Social Implications of E-Commerce
The vast majority of products one would ever need to purchase can be found on the internet. A few clicks of the mouse and anything you could ever want can be sent straight to your door, but this wasn’t always the case. Online shopping – something a lot of us couldn’t do without these days – is a fairly recent development. In 1991 a ban on commercial businesses operating on the internet was lifted, paving the way for e-commerce websites to develop.
Amazon was launched in 1995 and set the standard for customer focused e-commerce websites, despite the fact it did not turn a profit for 6 years. Bay was launched in the same year and by 1996 had sold $7. 2million worth of goods while having only two full time employees. Before Amazon and eBay opened the gates of e-commerce customers had two choices for their shopping needs – brick and mortar shops or mail order catalogues. Word of mouth was very important for businesses as customers had limited means of price comparison or product reviews; unlike today where a simple web search can show in an instant which stores have the cheapest prices or which products are the most popular.
With websites such as Groupon or Wowcher consumers can get huge discounts on products or services that would otherwise not be available. This information is also available to the business; which means they can always know what the competition is up to and undercut them or offer a price match guarantee, making sure they always have a competitive edge. Twenty years ago location was the most important factor for businesses. Shops placed on busy streets had the highest flow of customers and therefore the highest profits.
Similarly if there was only one butchers shop in a small town the owner would be guaranteed frequent repeat customers, regardless of price or quality, due to the lack of choice or information available to customers. With the popularisation of online shopping businesses can be extremely successful without ever having a high street presence. Even small niche shops in obscure locations can establish a loyal customer base if they have a good online presence, the internet makes it quick and easy to spread the word about a business.
Transactions can be carried out at any time of the day which means the business can continue to make money beyond normal trading hours. Business will also not be affected by bad weather or problems with public transport – if fact these things might even help an online business because it would be more convenient for the customer to shop online rather than go to the high street. A wider range of stock can be offered for sale online and orders can be filled as they come in, which saves money on warehouse costs.
It also reduces the risk of over ordering on a product that doesn’t sell well. Designs can easily be changed at any time on a website, this is much harder to do with a brick store. If the website offers a feedback submission form the customers can tell the company what they would like to see and the website can change accordingly. Business start-up was very different before the age of e-commerce. The costs involved in setting up a high street location are considerably higher than the start-up costs of an online business.
If a business didn’t take off it would leave the owners with a lot of costly equipment and a huge hole in their bank accounts. Setting up an online business can be achieved with very little initial cost; especially if the entrepreneur chooses to use a third party such as eBay to sell their product. Businesses have the freedom to start very small and grow as the profits start to come in. If a business is not successful the costs are easily written off.
Advertising a new online business can often be done for free, most company’s now have Facebook and twitter pages to advertise their business and huge interest can be generated in a business if they “go viral” – this is a phrase used on the internet to describe advertising that is interesting or funny in such a way that people who see it want to show it to all their friends. Many hosting companies also offer Google ad words vouchers so the company can spread the word for no cost at all in the beginning.
Opening a brick shop – especially on your own – requires a wide range of skills, contacts (suppliers, investors, etc. ) and very long working hours to keep the business running in the beginning. Whereas using websites like eBay or amazon is accessible to anyone with basic computer knowledge and a couple of hours a week of free time. Many brick businesses were already well established before the internet was widely available to the public and later launched websites to complement their already popular high street stores.
These days small companies or individuals can easily start to sell their products on the internet first; and if their online endeavours prove to be successful they may later open a physical store. Simply be is one example of this. While the cost and effort involved in starting an online business is very minimal, the competition is fierce. As mentioned above, before the days of online shopping customers had very little choice about where to spend their money; it’s a very different story today. The list of places to shop online is almost endless and it can be extremely difficult to stand out and grab the customers’ attention.
The fact that it’s so easy to set up an online business also means that it’s just as easy to give up on said business. The internet is forever changing and in turn makes customers fickle and less likely to be loyal to one particular brand. Business owners who have put in a lot of time, effort and money in to setting up a shop are much less likely to give up at the first hurdle. This is why stores that have been around for decades continue to thrive today; such businesses would probably still survive for a very long time even if they chose not to expand their business to the online customer base.