E-Commerce According to a Wall Street Journal

E-Commerce

According to a Wall Street Journal article by David Pringle, "One would think that, since America went first into the void, that Europe would have the advantage of seeing their mistakes and avoiding them." However, the article dispels this myth, stating that e-commerce has turned out to be a lot more difficult than the major bricks and mortar retail establishment's had originally thought.

According to Pringle, traditional European businesses have enjoyed several advantages over American companies for conducting online business. The first is that the European market is less savvy and sophisticated than the American audience. American online consumers represented a large and demanding audience that required the latest in convenience options and state-of -- the art technology. At the same time, brick-and-mortar companies in the United States had to deal with far more competition from newer Internet startups than did brick-and-mortar companies in Europe. Because of these factors, brick-and-mortar companies in Europe have been able to maintain a leading position in their local markets.

Pringle also believes that Europeans have enjoyed advantages by learning from American failures. They develop more slowly, analyze problems and then implement and expand in a way that more closely mirrors the needs of their prospective customers. However, Pringle acknowledges that this second-mover advantage is only temporary. The reason is that ultimate success relies on the ability to compete on a global basis. The author cast doubts on whether the European approach offers any sustainable competitive advantage in international markets.

Infrastructure is also another obstacle for electronic commerce in Europe. Competition in most European Union countries' wireline markets, particularly Spain and Italy, remains limited because the telecommunications incumbents (which have only recently been privatized) still control more than eighty-five percent of their respective national markets. They remain the dominant providers of telecommunications services, including broadband. As a result, there has been slower than expected Internet expansion. Internet penetration rates average only forty percent in the European Union, and much less in Spain and Italy.

Also, the United States economy has many attributes that are more conducive to electronic commerce that are not present in Europe. These include:

huge market of several millions of Internet users.

All the users share the same language, the same laws, and there are no political or economical barriers to reach them.