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E-commerce sees signs of recovery, analysts say

Businesses have begun to see signs of growth and development for electronic commerce, after the Internet-based business model emerged from the dotcom trough in 2000, analysts said.

Unlike its early days, e-commerce has shown concrete progress in the quality of information technology (IT) infrastructure, government initiatives and commercial efficiencies provided by the Internet over the years, they added.

"The commercial potential of the Internet is always there and will only get stronger in the years ahead," Yang Cheng-yu (楊正瑀), an analyst at the Institute for Information Industry (資策會), told a seminar earlier this month in Taipei.

According to the institute, NT$20.47 billion worth of goods was sold online last year, up 35.2 percent from the previous year. The institute forecasts that the figure will reach NT$26.62 billion this year.

Analysts said they believe e-commerce will be back on the list of promising businesses all over the world, even in Taiwan where some online shopping Web sites have helped some Internet start-ups end up with some money in their pocket rather than unsold items on their shelves.

The first factor to boost e-business was the improvement of the IT infrastructure in the nation, Yang said. According to the Ministry of Economic Affairs, there were 9.28 million households in Taiwan with Internet access, with 2.7 million of them using broadband to hook, as of the end of September last year.

"There is still a huge room for future growth, as 77.9 percent of Internet users still have not conducted online shopping," Yang said.

In Taiwan, there are myriads of goods being sold in virtual stores, from Mr. Tang's broken antique vase, high-tech products, real estate and cars, to groceries and ready-to-eat delicacies.

Users are now shifting from being freeloaders to paying customers -- they are willing to pay for downloaded music, ring tones, games, fortune telling and even dream dates.

Additionally, changes in business strategies has further coaxed online surfers to switch their shopping habits, analysts said.

Online vendors have decided to sell things online at prices 5 to 16 percent lower than their brick-and-mortar competitors, a survey issued by the institute indicated.

The tactic is proven working, as 51 percent of online shoppers said they were lured by the low prices and discounts offered by virtual stores, according to another survey by Yam Digital Technology Co (蕃薯藤數位科技) which runs the nation's third largest Internet portal.

All the signs suggest that e-commerce is on the up. But is this another bubble that will pop?

"I think that e-commerce all over the world will continue to go uphill as expected," said George Wei (魏志強), an E-commerce Resources Center manager at the Institute for Information Industry. "It is just a matter of how far and fast the growth will be."

Online security, which was indicated as a major concern for conducting online shopping four years ago, still haunts shoppers now, Wei said.

The observation fits in with Yam Digital's survey, which said 39 percent of online users were hesitate to conduct online shopping due to security concerns.

Such a worry has deepened following a series of online frauds late last year. In particular, online shoppers were alerted to online fraud after three of its top sellers were found offering fake brand-name clothing on the Yahoo-Kimo Web site earlier this week.

One of the sellers, nicknamed "Orange Mama" (橘子媽媽), became a well-known online retailer after claiming that she sold goods worth more than NT$1 million every month through online auctions.

"I think the incident will help enhance consumer awareness about shopping in virtual stores but impede the development of e-commerce in Taiwan," said Pan Jou-juan (潘兆娟), deputy executive director of the Secure Online Shopping Association (SOSA, 消費者電子商務協會).
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