According to forecasts by the Institute for Information Industry's Market Intelligence and Consulting Institute (MIC), the online shopping market in Taiwan can be expected to surpass NT$300 billion this year, an astonishing 31.6% increase on last year. Everything is available online, from the stereotypical items like women's clothing, cosmetics, and consumer electronics, to vegetables and even the most ordinary of low-priced everyday things such as toilet paper, spray cleaner, and soy sauce. The tremendous strength being shown by these online channels is proving a beacon of hope in the economic darkness.

As the warm noonday sun bathes the land, office workers throughout Taiwan take the opportunity to enjoy the weather, get some fresh air, and take lunch outside. But all Cindy, a marketing planner at an advertising firm rushing to get new product estimates out, can do is ask her colleagues to grab a boxed lunch for her on their way back.

"Every lunch break is an opportunity for me to go shopping online," jokes Cindy. Like many other working women, after clocking out Cindy heads home to busy herself with household chores and look after her children, leaving her with no leisure time in which to shop. Browsing the online shopping sites for everyday goods and hunting for bargains on the major sites has become her biggest daily hobby.

For example, Cindy points to Yahoo! Shopping's March anniversary sale, where a NT$2000 purchase would net shoppers a NT$300 discount voucher. PChome's "24h Shopping" website had a similar anniversary sale. Even relative newcomer Ruten held its own sale with discounts of up to 90%. With just a little time and research, you can find products online for mere fractions of their real-world prices. To illustrate, Cindy tells of taking advantage of Yahoo!'s "lowest prices online" offer to buy SK-II facial cream normally priced at NT$3000 for only NT$999.

Weathering the storm

"I even buy toilet paper and feminine hygiene products online now. If I order before noon, they'll deliver that night, so I don't have to drag my poor husband around the stores during days off," says Cindy, who has nothing but the strongest praise for the convenience of online buying.

The number of consumers like Cindy, who rely on online buying for even everyday goods, is growing, and this group of online loyalists have become the biggest driver behind Taiwanese e-commerce.

According to MIC statistics, the online shopping market (including consumer-to-consumer (C2C) auctions and business-to-consumer (B2C) online retailers) was worth NT$243.7 billion in 2008 and is predicted to break the NT$300 billion barrier in 2009, reaching an expected NT$320.9 billion.

Between 2005 and 2009, this market has experienced steady annual growth of at least 30%. While the period of the most rapid growth was 2001 to 2004, the overall performance of the market remains impressive. Forecasts from IBT Securities and other financial institutions expect the overall retail market in Taiwan to contract by 3% to a total of approximately NT$3.16 trillion as a result of the global economic crisis. As the market shrinks, the success of online sales is a standout point of success.

The MIC statistics also note that over 20% of the almost 5600 people interviewed buy through either online auction sites or online retailers at least once a month, roughly equivalent to the proportions seen for real-world department and electronics stores. Amongst shoppers' most favored products for online purchases are books, food, cosmetics, health products, fashion accessories, and electronics, showing that the Internet is a far more common avenue of purchasing than most of us give it credit for.

Small auctions to mass markets

Taiwan's online market found its start almost 10 years ago, when the first big-name local auction site began, making its name with NT$1-reserve auctions. Both the original auction site Ubid and local site Coolbid began in 1998, but it wasn't until after Yahoo! Auctions' Taiwan launch in 2001 and eBay's in 2002 that the online auction market began to heat up. On the back of a successful advertising campaign which garnered media attention, using the Internet for both searching for and bidding on auctions made inroads into the public consciousness.

B2C online sales began in Taiwan in 1995 with the establishment of books.com.tw. In 2000, President Chain Store Corporation became the company's majority shareholder, giving books.com.tw access to Taiwan's roughly 4,800 7-Eleven stores and allowing them to offer delivery and payment of orders at 7-Elevens. After years of floundering in the wilderness, finally they were able to begin changing the habits of Taiwanese book purchasers.

PChome, originally founded as a computer magazine publisher, also began to see the potential in online retail, opening their own shopping service in 2000. Beginning as an electronics retailer and building strategic alliances with suppliers to lower prices, PChome's online shopping channel quickly drew a substantial number of loyal customers. After tasting success with digital cameras-then the hottest high-price product-and making a whopping NT$1.3 million in weekly sales, PChome began to branch out into other product categories, becoming in essence an online department store.

The success of PChome caught the attention of Yahoo! Taiwan and other online portals, who established their own sales centers. Since their establishment in 2005, Yahoo!'s "super mall" service and PChome's "market street" have received heavy promotion, leading sellers large and small to set up their own online stores. In the midst of the current economic downturn, these services have been a lifesaver for newly unemployed office workers looking for a new line of work. (see "New Hope through Online Auctions" (p. 25) and "The Miracle Moment" (p. 28))

Taiwan's online purchasing market is already well established, with services like PChome's popular 24h Shopping able to sell at prices competitive with major retailers, as well as shipping to your door to save you the hassles of traffic.

The killer app: 24-hour service

One of the main stumbling blocks faced by e-commerce in the past was the fact that after placing your order, you would have to wait several days for delivery. This visibility-without-tangibility put a damper on many consumers' enthusiasm for online shopping.

Three years ago, though, PChome launched their 24-hour Shopping site and Yahoo! their "speedy delivery" service, leaping over that old hurdle. These two dove in and invested in storage, packaging, and downstream delivery logistics, successfully building positive reputations with their "order by 6 p.m., get it by noon tomorrow" and "place your order in the morning, get your order that night (in 10 major cities)" services.

During the cold, dismal weather of Chinese New Year 2009, online retailers became the go-to option for those too lazy to go outside, with PChome's 24h Shopping site getting a new high of NT$380 million in orders in January alone. Yahoo!, for their part, saw growth in sales of almost 60%.

"'Speedy delivery' is the most popular of our services," says Yahoo! Shopping senior supervisor Wang Zhiren. "The most popular products for delivery are common, everyday items like toilet paper, feminine hygiene products, cleaning fluid, and mineral water. During one sale we shipped 10,000 boxes of Tender Tissue in a single week. We were practically shipping it till we passed out," he laughs.

With same-day shipping so popular, businesses soon capitalized on it by expanding their services. Right now, PChome's 24h Shopping site boasts over 110,000 different products, while Yahoo!'s "Speedy Delivery" section has over 60,000 items. Aside from fresh meat and vegetables, you can buy just about everything you could need at these sites.

In order to meet their goal of next-day delivery, online retailers have begun increasingly focusing on storage and packaging, which when coupled with speedy delivery can noticeably reduce processing times. This photograph shows workers for delivery firm Takkyubin busily getting products shipped. (below) A customer picks up her order at a 7-Eleven.

Opening the floodgates

Liu Weilin, online trend analyst and holder of master's degrees in electronic engineering and management from Stanford, describes the recent blossoming of online sales in Taiwan as an "opening of the floodgates" of opportunity.

Compared with other countries, he says, online sellers in Taiwan are much more nimble. Not only are there large-scale "cyber-department stores," using low prices, prompt shipping, and quality customer service to draw in customers, there are also many smaller businesses doing well and offering a constant stream of surprises for online consumers.

One example is oBuy, set up by eDynamics and following the same concept behind popular American site Woot!, offering one special deal a day with prices as low as 10% of retail, but in limited numbers. With the product on sale changing every day, if a consumer spots something he or she wants to buy, it can feel like striking gold.

Another method used is "story-based marketing," tying products in with blog posts and adding value to them that way. One example of this is the well received site "Hug Fruit House."

Liu explains that Hug is an online supermarket specializing in organic fruit and vegetables, with all the products personally selected by the owners from local orchards and farms. This site doesn't just sell fruit and veg, it also shares with consumers through blog posts stories about organic farming and how to make the best meals out of the fruit and vegetables on sale.

"While their fruit might be a fair bit pricier than other channels, and can take at least two working days to deliver," says Liu, "because it's so good, and thanks to the value added by the stories, wealthier consumers are happy to pay the extra."

Once a year, the big department stores hold anniversary sales, with cosmetics counters packed with people looking for that one big deal or one perfect freebie. Most of these major retailers also do anniversary auctions online alongside these sales, letting smart shoppers get the same deals without the frustration of huge crowds and never-ending queues.

Cooperating with competitors

Taiwanese e-retailers are not only canny sellers, but also highly innovative in terms of shipping, with the classic examples being "cooperating with competitors" and offering delivery to and payment at 7-Eleven.

Yahoo!'s Wang Zhiren explains that they were offering convenience-store pickup four years ago, letting consumers pick their orders up any time, day or night, rather than waiting for them to be delivered to their doors. This past January, they expanded this into offering a means to pay for the order at convenience stores as well, offering a one-stop-shop for payment and pickup at any of their nearby convenience stores.

"Shipping and payment are the lifeblood of business, and as soon as we opened up this channel, sales shot through the roof," says Wang. Not long after the service went online, 20% of Yahoo! members were using it regularly.

According to Liu Weilin's analysis, Taiwan's multitudinous convenience stores originally proved an obstacle for aspiring online shopping services, but the success of books.com.tw in using them has created a uniquely Taiwanese shipping model and turned these former competitors into massively beneficial intermediaries in the shopping process.

As Liu says, by picking up and paying for orders at convenience stores, buyers needn't worry about security issues around inputting their credit card details online, nor do they have to worry about paying for something they never get. Sellers, for their part, don't have to worry about the hassle of delivering to buyers' doors and having them not pay. And for the convenience stores, the more orders they handle, the more they can make in service charges.

"A lot of buyers will, when picking up their orders, grab a drink or snack, thus adding to the turnover of the store and creating a win-win-win situation," jokes Liu.

In its 10-year history, online shopping in Taiwan has become a force to be reckoned with. In these poor economic times, the boom in this "at-home economy" has been surprising in its strength, and behind it lie years of hard work and grind by a number of entrepreneurs. Sometimes the hardest of times inspire the greatest creativity and create the biggest opportunities, and in the essentially infinite world of the Internet lies a perfect place to experiment.