A Research on the Paradigm of E-commerce Competition

Abstract

This research is based on the "E-commerce industry's competitive standards report" done by the Fair Trade Commission as part of its ongoing analysis of the 4Cs industry research.

To better analyze the competitive environment of an increasingly popular business trend, it is first imperative to understand the economic and industrial characteristics and unique circumstances surrounding this new business. Only then will we be able to use this knowledge of the market's economic characteristics and understanding of the greater e-commerce environment to drive the discussion on which industrial characteristics to regulate. If regulation is required, upon what standards should it be based? Therefore, this report will focus on clarifying the differences and similarities of e-commerce and traditional commercial activities, the economic characteristics of e-commerce, the structure of the e-commerce industry and the unique specifications on each industry segment. The objective is to provide the regulators with the focal and key points so that all relevant issues are factored into consideration during the decision process.

This report uses technical literature review to discuss the economics of e-commerce. Furthermore, this study also provides primary research by using in-depth observation techniques for scanning the entire industrial environment. Interviews are also carried out to more accurately describe the potential competitive environment of e-commerce. In all, 32 interviews have been completed.

The key findings of the report are organized as follows :

1. The current e-commerce situation in Chinese Taipei
(1) Enterprises and manufacturers encounters several difficulties in e-commerce including (a) technical standards, (b) policy, (c) distribution and flow of commodities and (d) insufficient technical personnel and expertise.
(2) Online sales usually (a) employs a low price strategy, (b) has an inclination towards collocation sales and bundle packages, (c) involves strategic alliances
(3) The Chinese Taipei e-commerce market is still largely made up by small-to-medium size enterprises. Whether online monopolies exist is not obvious and remains unclear
(4) The online intermediaries are the among the most comprehensively developed segment of the e-commerce industry, warranting close attention to their future development
(5) The large enterprises in Chinese Taipei have enthusiastically ventured into e-commerce and are actively entering alliances and partnerships. However, these arrangements have, as yet, been unable to influence the markets in a major way
(6) The emergence of technical standards alliance
(7) After the proliferation of e-commerce, the businesses regards distribution and flow of commodities are actively undergoing restructuring for a better fit with the new business model
(8) The rapid adoption of e-commerce is nurturing (Jing Liu) and certification houses

2. The competitive standardization issues faced by e-commerce
(1) Definition of general principles
a. Unique / Special-Designated Industry Classification
(a) Whether e-Commerce is a specially designate industry and should be regarded as such
(b) Distinction between product market and related markets
(c) Segmentation of geographical markets
b. Competitive Relationships Classification
c. Jurisdiction & control over the international competitive activities of web sites
(2) Imposing restrictions on competition
a. Monopolies
(a) Definition of technical standards
(b) Computing software monograph
(c) Policy and Regulation
(d) What is a Monopoly
b. Coalition activities
c. Business integration and merging
d. Restriction on resale pricing behaviour
e. Fair Trade Law Article 19(i), 19(ii) and 19(vi) Definition of Restricting Competition Behaviour
(3) Unfair Competition Behaviour
a. Unfair Web Domain Name Registration & Abuse
b. Multi-level Resale Advertising Websites
c. Package Sale and Tie-In Sale
d. B2B Websites

Combing the interviews and analysis of news articles, the following 3 key suggestions are offered for future references :

1. The debate over domain name registration practices
2. The business model and influence of B2B websites
3. E-commerce and web-based companies market potential and size measurement standards