Economic Characteristics of E-commerce and Its Impact on Economic Structure

Abstract: With the development of market economy, e-commerce has gradually penetrated into all fields of social and economic life. Many products in e-commerce are digital products, and enterprises that produce digital products are the most convenient to carry out e-commerce. This paper expounds the concept and characteristics of digital products, the laws followed by e-commerce enterprises, the new economic characteristics of e-commerce and its influence on economic structure. [Keywords:] economic characteristics of e-commerce economic structure

In e-commerce, many products are digital products, including computer operating system, office productivity software, e-books, audio-visual products, information and services. These products have many characteristics different from traditional goods and services, and the laws followed by enterprises producing digital products are also different from those of traditional enterprises, showing many new economic characteristics of e-commerce, which will inevitably have a greater and greater impact on the economic structure. Digital product is the exchange of information content based on digital format. Digital products can be transmitted both physically through carriers and electronically through the Internet. First, the law that e-commerce enterprises that produce digital products should follow follows the law of diminishing marginal cost in terms of factor input. The cost curve of general industrial enterprises is U-shaped. After the output exceeds the moderate scale, with the continuous increase of output, the average cost and marginal cost begin to rise. Theoretically, digital products can be enjoyed by an infinite number of people at the same time and can be copied at zero cost. The average fixed cost shows a downward trend with the increase of product quantity, and the average variable cost is the same as the marginal cost and tends to zero. The uncertainty of value lies in the fact that the original cost of producing digital products is fixed, but because its marginal cost tends to zero, the uncertainty of sales quantity and the uncertainty of utility to different consumers determine the uncertainty of its price. Incremental marginal utility refers to the opposite marginal utility of information and wealth, that is, the more information a person has, the greater the utility of each additional piece of information to this person. Second, the new economic characteristics of e-commerce The new economic characteristics derived from e-commerce are very different from the previous economic forms and have their own operating rules. Mainly reflected in the following economic laws: Moore's Law, Metcalfe's Law, Matthew Effect, marginal return's Law of Increasing, etc. 1. Moore's Law: Moore's Law is the changing law of the function-price ratio of network information technology, which reveals the root of the rapid growth and continuous change of information technology industry. According to this rule, the function of computer silicon chip doubles every 18 months, and the price drops by half. Moore's Law reflects the cost performance of information technology products and reveals the power source for the rapid growth of information technology industry. This law has been playing a role since the 1960s and will continue to play a role in the future. With the continuous improvement of computer performance and the rapid decline of price, the computing cost of human beings has been greatly reduced. 2. Metcalfe's Law: According to Metcalfe's Law, the network value is equal to the square of the number of network nodes, or the network value increases exponentially with the increase of the number of network users. The expansion effect of information network is dominated by Metcalfe's law, or Metcalfe's law reflects the expansion effect of information network. Internet users double every six months, and Internet traffic doubles every 100 days. This explosive growth will inevitably lead to the rapid growth of network benefits. 3. Matthew effect: the new economy is an economy that organizes and dominates the flow of goods (including goods and services), capital, technology and manpower with information flow. In information activities, due to people's psychological reaction and behavioral inertia, under certain conditions, once advantages or disadvantages appear, they will continue to intensify and strengthen themselves, resulting in a rolling accumulation effect, the so-called Matthew effect. 4. marginal return's law of increasing: In the era of e-commerce, information resources have become the main resources in the new economy. This resource is renewable and reusable, non-exclusive, and its cost does not increase proportionally with the increase of usage. This fundamentally changed the conditions for the existence of the law of diminishing marginal returns in the traditional industrial economy, and the law of increasing factor marginal return appeared. In the input-output system of social economy, with the constant input of factors, the marginal income (that is, marginal output benefit) is increasing. Third, the impact of the new characteristics of e-commerce on the economic structure Most economists believe that the market is an effective mechanism for allocating scarce resources. However, today, a large number of business activities take place in large-scale enterprise organizations. When the transaction cost is high, businessmen will establish enterprises, and enterprises will replace the transaction negotiation activities in the market with a hierarchical supervision and control system. Although the cost of establishing and maintaining a supervision and control system may be high, in many cases, these costs are lower than the transaction costs. Economist Oliver? Williamson further developed Coase's theory. He believes that those industries with complex production processes and assembly lines often have more enterprise levels, and ultimately it is easier to achieve vertical integrated management. The innovation of enterprise production and management has greatly improved the efficiency of hierarchical supervision activities. Assembly lines and other mass production technologies can break down complex work into small and manageable steps. The emergence of computers has greatly improved the ability of superior managers to supervise and control the specific activities of their subordinates. Some direct performance measurement techniques used by top managers are even more effective than the supervision of front-line supervisors. From the industrial revolution to the present, with the increasing popularity of supervision means, the scale and level of vertical integration of enterprises have been continuously improved. However, in some large enterprises, the supervision system can not adapt to the expansion of enterprise scale. Because the overall economic feasibility of an enterprise depends on its ability to effectively supervise the business activities of enterprises at all levels, the problem arises. These enterprises have to adopt decentralized management, so that different business units can operate like independent enterprises. They negotiate and trade with each other according to the market model, instead of trading like different departments of the same enterprise. These decentralized methods only return to an effective market mechanism, which was effective before the enterprise became vertical. The adoption of e-commerce by enterprises and individuals can improve information flow, coordinate different activities and reduce uncertainty, thus reducing transaction costs. By reducing the cost of collecting information about potential buyers and sellers and increasing the number of potential market participants, e-commerce can divert the attention of many enterprises from vertical integration. When selling goods and processing orders, enterprises can use e-commerce to reduce the processing costs of sales inquiry, quotation and inventory determination. Just as e-commerce can increase sellers' sales opportunities, it also provides buyers with more choices. Enterprises can use e-commerce to find new suppliers and trading partners when purchasing. By using WWW, quotations and trading terms can be transmitted efficiently, which improves the speed and accuracy of information exchange between enterprises and reduces the cost of both parties. Although it is not clear whether the widespread adoption of e-commerce will make hierarchical organizations return to the previous market structure, one thing is certain, that is, the widespread adoption of e-commerce will have a significant impact on the economic structure. 1. As far as the market model is concerned. Many enterprises and strategic business units operate in the intermediate mode between market orientation and hierarchical economic structure, which is called network orientation. Under this network economy structure, different enterprises establish long-term and stable relations according to the same goals to coordinate their strategies, resources and technology combinations. This kind of network organization is especially suitable for information-intensive high-tech industries. E-commerce can establish and maintain this network which mainly depends on information more easily. Some researchers believe that commercial activities in this form of network organization will dominate in the future. 2. In terms of market competition. An enterprise's advertisement on the Internet can convey its promotional information to potential customers all over the world. Enterprises can also deliver goods to the target market with scattered geographical location and very narrow demand through e-commerce. Internet and World Wide Web are particularly effective in creating virtual communities, which can become an ideal target market for enterprises. Virtual community refers to a collection of people with the same interests, but this collection does not happen in the real world, but appears on the Internet. The operation mode of real-time production, zero inventory sales and different economies of scale of e-commerce enterprises has broken the monopoly position of large enterprises. The emergence of virtual enterprises and the change of trade environment have also weakened the entry barriers of small and medium-sized enterprises, thus strengthening the market competition mechanism. Under the action of Metcalfe's law, the problem of information asymmetry in the traditional market has been well solved, and the price of goods has been decreasing to the cost, and will not fall again after reaching the price bottom line. Staying at this level eventually leads to the loss of price orientation, and the market relies more on non-price competition. 3. In terms of resource allocation. E-commerce, a new operation mode, has improved the market efficiency to the maximum extent, and the resource allocation will tend to the optimal state. E-commerce has changed the proportion of each link in the traditional economic operation mode. The central link of economic operation is gradually shifting from production and circulation to design and consumption. The resource allocation structure formed under the traditional commercial system will inevitably undergo major changes in the state of e-commerce, and it will change in the direction of informationization and science. 4. In terms of industrial structure. The tertiary industry will achieve greater development and its proportion will be greatly increased, especially the position of service industry in the national economy will be gradually improved. At the same time, the industry structure has also changed. The electronics industry and related industries of electronic product manufacturing will achieve rapid growth, while other industries will develop relatively slowly. As far as the international economic structure is concerned. The impact will be generated at multiple levels: First, the international economic integration will be promoted, and the connection between the domestic market and the international market will be further improved; Second, the national economic structure of each country will be allocated according to the principle of rational allocation of resources under the overall framework of the international economic structure, and the domestic economic structure of each country will be determined by the international economic structure. Reference: [1] Yao Qiuli. Discussion on the development trend of e-commerce in China [J]. Journal of Anyang University, 2007, (02) [2] Tang Bingyong. Discussion on the growth strategy of enterprises in the era of network economy [J].[3] Jiang. Journal of Donghua University (Social Science Edition), 2006, (07)