000. A similar sweepstakes at CompUSA.com helped that site see a 43 percent jump in traffic.