Friday, July 16, 2010

How does the Internet affect retailing?

A study of three industries (travel agencies, book stores, and car dealerships) found two effects.

  1. the Internet facilitates price comparisons which leads to "intensified price competition and through it to lower variation, or “dispersion”, in prices."  
  2. In all three cases the growth of internet traffic and online shopping affected the structure of the industry, not just prices. In general larger firms grew at the expense of smaller ones.


  1. Online retail sales sustained its growth rate from offline stores indicating that customers are more comfortable with the online shopping than offline stores.

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