In the UK's cyberjungle, there is only one big lumbering beast which is really feared. It is the American predator. British e-commerce directors are constantly being warned by venture capitalists that if their defences are not strong enough they will be swallowed up by an aggressive US rival.
Today, all the legendary internet companies are American. Freeserve might have broken new ground but everyone knows it is an online midget when compared to giants such as Yahoo!, Amazon and eBay.
The US dominance of the internet marketplace can be explained by the fact that the Americans logged on quicker and are now streets head of everyone else in terms of technology know-how and usage. But in recent months, the image of US online supremacy has been slightly dented. There are clear signs that some American online companies are finding it difficult to crack the UK digital marketplace.
In June, e-tailer Fogdog Sports closed its London office and announced it was concentrating on its US operation. At the end of August, blaming heavy losses back home, US broadcaster NBC pulled the plug on the UK launch of its internet operation. And around the same time New York-based UrbanFetch, which delivers goods within an hour, announced it was laying off 18 staff from its London office.
UrbanFetch recently collected an award for being the most exciting newcomer from the European e-commerce association, but rumours still persist that the company is experiencing difficulties.
"We would be foolish to think London is going to be a walkover," says chief executive Andrew Tsai, who strongly denies that the business is in trouble. "We will be fighting tooth and nail to win market share in London and it's still early days."
Tsai argues that the staff cuts were necessary for the business to remain efficient. "We're making sure we get the model to profitability by the end of next year and we are on track to do that. But it is a difficult process."
E-commerce consultants point out that UrbanFetch has a tough fight on its hands. The company offers free delivery and needs to serve a dense population. New York is ideal because lots of people live in skyscrapers. But in London the population is more spread out and to make the economics work, large orders have to be delivered regularly to substantial numbers of people.
UrbanFetch has also not been helped by some pranksters who have been going on to the site just to order one small item such as a bag of nuts which then has to be delivered free by an express courier. To succeed, e-commerce consultants say UrbanFetch has to get its customers buying more expensive products with higher margins.
"We are going to expand our gift section enormously. We are gearing our consumer site up to be an enormous opportunity for Christmas," Tsai says, pointing out that over-crowded London shops should help UrbanFetch.
As part of the government's initiative to make the UK a leading digital marketplace, the Foreign Office has been launching a charm offensive in Silicon Valley trying to encourage US dot.coms to set up over here. But it has not all been going smoothly.
"Most US internet companies vastly overestimate the value of their brand," explains director of Ernst and Young's e-business accelerator service, Jo Enefer, who was seconded to the Foreign Office initiative for two years. "When they are sitting in the Valley, US companies have an idea that their brand is going to be recognised very quickly in the UK. When they get over here, they are often disappointed very quickly."
Enefer, who has advised eBay, says the business to consumer sector has now calmed in the UK and the latest US entrants tend to be in the business to business space or provide enabling technologies. She says the most successful ones seek out local partnerships.
"They are looking for partners who can given them 'traction' quickly. Traction is a new buzzword which means getting a footprint in the marketplace." She adds that any new US entrants are usually helped by the fact that they are less deterred by risk and are generally more flexible than their UK-based rivals.
"I have noticed since coming back to the UK that relative to the US, there is some nervousness about the extent to which UK internet companies will partner with other organisations to go to market. In the States, everyone is open and keen to get in bed with everyone else to achieve their objectives."
Inevitably there is a lot of money to be made from helping US internet companies into the UK. And specialist London-based incubator services such as eVentures work in partnership with US internet companies writing their business plans and offering them access to a select list of preferred local suppliers.
"Most US companies we dealt with in the past wanted speed before everything else and wanted to launch very quickly. But that emphasis has changed, and what US companies want now is a more cautious and well-thought out strategy," explains Valerio Massimo, director of eVentures.
Earlier this year, the heavily-discounted shopping site, Buy.com chose to launch into the UK in partnership with eVentures to help them localise their service.
"The UK consumer is crying out for value and our decision to expand from the US to the UK was based on that," explains Buy.com's chief executive, Murray Hennessy. "We saw that pricing on the UK high street was very high across the board. There was room for the internet in general to offer better value."
To make its presence felt and win market share quickly, Buy.com is aggressively pursuing partnerships. Hennessy says: "We are all over the web with people like AOL, MSN and LineOne and we have 500 affiliate partners."
It is clear that US entrants to the UK market have taken a few bruises over the past few months and are now behaving more cautiously. But it is worth remembering that running an internet-based business presents huge challenges to anyone. Irrespective of which country you start from, issues such as ensuring your technology is robust enough, finding and hiring the right people and raising the necessary capital are difficult to solve.
Furthermore, it would be unwise of anyone to attempt to write off US entrants to the UK market. Major players in the US, such as the giant online directory service About.com, have only just arrived, and they have been successfully doing business for about four years.
"In Silicon Valley, they eat, sleep and breathe what they do. I have been to places where they have got sleeping bags under their desks," says Jo Enefer, who has witnessed how aggressive and single-minded US internet companies can be. "When they come over here," she warns, "they do what it takes to get the job done."
