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U.S. e-stores lead in profits

European Internet storefronts generate far less revenue than e-stores in the United States, according to a new report from Datamonitor.

2 min read
European Internet storefronts generate far less revenue than e-stores in the United States, according to a new report from strategic analyst firm Datamonitor.

The report cites greater sophistication among U.S. retailers and cheaper, faster Internet connections in the United States compared to Europe.

Monthly revenues for online retailers in Europe averaged $11,000 while U.S. Web merchants sold $50,000 monthly, according to a Datamonitor survey conducted in May.

"Although the concept of e-commerce is rapidly becoming as popular in Europe as in the U.S., U.S. retailers are still far more aware of how best to exploit its full potential," the firm said in a statement.

Datamonitor's survey, conducted in conjunction with ShopsOnTheNet found that U.S. consumers spend more per purchase than Europeans, reflecting the greater maturity of the U.S. market. ShopsOnTheNet is an online shopping index that promotes, develops, and reviews European e-commerce sites

Almost a third of Web storefronts on both continents generate revenues from sources other than sales, with advertising being the most common, the survey found. Subscriptions and other content sales were additional revenue producers.

"Although this additional revenue stream for online retailers is still insignificant in comparison to overall revenues, it highlights their futuristic and innovative view of the e-commerce market," Datamonitor analyst Caroline Magnusson said in a statement.

Large e-commerce sites are more likely to generate nonsales revenues because they have better-defined e-commerce strategies. The survey found that 60 percent of big storefronts generated such revenues, compared to 28 percent of small firms and 18 percent of midsized Web stores.

The survey also cites differences in order-taking capabilities and online payments as a possible reason for the lag between U.S. and European online retailers.

In a report last month, Jupiter Communications highlighted Germany as the most promising European market for Internet commerce, citing a strong economy and consumers who spend on leisure goods and services.

Jupiter predicted that in 2002 Germany will outdistance France and the United Kingdom, based on e-commerce revenue in air travel, books, music, and software.

Deregulation of Germany's telecommunications industry could boost e-commerce there by driving down consumers' cost of getting online, Jupiter suggested.

Nonetheless, a German retail trade group said last month that Internet commerce isn't a serious competitor to traditional in-store shopping, citing security concerns. The group said using credit cards over the Net is risky and would remain so into the "distant future."

An earlier study this month by research group Market Tracking International noted that in Britain some 2.2 million households now have Internet access, with the figure projected to reach 34 percent by 2002, according to Reuters.

Books and music remain the most popular commodities online, and some experts think next year's arrival of a single currency in Europe, called the Euro, will spur Net retailing.