Europe leads US in e-commerce: Internet Retailer

Europe continues to lag in overall economic growth compared to the US, but when it comes to e-commerce sales the continent is far ahead of the US, which boasts of some global e-commerce majors, latest data from Internet Retailer reveals.

US e-commerce sales rose 15.9 per cent to $225.54 billion in 2012 from $194.61 billion the prior year, according to the US Department of Commerce, while the Centre for Retail Research in the UK said European e-commerce sales rose 16.6 per cent to $302.2 billion from $260.4 billion.

The 500 leading e-retailers in Europe put up an even better performance, according to Internet Retailer, increasing their web sales collectively by 17 per cent to $122.74 billion from $104.89 billion.

According to Jack Love, Internet Retailer chairman and CEO, despite its fragmented nature, the European e-commerce market was bigger than the US market and was growing at roughly the same speed, even though it did not have the benefit of a growing overall economy like the US.

Moreover, the European e-commerce market is decentralised, with no pan-European operator operating across the continent like e-retailers who sold across America.

As in the US, Amazon.com was Europe's top-ranked e-tailer with sales that increased 19.3 per cent to $16.1 billion as against $13.5 billion the prior year. Japan's Rakuten Inc was the country's fastest-growing e-retailer in Europe with a sales growth of 650 per cent to reach $786.4 million.

Meanwhile according to Temple University, despite the reputation of online marketplaces being distant and impersonal, they could leverage social technologies such as instant messaging, to create the sense of personal and social relationships between buyers and sellers, termed ''swift guanxi'' in China, to facilitate loyalty, interactivity and repeat transactions.  

University Fox School of Business professor Paul A Pavlou, Tilburg University's Carol Xiaojuan Ou and Robert M Davison of the City University of Hong Kong studied data from TaoBao, China's leading online marketplace, to examine the efficacy of using computer-mediated-communication (CMC) technology to build guanxi and turn impersonal one-time shoppers into loyal and committed long-term customers through personal rapport.

Guanxi is a Chinese concept that is ''broadly defined as a close and pervasive interpersonal relationship'' and ''based on high-quality social interactions and the reciprocal exchange of mutual benefits,'' Ou, Pavlou and Davison wrote.

Online shoppers had previously been presumed to prefer impersonal transactions, while the study shows both retailers and customers inherently desired the kind of relationship that could be called guanxi, even if the degree and extent of communication varied by culture.  For instance a transaction of a few dollars in China, could be preceded by communication of over 45 minutes.

According to Pavlou, the Fox School's Milton F Stauffer professor of Information Technology and Strategy, nobody would argue that personal relationships were unimportant, but it was unfathomable that people in the US would engage in such extensive communications and personal interactions for a small transaction.