Abstract
The economic impact of e-commerce in Singapore is measured via three channels: (1) aggregate demand stimulative effect of capital investment, (2) the productivity effect resulting from capital investment, and (3) of the price and cost reduction effect associated with the productive use of e-commerce transactions. Using input-output technique pioneered by Nobel laureate W. Leontief, and econometric analysis, it finds that e-commerce in Singapore accounts for S$35.5 billion of output (or sales revenue) and S$7.9 billion of value-added in 2018. These are respectively equivalent to 2.8% of the nation gross output and 1.7% of the annual GDP. E-commerce has supported more than 68,500 jobs and stimulated the formation of about 758 new company formation in the year. The value-added contribution by e-commerce is projected to grow from S$7.9 billion in 2018 to S$10.1 billion in 2020 and further to S$28.1 billion in 2030. As a percentage of GDP, e-commerce accounts for about 1.7% of GDP in 2018, and this proportion is expected to increase to 1.9% in 2020 and further to 3.5% in 2030.
TopLiterature Review
Definition of e-Commerce
E-commerce refers to the trading of goods or services over computer networks such as the internet. In this study, e-commerce is taken to mean doing business electronically. More formally, e-commerce transactions, according to OECD (2011, pg. 172), are defined as ‘the sale or purchase of goods or services, conducted over computer networks by methods specifically designed for the purpose of receiving or placing or orders..’. It is important to note, under this definition, that ‘the goods or services are ordered by these methods, but the payment and the ultimate delivery of the goods or services do not have to be conducted online’ (OECD, 2011, p. 72). This new definition is now used in data collection in most EU member countries. It includes orders placed on web pages, EDI and extranet, and excludes orders made by telephone, facsimile or manually typed e-mails. In addition, the term “computer network” is broadly defined to give the flexibility to accommodate future changes in how e-commerce is conducted.
Other than buying and selling, many people use Internet as a source of information to compare prices or look at the latest products on offer before making a purchase online or at a traditional store. E-business is sometimes used as another term for the same process. More often, though, it is used to define a broader process of how the Internet is changing the way companies do business, of the way they relate to their customers and suppliers, and of the way they think about such functions as marketing and logistics.
Other terms that are often used when talking about e-commerce are B2B and B2C, shorthand for business-to-business, where companies do business with each other, and business-to consumer (B2C), where companies do business with consumers using the Internet. These are considered main forms of e-commerce.
Key Terms in this Chapter
B2B: Business to Business. Transactions between businesses.
Network Effects: Network effects occur where the value of a product or service to an individual user depends on the number of other users.
E-Commerce: Activities related to the buying and selling of goods or services over the internet, including ordering of goods and services online and ancillary activities that support such transactions, including the interaction between businesses across the supply chain.
Online Trading: Buying and selling goods or services over the internet.
Induced Effect: Measure of changes in sales, jobs and income in the economy resulting from household spending of income earned either directly or indirectly from spending on the project.
Indirect Effect: Measure of changes in sales, jobs and income within in the economy resulting from their operation in supplying industries supporting the change in direct demand.
B2C: Business to Consumers. Transactions between businesses and consumers.
Backward Linkage: A relative measure of the potential increase in output induced in upstream industries resulting from a dollar increase in the industry’s output.
Forward Linkage: A relative measures the output induced in downstream industries in response to a dollar increase in the industry’s output.
Omni-Channel Retailing: An emerging business model where firms seek to engage with customers and supply products or services seamlessly across different channels (e.g., online and offline).
Platform (Including Two-Sided or Multi-Sided Platforms): An intermediary, connecting different types of users on each ‘side’ (e.g. a marketplace with buyers on one side and sellers on the other).
Multiplier: A measure of the cumulative effects that an initial (unit) change in economic activity (such as spending in e-commerce) has on the economy.