Washington, DC – Anticompetitive barriers to eCommerce will cost consumers $32.6 billion this year and more that $200 billion over the next five years according to a report released by NetChoice today. Entitled “The State of eCommerce 2002: Beyond the Bubble, Beware the Barriers,” the report finds that these barriers and persistent efforts to create new ones threaten the future of e-Commerce.
eCommerce barriers include any law, regulation, rule, or business practice that significantly impedes more cost-effective, more efficient, and more direct delivery of goods and services to the consumer. With online retail sales are growing ten times faster than overall retail sales, many traditional middlemen (car dealers, alcohol distributors, real estate agents, etc.) are trying to preserve existing barriers and create new ones as a way to prevent online competition. These barriers already prevent automobile manufacturers and wineries from selling directly to consumers and severely limit the ability of consumers to buy things like contact lenses and homes online.
The report analyzes costs specifically in the airline travel, automotive sales, residential real estate, and contact lens markets. According to the report, barriers to direct sales of automotives will cost consumers nearly $25 billion this year and more than $150 billion over the next five years. In the residential realty market, anticompetitive efforts by offline realtors and laws preventing commission rebates will cost consumers $7 billion this year and nearly $46 billion over the next five. Efforts to prevent patients from buying contact lenses online and laws prohibiting multi-channel sales will cost consumers $470 million this year and $3 billion over the next five. The anticompetitive tactics of travel agents and green-screen computer reservation systems have slowed the implementation of newer, faster and less expensive technologies that would save consumers more than $1 billion over the next five years.
“We found that the greatest threats to eCommerce are old-economy middlemen and their lobbyists,” said Steve DelBianco, executive director of NetChoice. “In just four markets, the anticompetitive efforts of these middlemen could cost consumers $200 billion over the next five years. It’s time for governments and consumers to start fighting back.”
In the report, NetChoice suggests several ways to remove these barriers and ensure the growth of eCommerce in the future. It calls on state governments to dismantle vertical restrictions and re-examine rules that prevent direct sales. Congress can preempt state restrictions and help businesses and consumers avoid the costs of a patchwork of state laws. Consumers can band together to let companies and governments know that they won’t tolerate artificial barriers that limit choice and raise prices. Finally, industry and professional associations should work to apply the promise of eCommerce, not to block it.