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European e-commerce lagging, needs push from governments

July 7, 1998
Web posted at: 10:05 AM EDT

by Kristi Essick

LONDON (IDG) -- European countries are significantly lagging the U.S. in the generation of revenue from Internet sales and businesses, and governments need to take urgent action to ramp up electronic commerce, according to a new report.

Unlike in the U.S., where 85 percent of total global Internet-based revenue was generated in 1997, European businesses do not have the government and industry backing needed to jump-start electronic commerce, according to a white paper recently published by the Interactive Media in Retail Group (IMRG).

As it stands now, the U.S. is acting as a large exporter of goods purchased over the Internet. But the promise of the Internet is that companies in any country can have a global presence and become exporters, said the report, which is entitled "Electronic Commerce in Europe."

European companies simply aren't moving their businesses to the Web and users don't seem as interested as their North American counterparts in buying goods online, according to the white paper.

Why is this the case? For starters, there is a much smaller customer base of Internet users in Europe, with the high costs of new hardware and telecommunications further hindering the use of the Internet, according to IMRG. Other issues, such as fears over security and problems arising from different languages and currencies, also continue to be stumbling blocks.

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These road blocks are well established, argues the IMRG, and now government and business will have to take action to change the situation, if Europe is ever to catch up in the e-commerce race.

In order for e-commerce to work effectively in Europe, businesses need to cooperate with banks, telecommunication and Internet carriers, hardware and software vendors, and the government, IMRG said. The most important point for businesses to remember is that they must offer a reason to shop online; it has to be easier, cheaper or better than shopping in person.

In addition, smaller companies may be more suited to e-commerce, since the Web works well for selling niche products and tapping into a large number of small markets worldwide, IMRG said. Larger companies can have a hard time representing all of their products on the Internet, without spending a large amount of money to build a complicated site, the research firm said.

Half of all Web-based businesses with 10 or fewer employees were profitable in 1997, compared with only 25 percent of those with more than 50 employees, according to the report.

More information on IMRG's white paper, which outlines a plan for government, industry, banks, technology vendors and Internet service providers aimed at getting European businesses up to speed in the electronic marketplace, can be found at

Kristi Essick writes for the IDG News Service in London.

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