Impacts of Online Shopping

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Technology

There is an increase in broadcasting, information and telecommunications technologies for internet access Increased frequency of use and sources (e.g. mobile devices, TV etc) for internet access by online shoppers

Economic
High interest rates slow UK consumer spending.
The credit squeeze and the housing slump has reduced consumer spending in the USA. However, consumer spending is rising in China and India due to high economic growth in both countries.

Internet retailing will see tremendous growth
between 2006 and 2011 with sales rising over
100%. This growth is fuelled by the number of on-
line households in the US, which has increased by
85% since 2000.
More potential Customers for online shopping

Markets
Tap Global Markets

Political
Government policies promote competition through telecom liberalization, e-commerce promotion and legislation (Held et al., 199 More affordable internet access and increase in internet users

High government investment in national ICT infrastructures
Faster, better and more reliable internet access for national users

Legal
No uniform regulations governing e-commerce
covering all the countries e.g Data Protection Act in UK and Federal Trade Commission in USA Be aware of both the domestic and international laws

Environmental
Global Warming/ Pollution Awareness
Less car journeys, more shopping online.

Social
Increase in online social networking
Marketing needs to take advantage of this new channel

Product category risk and financial risk decrease online shopping Need to consider overcoming risks to increase users

Growth of internet from 2002 to 2007 is 244.7%.
18.9% of world population use the internet opportunity to increase market share.

PORTERS FIVE FORCES MODEL
Threat of new entrants
Low – For online established retailers a
strong brand image generates consumer
trust

Low - Economies of scale – Retailers that
have refined technology and processes and
are able to buy in bulk can offer the lowest
prices. This is a major competitive
advantage as there is much choice online

Low - Strong experience in the online
retail industry gives e-retailers advantages
in terms of cost and customer loyalty

High - Capital requirement entry is a low
for online businesses’ as cost of lease
premises is minimal

Power of buyer
High – There is a large variety of online shops
and comparison websites to compare best prices

Threat of Substitutes
High - Physical stores and touch, feel,
hear factors (Ward, 2001)
High - Renting products online instead
of buying them is increasing in
popularity. This is a major concern for
Amazon in their book sales as online
retailers such as Textbookflix.com and
BookRenter.com are providing much
cheaper options than buying

High – The internet is a “Global
Market”, consumers can substitute any
product by purchasing from companies
overseas where products are cheaper, but
of good quality
Low – Catalogue/mail order although
not as popular still a substitute to online
buying

POWER OF SUPPLIERS
Low – For standardised products that are easily available supplier power will be low

High - Specialised products and brands increase switching costs for buyers so the suppliers have higher power. With Amazon products such as the Harry Potter books are exclusive from publisher

High - Online shops making it easier for publishers/ brands to sell directly to consumers without a third party (e.g. Blackwell’s), suppliers may not need Amazon

High – If there is a concentration of suppliers for certain products in the industry rather than fragmented

Low - Global shipping has increased the amount of suppliers available

Competitive Rivalry
High– As search engines are becoming
the first choice for consumers when
shopping on-line e.g. Google. This
increases the opportunities for other
retailers (Cassiman & Sieber, 2002)

High – There is an increasing...
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