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The first of such findings is that industry representatives see that
e-commerce is altering business models and, in particular, spheres of
competition. Businesses are being forced to reassess who their competitors
are in an online world as often they differ from their traditional
competitors. There may be large new markets for some, but increasing
competition is also a feature of the new environment.
Secondly, e-commerce is forcing business to rethink customer
relationships. Industry representatives have broadly identified that
e-commerce is making it possible for businesses to approach customers
directly, whether for direct sales or product information and feedback,
rather than going through intermediaries (e.g. retailers, distributors, etc.).
Customisation can occur much more readily.
Order and delivery of products is being improved by e-commerce.
Customers can be served from their home or business rather than having
to go to a point of purchase. When products or services are digital or
‘virtual’, the entire process can be conducted electronically. While real
goods still require eventual delivery, the process of gathering information,
browsing, comparing and ordering can still be more convenient than by
traditional means.
A key theme that industry representatives reported was that e-commerce
is being used to improve supply chain management. E-commerce
continues the process of substituting information for inventories and
reducing substantially the investment in warehouses. It continues to cut
back the need for paper-based documentation and improves the speed of
communication. (The modelling work to follow picks up on many aspects
of this change).
Some industry representatives have commented on the capacity for
e-commerce to improve customer power by expanding their information
base, particularly with respect to price differentials. As the Internet
overcomes problems associated with buying products from a distance,
alternative lower-cost suppliers can be found across a larger geographic
range, widening the effective market and intensifying competitive
pressures. This is another dimension of the increasing competition point
made above.
Finally, e-commerce is expected to allow competitors in other industries
and other countries to enter markets as it bypasses the need for
investment in local facilities. This has been seen in financial services, with
the entrance of new dot.com players. Import competition is patchy with
some sectors facing more competition than others. (Some aspects of this
will be analysed in the modelling to follow).
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