The concentration phenomenon in E-commerce

Abstract

The universality of the Internet led experts to expect markets to expand and the range of products and services to proliferate, making Internet-related markets more transparent and competitive. Electronic commerce, in particular, has been seen as an opportunity for retailers to expand their market over a geographically limited customer catchment area. For example, Poon and Jevons (1997) were amongst the first to recognize the potential benefits that the Internet offered to retailers, suggesting that it "creates an unprecedented opportunity for businesses to engage in national and international marketing campaigns that previously would have been unaffordable" (p. 29). This would tend to reduce their (local) market power and increase the intensity of competition. But in many Internet-related markets, only few businesses have emerged, and often one actor is in a dominant position. This phenomenon is observed in the B2C e-commerce market all around the world. In countries where online commerce is relatively well developed, such as France, Germany, the United Kingdom, the USA and even China, despite a large number of merchant sites, the online selling business is highly concentrated around a few major actors and appears to be more concentrated than offline commerce.