Britain catches up with online service

THE UNITED States may be where the big Internet action is taking place, but there is money to be made in the UK too. Dixons, the electrical goods chain, recently announced it has signed up 475,000 customers to its new "Freeserve" Internet access service just eight weeks after its launch.

Amazon.com, the American Internet bookseller, has just set up a UK service that will increase the pressure on UK rivals such as Waterstone's. One by one, other retailers and consumer goods companies are setting up online services.

After several years during which the hype of electronic commerce has far outstripped its achievements, e-commerce finally appears to be taking off. According to a recent report by Forrester Research of the US, worldwide e-commerce sales could reach $32 trillion in 2003, representing almost 5 per cent of global sales.

But the UK Internet market is evolving in a very differentway from its development in America. In the US growth has been driven by consumers ordering goods and services from home. In the UK and Europe, e-commerce is being driven by business to business trade. Forrester estimates that by 2001 European Internet revenues will reach $68.1bn (pounds 41bn) but $57bn of that will be from businesses trading with each other.

In the US, about 13 per cent of households are linked up to the Internet compared with only 4 per cent in the UK. The difference is due chiefly to the high costs of Internet access in the UK.

According to David Bowen, editor of the electronic business newsletter Net Profit, the real commercial gains of the Internet are to be made not in selling goods but by cutting costs through more efficient relationships with customers and suppliers.