Research on online products competition: Perspectives customization and network effects

There has been a sharp rise in the market of online products along with the development of Internet. Compared with traditional products, online products have two major characteristics, which enable them to be customized to vendors and have network effects on consumers. In this paper, both the demand and supply are considered in the research of online competition. The research has adopted the SWARM platform based on multi-agent model approach, simulating the process of competition between 5000 consumers and 2 vendors. The results show that the network effects has “Avalanche Effect”. Strengthening the network effects coefficient and providing as much differentiated customized spaces as possible are two effective means to get competitive advantages, while vendors who rely only on imitated customization will not be able to survive in the future.