[July 4th, 1998]

See Also   Euro FAQ   The Euro and Your Web Store   Getting Europe Online   Intranet USA - Who Needs Europe?

There's no question that the Internet has brought a lot of benefits to us all, but it also has its downside too. There are the obvious things like Spam of course, but particularly annoying for me is the plethora of surveys and statistics pumped out every week. Many of these are of dubious value, based on insignificant sample sizes, poor data collection techniques or bad analytical methods.

And that's just the good ones. The rest tend to be based on the opinions of some industry luminary no-one's ever really heard of, or reflect the opinions of three or four people sitting round a pub table in a post-work drinking session.

However, when a press release arrives in my mailbox from a respected organisation such as Forrester Research with the doom-laden title of "The Internet: Europe Crawls While America Runs" I sit up and take notice. But before I explain why I think this is so important, let me briefly outline Forrester's findings.

The release summarises comparative data that was presented at a recent Forrester Research bash in London and has three key projections for the year 2001 that are of particular interest:

• Europe's online population will only grow to 13%, in comparison to the 40% figure being projected for America.

• The European e-commerce market will be $64 billion or 0.9% of GDP compared with $206 billion and 2.7% of GDP for the US.

• The average amount traded per Internet user will be $1,217 in Europe Vs $2,101 for the US.

Now, as an Internet consultant based in Europe, I'm sure you can understand my concern about these figures. But for the majority of readers who are based in the US, does the slow uptake of the Internet in Europe or anywhere else in the world really matter?

Yes. Definitely. And here's why.

If you're an American running a "mom and pop" Web store and shipping the vast majority of your product into the domestic market, you will probably regard the Internet as being nothing more than another sales channel. As a result, you will be uninterested and relatively unaffected by slow global Internet growth.

However, major organisations should be very concerned. For them, the Internet is not merely a sales channel but the means by which they can fundamentally re-structure their business to increase productivity and eliminate costs.

During the 80's and 90's companies have increasingly become global players, achieving economies of scale by selling near-identical goods and services world-wide. In order for e-commerce to deliver the improved efficiencies and cost savings that these organisations expect it needs to be global solution.

If e-commerce fails to take-off in the rest of the world, then we are effectively left with a North American e-commerce intranet – Intranet USA. This will force global businesses to support two different fulfilment models, one based on e-commerce for the USA and one based on the traditional, pre-Internet model for the rest of the world.

So rather than decreasing costs, the advent of e-commerce may in fact increase costs for some organisations and thus leave them vulnerable to attack from their competitors.

However, things are not all doom and gloom.

Fortunately, affected organisations are already beginning to take action and have formed the Alliance for the Internet in Europe. Led by 3Com, the aim of the group is twofold. Firstly, they intend to work with governments and institutions to remove the tax and tariff barriers that threaten to choke European e-commerce growth. And secondly, they aim to resolve the infrastructure problems that are delaying European Internet penetration.

And whilst Forrester's figures do paint a rather gloomy picture, it is worth bearing in mind that their findings differ from some of the actual experiences and projections being made by other organisations and individuals. For example, the Financial Times recently carried a quote from Dell's president of European, Middle East and African operations, Jan Gesmar-Larsen claiming that "Europe is about nine months behind the US and the gap is closing".

Do you agree with me? I'd love to hear your comments.