Welcome to the Virtual Maketplace--Online Shopping Catches on

33-year-old Huang Shih-chieh works in a factory producing electrical meters in Wuku Industrial Park, while reading for his masters in business administration at National Chiao Tung University. What with all the pressure of work and study Huang can barely remember what it is like to spend free time wandering around the shops. A month before Valentine's Day last year he spotted a flower delivery advertisement on the web, clicked his way to the site and found a florists that was charging off-season prices for Valentine bouquets booked in advance. Not wanting to repeat a previous Valentine's Day debacle when he had turned up to see his sweetheart empty-handed, Huang promptly placed a NT$1,500 order for a bouquet of roses.

Not having the chance to touch or smell the flowers first, wasn't Huang concerned his girlfriend might end up with a bunch of worm-eaten old blooms? "Not at all," he says. "Of course I knew she'd tell me how the flowers were." Huang's online purchase was convenient and economical, and the flowers were fine. He also liked being able to make the arrangements without skipping work, and is now a confirmed online shopper.

Palau is partially encircled by coral, making for calm seas, and the area is almost always windless. Catch a ride on a parasailer, and you can see how close to Heaven you are.

Never have to leave your home

Pan Ying-wei, an associate professor in the department of applied languages at National Yunlin Technology University, has spent 16 years in the US and shops regularly in the internet malls of the world.

"I make a lot of trips abroad and find it can be 20% cheaper booking rental cars over the Internet," says Pan, who is savvy about both technology and personal finance. "I can also find hotel booking information and services, and accumulate credits in my personal file where they can't go astray. It's very cost-effective."

Pan is a frequent visitor to websites in the Yahoo! shopping street-as she has shares in Yahoo! "There's everything under the sun, from A to Z, all accompanied with clear graphics and explanations," she gushes. For example, a nutritional product like vitamin E is off-puttingly expensive in Taiwan, but on the web you can get it at the US retail price, minus the high sales taxes that apply in some states (8.25% in California), since e-commerce isn't taxed. So it's well worth it, even allowing for the cost of shipping items from abroad.

"Sometimes there isn't much that you want to buy, and it seems like a pity to pay all that postage for just one little item. But that's OK, all you do is leave it in your online shopping trolley for a few days, and when a few of your co-workers have things to buy too you submit a joint order." Pan thinks that it is an especially good idea for students to shop online at overseas websites, and even to trade shares over the Internet: "Force yourself to practice English and learn how the global market works. Let the web provide you with an international perspective!"

The global accessibility of the Internet is also useful for Taiwan-based websites targeting the international overseas Chinese market. Hsiao Shan-wen is a net entrepreneur who, among other services, books photographic studio time for clients who are preparing personal pictorial albums. "Many of those who book online are students living overseas, or flight attendants, and they want to schedule time in the studio for when they next return to Taiwan rather than just hoping for a free slot at short notice." Hsiao says that when image synthesizing technology gets more advanced he can help these clients to try out different hairstyles and clothes online, so that they can see how the colors match their skin tone, rather than leaving all that until they get into the studio.

Just ten years ago the Internet was a little known phenomenon. But nowadays, with instant information streaming through fiber-optic networks and the web branching out to almost every corner of the globe, it's possible to know about everything that's going on without ever stepping outside your own front door.

Five years ago Dell Computers, whose website initially just provided information about the company's products, responded to pressure from its customers and began accepting online orders. Within just one year, online business propelled Dell from relative obscurity to being the world's third largest PC vendor. When a company progresses from treating the web as an information resource to using it as a commercial channel, it has no need of a fancy storefront or huge warehouse. In fact, anyone can set up their own website and go into business. What's more, Internet operations are open 24 hours a day to consumers all around the world. Smart shoppers can now buy anything they want without even leaving the house. This is re-writing the way that business is done.

Late last year Dreamer.com.tw organized a special Internet challenge in which contestants had to support themselves for as long as possible starting with no more than NT$500, a credit card, and Internet access. In the event, the winner was the one who held out for longest by practically starving himself, which goes to show that Taiwan's Internet market is still relatively underdeveloped. （photo by Chen Ming-ching, courtesy of TVBS Weekly）

Unlimited space

What's the big appeal of shopping online? One important advantage is that "there's unlimited space in a cyberstore." Terry Chang, president of Books.com.tw, Taiwan's largest online bookseller with over 1000 orders processed every day, says that more that 500 publishers have already signed contracts with his company, representing access to about 200,000 works, far more than can be found on the shelves of chain bookstores like Kingstone and Eslite.

Says Chang: "It's expensive running a bricks-and-mortar shop, and space is at a premium." Many publishers can't even get their books into the stores. Even a top-flight publisher often gets only a small selection of its works onto the shelves. As a result a lot of quality books and established bestsellers are no longer available.

Mr. Chou, a book fan who works at Sanlih Broadcasting, says that he used to be a regular at the bookstores in Taipei's Chungching South Rd. But there seemed to be totally different books on display every time he went there, and whatever book he had been thinking about buying before had vanished. Chou now browses for books online, free of "information anxiety," and he especially appreciates such added incentives as Books.com.tw's fixed 10% discount plus free shipping.

Another point about online commodities is that they don't have to be shifted about within the store. Consumers can browse among them at speed and make instant links to other sites, and there all sorts of enhancements that can be added to the shopping experience-provided that a website is cleverly designed and makes good use of Internet functions such as hyperlinks and interactivity.

Terry Chang points out that most people visiting a bookstore will save time by heading straight for that part of the store where they know they can find books of a particular type, be it business administration, biography, travel or whatever. But a lot of the best books just don't fit in one category. For this reason, Books.com.tw has tried to group together books that are linked by a common theme but would originally have belonged in different corners of the bookstore. For example, under the theme of "anxiety," Books.com.tw offers a selection of writings from the areas of science and technology, economics, society, literature, and health, allowing readers to click their way into contact with books that they might never otherwise have encountered, and so broadening their perspectives. Readers are also encouraged to write in with their thoughts on books they have read, to help other consumers decide whether or not they want to place an order.

The coastal waters around the Palauan islands are clean, warm, and shallow. The coral and tropical fish are delightful, and even water-shy visitors can get a glimpse of this gorgeous marine vista by casual snorkeling.

Intelligent shopping

Many people agree that given the Internet's fundamental character as an information channel, products bought online can become "more than just products."

John Tsung, president of Acer Internet Services, a subsidiary of the Acer Group and operator of AcerMall cyber-market, launched three years ago, says: "As well as buying things at this website, consumers can also learn everything they want to about any particular item in the process. It's a very special kind of shopping experience."

For example, someone who purchases a bone-china coffee cup in a department store can examine its pattern and texture, but isn't likely to learn much about the origins and appreciation of bone china from the store assistant. A good website, on the other hand, would direct shoppers to specialist resources on the topic of bone china, so launching them on a voyage of web discovery.

However, even Tsung acknowledges that sending consumers out in quest of knowledge is more of an ideal than a current reality. For one thing, the majority of Internet companies are racking up big losses for the time being, and barely have the resources to provide extraneous services. Another factor is Taiwan's limited bandwidth, which slows the pace of information transmission. There are also concerns about putting shoppers within easy reach of too many other websites lest they wander off down some Internet byway and completely forget about what they came online to buy.

Judy Chi, vice president of Yam.com's e-commerce department-whose first foray into the online market was selling I-Mei brand mooncakes in time for last year's Mid-Autumn Festival-contrasts the "from-shopping-to-information" approach described above with the "from-information-services-to-e-commerce" principle, around which Yam.com is developing its shopping network.

As Chi explains, a lot of women search on Yam's women's network for information related to health or dieting, and sometimes they want to obtain the relevant books and products as a result of having read that information. If the website can supply them with the products they want, it can fulfill their needs all at once. As another example, one member of a virtual community might propose a group tour to Sydney, for which the website could rapidly propose a suitable itinerary tailored to their requirements.

Yam.com's recently launched Internet shopping service is ambitious in conception, but as yet it doesn't have a great range of products on offer. Judy Chi is not anxious, however. Yam.com gets over a million hits a day and is one of the leading portals in Taiwan, says Chi, and there are plenty of other companies willing to offer associated services, just as businesses are keen to cluster around the Sogo department store in Taipei's Chunghsiao East Rd. What is not so simple is converting that tide of visitors into a flood of spending. "The big concern is having the Internet pie in front of you but not being able to take a bite," smiles Chi. "And if you get a whole mouthful, you may well choke."

The Hung Kuo Group has just finished preparing its site for construction of the company's Palau vacation spa project, and now they are planting grass that will keep the soil from eroding. This is the largest Taiwan investment in Palau.

Hemorrhaging money

Estimates of the total number vary, but there are already several thousand e-commerce websites in Taiwan, and apart from those raking in profits selling pirated software or adult entertainment, the great majority are losing money hand over fist.

"You don't need a shop or warehouse to take part in the cyber-market, but that doesn't make it cheap," cautions John Tsung. The big worry for websites is not getting any hits. In order to attract and maintain a steady stream of visitors they have to run endless product promotions, hold PR events, and issue regular e-mail bulletins to remind punters of their existence. At present, most shopping websites use a membership system, creating an exclusive file for every customer so as to establish brand loyalty early on. AcerMall, which has been operating for three years, is still working hard to build up its clientele. But when will it start making money? John Tsung is unwilling to make a prediction.

Judy Chi cites a Yam.com survey from last year, in which 58% of respondents declared their wish to shop online. This represents astonishing potential, given that Taiwan already has over 4 million Internet users. "Today's under-twenties are online from morning to night-the Internet is their world. They play games on the web, study, chat and make friends. Of course they're going to want to shop online!"

But compared with those who still shop the old way, barging about on the sidewalk, there has been discouragingly slow growth in the numbers of Internet shoppers. It boils down to the fact that the domestic market is relatively small and the traditional way of shopping is so convenient, while the credit mechanism, on which the cyber-market depends, is not yet reliable enough here. No wonder that there is a lot of skepticism about the prospects for Internet shopping in Taiwan.

Professor Frank Hong of National Taiwan University's department of business administration contrasts the situation in the US, where vast distances and the fact that suburban residents have to get in their cars just to go for groceries, makes Internet shopping a fast and convenient alternative. Also, mail order has been in operation in the US for over a century, so there's a well-developed infrastructure for long-distance processing of orders and distribution of goods. All a company needs to do is adapt existing mail-order records for the web and it's ready to start welcoming online customers. But even in America the big online merchants, including e-commerce giant Amazon.com, are still stuck at the money-losing stage of development. For Taiwanese enterprises looking to make a quick buck off cheap, low-margin products like CDs, books and day-to-day items, it can be frustrating.

Virtual commodities

As Professor Hong points out, effective processing of Internet orders depends on a tight combination of distribution, payment and information systems. Distribution is a time-consuming and costly process in Taiwan, where traffic congestion is ever-present, so this is not the ideal place for the online purchase of the kind of commodities that have to be physically shifted to the consumer. But as Hong suggests: "Internet shopping in Taiwan ought to get back to transactions involving true cyberspace commodities, namely virtual and digitized products such as intellectual property, information and services."

Charlie Hung is the president of Winmax Technology, which two years ago set up the Hi-Tour website in conjunction with Chunghwa Telecom and Dynasty Tours, selling air tickets, making hotel bookings and providing related services. Hung saw the direction that the market was going as long as eight years ago, when he first became involved in e-commerce. The various services that Winmax now offers, including tourism, adult entertainment, education and investment consulting, all conform to the "no distribution" spirit of cyber-products.

For Winmax, a pioneer in the field of e-commerce in Taiwan, the key tools are its "dynamic database" and "instant transaction" system. As Hung explains: in order to provide air ticketing services, the Hi-Tour website has to have online links to the databases of over 500 airlines worldwide and be able to provide up-to-the-second seat availability information at any point, with no margin for mistakes. Furthermore, Winmax also has its own payment processing capability, with money transferred directly into the company accounts, just as when the consumer uses a credit card in a store.

"Digitally transmitted virtual products are going to form an increasingly important part of Internet shopping," agrees John Tsung. With this in mind, AcerMall-in addition to offering an education website-is collaborating with China Credit Information Service to provide customers with the credit records of companies that they want to do business with. AcerMall has also recently linked up with Lee & Lee Communications to sell digital fine art reproductions over the web.

Even though the trend for the future is fairly clear, Professor Hong-who is himself preparing an education website-is less than optimistic about the market prospects for virtual products in Taiwan. "Taiwan is great at manufacturing but fairly weak when it comes to intellectual and information products, especially given how hard it has been to establish the idea of protecting and respecting intellectual property. This is a matter of concern for the future."

Consumers no longer the losers

According to the Yam.com survey, consumer doubt about transaction security is another key obstacle to the development of online shopping in Taiwan. Online shoppers were disturbed by the recent incident in which hackers broke into the databases of several American companies and obtained the credit card details of online customers.

"Consumers should think carefully before using their credit cards on the Internet," cautions Lin Shih-hua, president of the Net Consumers Association and honorary chairman of the Consumers' Foundation. Although using one's card in stores also carries some risk, the customer's signature on the debit slip is still a basic requirement. If the signature is wrong then the credit card company has to carry the loss. On the web, however, where there is no need for the customer's signature, there is more scope for disputed charges.

However, Lin notes that since last December when the Association launched a website and began accepting complaints over the Internet, only about 100 complaints have come in-somewhat less than anticipated-split half-and-half between traditional consumer issues and online shopping. There have been several cases involving online scams, but the most common complaint from web users concerns the never-ending stream of spam.

Pan Ying-wei, who has made plenty of credit card purchases through overseas websites, feels that since most regular websites use a membership system there is no need to worry too much about credit card fraud. So long as you need a membership number and PIN to shop, it is very unlikely that anyone could make fraudulent use of your credit card number. (See box.)

There are still some technical stumbling blocks in the way of online shopping, but overall, says Lin Shih-hua, "the flourishing of online shopping is very good news for consumers." Transparency of information and prices is the key. Ten years ago the Consumers' Foundation used to send its people undercover into supermarkets to copy down the prices for the Foundation's pricing service. Sometimes they nearly got chucked out by irate store owners. "There's no need for that these days," laughs Lin. Several supermarket chains now give full details of prices, brands and specifications on their own websites, so consumers can compare for themselves with a few clicks of the mouse. Overseas, there are already professional websites providing consumers with this type of price comparison service.

"Companies used to monopolize commodity information, but with an efficient resource like the Internet to turn to consumers don't have to worry about always losing out." Now is the right time for consumers to start exploring the web. Are you ready to become a smart shopper?