This article makes two points about the economics of e-commerce. First, currently there may be eight to ten pet product retailers, but the industry should shake out to two or three retailers. The article claims that the reason for this shakeout in the pet product as well as other markets is network externalities. The copycat population explosion is a byproduct of the big rush to e-commerce in 1999. It is starting to cause considerable overcrowding, making life unpleasant for lots of e-tailers.
Many analysts say a shakeout looms.
Yet many of the Web-commerce sites claim this was the plan all along. This winnowing out may be on the verge of starting. Consider how jam-packed some of the big Internet categories have become. The list goes on and on. Of course, copycatting isn't new to business, or to the world of investing, where fads have come and gone for centuries.