e-commerce@its.best.uk - Fatal System Error
e-commerce@its.best.uk - Fatal System Error
e-commerce@its.best.uk - Fatal System Error
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3.21 The proposals for a formal evaluationof the overall net impacts of e-commerceput forward in chapter twelve will go someway to establishing the importance of themacro-economic effects discussed here.The UK must act now3.22 E-commerce is not only of significanteconomic importance to the UK, but therate of change it brings about is likely to bedramatic. If the UK is to capture the benefitsthat e-commerce offers and play a leadingrole in global e-commerce markets, rapidaction is required.3.23 First, the Government needs to actnow in order to enable the efficiency gainsoutlined above to be captured as soon aspossible.companies. The role of Government is toclear the way swiftly for those that wish tomove and to raise levels of understanding ofthe opportunities and threats to e-commerceso that the decision to move or not is aninformed one.3.25 This chapter has shown the economicimportance of electronic commerce toindustry and to the UK’s macro economy.It has set out the urgent need to create anenabling environment by removing barriersfor business and consumers to capture thebenefits described. The following chapters setout how the UK is currently positioned, thenature of the enabling environment neededand how it can be achieved.3.24 Second, the PIU Team believes thatthere may be first mover advantages to begained for UK firms that use e-commerce toenable transformation of their markets aheadof rivals. 5 There are broadly two types of firstmoveradvantages – cost and demand based.E-commerce has potential elements of both(see box 3.6 below, which uses Amazon asan example). It should also be noted thatthere can also be first mover disadvantages. 6When to move is a decision for individualFIRST MOVER ADVANTAGE FOR E-COMMERCE FIRMSType Name Description Amazon ExampleCost Economies of Costs fall as output increases. Purchasing powerbased scale First mover has highest output,lowest costs.Cost Economies of Costs shared across new products Sells CDs as well asbased scope First mover has low costs over books to same customers.large rangeCost Control of Competitors do not have access Sites close to wholesalers.based scarce input to critical input.Cost Learning by doing Costs fall by being near Start near Siliconcomplementary producers.Valley.Early groupings have advantage.Demand Network Additional consumers add value More customers meanbased effects for total customer base. First better affinity marketing.mover has largest customer base.Demand Reputation Uncertain buyers value longevity. Buyers trust Amazon.based effects By definition first mover is longestlived firm.Box 3.65For example, Amazon, Yahoo, E-Bay are all leading e-commerce companies that had no particular advantage when they startedother than being first. The Internet took off first in the US and it is US companies that are capturing first mover advantages in manyof the new markets e-commerce offers6For example, followers might be able to ‘free-ride’ on a pioneering firm’s investment, and the development of standards mightmove against those who move first and offer standards to the marketE-<strong>commerce@its</strong>.<strong>best</strong>.<strong>uk</strong>15