“We’ve hired a team of UK nationals,” said James Bidwell, eToys’ director of marketing for Europe. “The site will feature UK products chosen for UK consumers. Our merchandisers are from the UK with experience at Hamley’s, Toys ‘R Us and ASDA.”  eToys was drawn to the UK by the promise of its $3.5 billion toy market, paired with a growing penetration of Internet users. 

“The online population, close to 12.5 million, is very attractive,” said Bidwell. “Sharing a common language helps, being an American company. And traditionally, the UK has been a strong jumping-off point into Europe for U.S. companies.” 

A huge e-market

U.S. e-commerce firms from Amazon.com to Charles Schwab are heading to the UK, ready to cash in on its growing online population. Online households are expected to reach 45 percent of the population by 2000. 

Shopping on the Internet is expected to generate sales in excess of $1.6 billion by the end of 1999, rising to $10 billion by 2003 — 2.5 percent of the total retail sales opportunity, according to consumer research by UPS European Business Monitor and Verdict Research.

Within the same time frame, 20 percent of all music and video sales and 18 percent of all books in the UK will be sold through the Internet.

e-creativity rampant

According to John Campbell, vicepresidentof international customer developmentat British Telecom, telephone deregulation in the UK 10 years ago sparked competition which, in turn,sparked creativity in the industry. 

“The UK is more creative than other European countries because of its experience,” said Campbell. “The Internet Service Provider (ISP)/telecom kickback scheme is a good example.”

In the UK, surfers on the World Wide Web typically pay 6.4 cents per minute in telecom fees. ISPs fund “free” Web services by receiving small payments from the telecom companies, in return for providing more Web traffic through their users.

In September 1998, UK retailer Dixon’s launched Freeserve, the country’s first Internet access service not to charge a membership fee of any kind. 

Other ISPs are fighting back, attracting even more users and expanding the Internet marketplace. 

In September, AOLEurope launched a premium Web access service that would reduce telecom charges to one pence (1.6 cents) per minute, on top of a $16.40 monthly fee. UK cable television operator Telewest has teamed up with Microsoft and Hewlett-Packard to offer super-fast Internet access to its 1.4million cableusers, without telephone charges. 

Infrastructure is e-friendly

The business is not all users, it’s infrastructure, too. BT recently invested $1.76 billion in an advanced IP and multimedia network called BeTaNet. Afurther investment of $8 billion is planned over the next five years to support future data and multimedia services. BeTaNet offers virtually unlimited bandwidth over a single link for simultaneous voice, data, video and Internet services. 

This is important for e-commerce investors, as well as digital broadcasters, interactive call centers and corporate intranets. The system will link Europe’s largest high-speed network.

e-support services

Supporting the technical infrastructure is a Web of services set up to help e-commerce investors in the UK. 

“Companies need to understand what e-commerce is about: the technology and the selling process,” said Paul Wolf, partner with Manchers Media, a London law firm.  “E-commerce is a sexy and big market.

“Service providers need to be intimate with the technology, including the pure computer skills and telecommunications. But they also need to know about the intellectual properties, contractual agreements, secure banking and taxes.”

The knowledge can’t stop after the order is placed online. Order fulfillment is an area that is often overlooked. 

“Take a look at e-commerce,” said Wolf. “There is the service provider in the legal and business affairs. There is the Web design and strategy. And there is the fulfiller. Everyone offers e-trade and design solutions. The industry has thrown up buckets of them. Fulfillment issues are very important, as well.”

eToys recognized this in its investment.

“Fulfillment is an important area and will set us apart,” said Bidwell. “We have our own 25,000 square foot warehouse and distribution center and are partnering with various distributors. 

“Our fulfillment process will be managed by people with experience in the UK. We chose Swindon, 80 miles west of London, for its accessibility, availability and proximity to our distribution partners.” 

Not all areas of the UK are recruiting the distribution end of e-commerce.

 “There is a reluctance in some parts of the UK to handle the larger distribution centers,” said Roy Lock, of the Inward Investment Agency in northwest England. “For a half million square foot warehouse, the land is expensive and sold at a premium. Some local development agencies are more interested in programmers and systems jobs.” 

For those investors looking for a quick answer to their e-commerce location questions, BT has set up a new service called elocations@ bt.com. The service offers a total fast-track package for first-time and expanding overseas e-commerce companies at a limited number of strategic locations.

The sites meet all investment criteria, including labor availability and communications infrastructure. The service ensures that sites are ready for a new company to move into in a matter of weeks. The team assists the company in identifying the most suitable location to meet its needs, and offers advice and contacts to ensure the smooth introduction of the project to the UK.

There’s more help for companies than relocation advice. Wales and Scotland both have e-commerce and EDI centers available to all companies with e-operations. Northern Ireland may be the best example of the impact of e-commerce. In the first six months of 1999, the region attracted 2,500 jobs in e-commerce and support — with a population of just 1.5 million people.  

e-regulations on their way

Because e-commerce is so new, regulations are just catching up with the momentum of the industry. The EU recently adopted the Distance Selling Directive, scheduled to be implemented in all member states in June of 2000. The directive is designed to protect consumers who buy merchandise by mail order, telephone, fax and the Internet. 

The directive covers the sale of most goods and services, although financial services are excluded. Other directives approaching implementation cover legal aspects of e-commerce, development of electronic commerce within the single market, sale of consumer goods and guarantees, protection of consumer rights and consumer complaints.