The Effects Of Internet On Business - Term Paper Example

The Effects Of Internet On Business Introduction The emergence of internet and related online technologies dramatically changed the way the world operates. Internet based applications keep the world connected and specifically enhances the flow of information regardless of geographical restrictions. Evidently, such dramatic improvements in information flow have had tremendous effects on the way companies run their day to day operations. The business sector chosen for this assignment is online retail industry, which constitutes a significant portion of current business transactions. The modern business world greatly depends upon the online retail industry as this sector provides customers with many shopping conveniences and time benefits. This paper will specifically discuss online retail industry, and analyze how internet related capabilities have impacted marketing and sales practices, distribution, governmental activities, bill paying, and banking transactions in this sector. To illustrate the changes clearly, the paper will give a specific focus on the Amazon, a US based multinational E-commerce company headquartered in Seattle. Online Retail Industry Undoubtedly, emergence of internet contributed to the development of online retail industry. Business houses realized that internet based operations would be an effective way to expand their market coverage and thereby improve market share. However, companies identified that technological innovations and efficient management are two components necessary for ensuring successful business operations. Historically, online retail industry has been established and grown in the United States very fast as compared to other developed nations. It is obvious that US is much ahead of other industrialized nations in case of IT advancements, and hence the country’s online retail industry performs well. While analyzing the current US online retail industry, it seems that this business sector has not been much affected by the recent global recession even though this crisis weakened the overall US economic growth. According to a Forrester projection (as cited in Wauters), the US online retail sector will grow by 10 percent during the period 2010-2015 and reach $279 billion in 2015. This growth rate is greatly enhanced by the US online retail giant Amazon.com. The Amazon was founded by Jeff Bezos in1994. Although the company began its operations as an online bookstore, it rapidly expanded its business to other areas such as DVDs, CDs, MP3 downloads, video games, apparel, computer software, food and toys. Currently, Amazon is positioned as the world’s largest online retailer. Influence of Internet on Online Retail Sector Evidently, improved information flow has brought tremendous changes to marketing and sales activities in the online retail sector. Before the introduction of E-commerce facilities, companies used traditional promotional channels to market and sell their products. Such promotional efforts often required companies to spend huge costs and long hours to obtain even a small increase in sales. However, advancements of online media made it easier for companies to promote their products easily, affordably, and effectively. Nowadays, millions of people around the globe browse internet everyday and majority of the people have easy access to this cyber globe. Hence, internet is today considered as the best channel for the promotion of products and services. It consequently improves sales returns also. To illustrate, before the advent of internet, it was a cumbersome task for marketers to promote items such as books, MP3s, and software because there were no effective ways for displaying those items to customers. The growth of internet based applications aided companies enable their customers to check those items before purchasing them. Amazon uses an array of marketing efforts to promote its products across the globe, and such efforts are supported by online media. In order to enhance its promotional efforts, Amazon has developed some personalized applications by which customers are treated individually. For instance, the company uses a customized application where a personal greeting message pops up when an individual customer logs in to his Amazon account. Such techniques benefit the company to make an emotional attachment with its customers. It case of products like music, software, and books, online retail stores including Amazon and eBay realize more sales revenues than any other physical store because physical sellers have no competitive techniques to market those products. Similarly, effectual information flow has significantly restructured online selling and distribution practices too. Since internet facilitates transfer information from one place to another at the speed of an eye blink, online retail companies like Amazon assist their customers to purchase items using credit card facilities. In addition, customers are given the opportunity to check and compare different items before making a purchase. Since detailed product information is displayed on the Amazon website, customers can more conveniently shop products without the assistance of a salesman. Amazon today uses cross-channel technologies to offer seamless shopping experiences to its customers. Amazon allows its customers to order products online and receive them from, or subsequently return them to any of the company stores according to customer convenience. Furthermore, the company uses extensive measures to categorize its product lines on the ground of number of customer views and frequency of people traffic to a particular page. Based on such information, Amazon provides its customers with better product suggestions when customers look for a particular product item. While scrutinizing the influence of internet on Amazon sales practices, the company’s one click purchase options seems to be the most fascinating innovation. Many customers opine that this option is one of the most convenient and attractive features provided by Amazon. In the absence of internet, it is never possible for customers to check such a huge range of products within a few minutes. As Wauters points out, new techniques such as flash sales and group buying have been introduced in the online retail sector and such features offer more improved services to customers. The online shopping process also benefits customers to get the products delivered at their home. Evidently, better information flow has assisted the Amazon to maintain a broader and efficient distribution network. Easy and quick information flow assists Amazon to effectively integrate and coordinate its various supply chain activities including distribution and thereby give quality services to its customers. Evidently, easy availability of information aids online retailers to provide their customers with more convenient shopping experiences. Similarly, the dramatic growth of internet over the last decade assisted governments to effectively regulate online retail business sectors. It is observed that the US government particularly focuses on areas like ‘privacy, copyright, security, and taxation’ (“Online business law”). In the view of many online business experts, governments impose more restrictions on online businesses than any other business because chances of fraud are more common in the e-business industry. In United States, the Federal Trade Commission (FTC) is responsible for regulating online business activities like ‘use of commercial e-mails, online advertising, and consumer privacy’ (“Online business law”). It seems that online retail giants like Amazon collect and retain huge volume of confidential information from their customers during the course of business. Since leakage of sensitive personal information would cause numerous troubles to customers, governments give specific focus on consumer privacy. The Federal Government has a set of consumer privacy policies that make online retailers like Amazon legally obliged to protect confidential customer information. In addition, governments require online retailers to protect intellectual property rights while marketing and selling their products. Those requirements force online business organizations to abstain from unfair and unlawful business practices. Undoubtedly, development of internet and easy availability of information have notably contributed to banking operations including bill paying. Quick flow of information made it easier for online retail firms to remit their bills from any part of the world. This feature assists the online retail sector to avoid the possible time delay involved in traditional bill paying mechanisms. Nowadays, most of the online retailers use internet banking facilities to pay their bills and realize account receivables. In addition, internet facilitates quick transfer of funds and this situation greatly aids online retail sector to immediately respond to unforeseen contingencies. Traditionally, the process of fund transfer had involved a series of procedural complexities as there were no effective technologies to coordinate banking operations. Since the internet banking promotes fast transfer of funds, online retailers like Amazon do not have to keep huge amount of working capital with them. AsMann and Roberts describe, through chargeback, a recently developed banking service banks initiate to forcibly return funds to their customers. The process of chargeback occurs when a company unfairly charges a customer for its products and services (1159). Such banking services greatly assist Amazon customers to get their money back if the company charges unfairly or delivers poor quality products. The most notable advantage of internet based banking is that this concept avoids physical transfer of money and hence adds value to transfer security. In total, the fast development of internet significantly contributed to online retailers’ banking efficiency. Conclusion From the above discussion, it is clear that dramatic growth of internet and easy availability of information have extremely changed the way online retail business is conducted. Development of internet has improved online retailers’ supply chain activities including selling and distribution. In addition, areas like marketing, governmental activities, and banking in online retail industry have undergone tremendous changes as a result of enhanced growth of internet technologies. Works Cited Mann, Richard A & Roberts, Barry S. Business Law and the Regulation of Business. USA: Cengage Learning, 2007. Print. “Online business law.” SBA. Gov. (n.d). Web. 28 July 2012. Wauters, Robin. “U. S. Online retail industry could be worth $ 279 billion in 2015.” Seeking Alpha. (2011). Web. 28 July 2012. Read More