French corporates at vanguard of online loss-leaders

France is leading the way as corporates rush to get online, but many are failing to make any money.

This is according to a report by consultants CMG who said there has been an 80 per cent surge in companies launching Internet ventures over the past six months.

Surprisingly, the greatest growth has not been in Germany or the UK, but in France.

However, the report also claimed many French companies felt duty bound to emphasise the Internet offering with little thought to the quality of content or users accessing the service.

Olivier Beauvillain, analyst at Jupiter Communications, said: "In terms of quality of supply in the Web sites it is quite good because last year a lot of venture capitalists funded French start-ups and a lot of traditional retailers went online. But there is a difference between the level of maturity of the sites and the level of maturity of the consumers. That's why all the start-ups in France have to think on a pan-European level, if they just think nationally they will have trouble making money."

However Beauvillain claimed France was still lagging behind in terms of users spending online. He said: "Only eight per cent of the entire west European spend came from France, compared to 31 per cent from Germany and 30 per cent from the UK."

Meanwhile, the number of Internet users in France has soared by 112 per cent according to IDC. It claimed the number of users has climbed to 8.6 million in the first quarter of the year.

Ashim Pal, analyst at Meta Group, said: "The observations are reasonable and there are good reasons why France is ahead. It is a pretty wired country coming from a Minitel background and they have already won the confidence of consumers to buy online by inserting smartcard technology into credit cards for identification.

"But companies must ask themselves if they see ecommerce as a trivial plaything or a serious value-add to the business."