Greater access to the internet has enabled buyers to search more easily for information about potential suppliers of goods and services. This has significantly affected many industries, such as insurance, banking, retailing and travel. To what extent do you think that increased internet usage inevitably reduces producers’ profits? Justify your answer with reference to organizations and/or industries that you know.
Over the past decade, Shopping on the internet has skyrocketed with internet sales reaching almost £30 billion in 2012, which accounts to almost 10% of total sales in the UK. This is due to the increased possession of Internet devices such as: smartphones, laptops and computers. It has become much easier and simpler for consumers to buy products online using these devices. Increased internet security has also increased demand for online shopping due to customers being confident in undergoing an online transaction.
Another advantage of selling items on the internet is that it gives you the opportunity to advertise your or another companies products. Over 80% of the British population uses the internet regularly which opens up a massive market for advertising and for companies to show their products to users of the internet. However, results in increased internet usage have resulted in the decreased need for physical advertising such as: books, magazines and newspapers which have begun to prove more ineffective in advertising products. For example, a double paged spread in a popular newspaper can exceed costs of £10,000 while costs of advertising on a high traffic website may only cost £200 a month.
Jessops has recently entered administration and is a perfect example as to how increased internet usage can reduce profits for some firms. Its target market was camera lovers, which prints out photos, sells cameras and a large number of accessories. Despite being an online retailer, Jessops failed to compete with the low prices of Amazon, Curry’s...
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