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Europe's B2B Benefit

(originally published by Booz & Company)

By every conceivable measure — Internet access and use, spending on the Web, startup rates, number of incubators, venture capital provision — the U.S. is as far ahead of Europe in e-commerce as the Web is of the printing press. Yet, at a March debate in London to launch, the Oracle Corporation's online marketplace for European e-entrepreneurs, two-thirds of a media- and industry-dominated audience backed the provocative notion: "This house believes that U.K./European dot-coms will resist U.S. dot-com colonization." What accounts for their confidence? The fact that America's early dominance in consumer e-commerce may not translate into business-to-business (B2B) supremacy.

A different and distinct e-ecology has been quietly taking shape in the Old World. For a start, while in the U.S., dot-coms got a huge head start over bricks-and-mortar rivals, in Europe there is less of a gap between startups and followers. In addition, there are signs that Europeans may be more loyal to established companies and brands — and consequently less open to new ones — than Americans. All this makes many observers believe that large European corporations are set to take a bigger share of the B2B landgrab, especially since some of the wind has gone out of the IPO markets for startups.

What's more, Europe's comfort with diversity may be exactly what's needed to succeed in the B2B marketplace. Selling industrial supplies to small firms across Europe's highly divergent cultures is quite a different verre de vin from selling global products like music CDs and software to consumers. And while U.S. B2B startups, busy fighting rivals for leadership in the U.S. market space, have yet to figure out how to adapt their offerings to 15 different European markets, European companies are obliged to combine technological scale with local scope from the start. It's a necessity that will stand them in good stead as they extend their reach to the U.S. — a scale-up, certainly, but not a difference in kind. as a future market leader? Don't rule it out.

Simon Caulkin,
Simon Caulkin writes a weekly management column for The Observer in London. He was named the U.K.'s 1997 Industrial Journalist of the Year by the Industrial Society.
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