What is the likely Long Term effect on UK retailing of Internet shopping

E-Commerce or the internet's World Wide Web has enabled us utilize the possibilities of a new direct and interactive shopping channel that is free from boundaries or limitations of time and geography. Online storefronts are being created to sell goods and services over the Internet. These storefronts or Internet Retail outlets usually cost low to establish, and yet they provide updated products and services offerings on demand. Customers can have an instant opportunity all around the world, 24 hour a day access to these storefronts using web browsers. They can explore information about required products or term papers, even can place an order for a product, receive follow-up service and in some cases, in fact take delivery over the web with just some clicks and keystrokes. Whereas some separate or individual Internet retail storefronts some times form grouped to develop electronic malls that has number of things to offer their customer.

Internet retailing is an innovation that many envisage will encounter phenomenal growth. Given these expectations, many businesses feel compelled to develop a web presence for reason to accomplish their long-term goal. Others, however, are less enthusiastic about the commercial potential of the web, pointing out the many challenges that the new retail form faces in terms of user acceptance (Alba et al, 1996).

Formation of E-commerce is firmly connected with Internet revolution. Even digital market is quite quantitatively not so large, but it is very persistent and is possibly to gain vast attractiveness in the near future. It enhances the development of new business ideas or models and brings about changes at organizational level. It also provides new and flexible ways for international trade and is a means of providing services and goods across borders. Definitely it affects markets by increasing the efficiency of transactions, by providing more quality and variety. The absolute prospective of e-commerce is massive as Internet-Shopping is on rise. Internet customers usually have greater access to the information than their traditional retail customers. The Internet purchase can take a really short time-as soon as the customer completes a shopping request the online retailer contact them and products can be delivered as soon as possible even on next or same day delivery depending on the type transaction.

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Internet Retailing, it seems, still has its limits. Does that mean its arrival is more hype than reality? Rather as it is for most of the Internet Retailers themselves? In some ways, the answer could be yes. Usually the Internet shopping was dealing on quite a narrow range of goods: mainly books, toys and music. Online shopping threw up as many stories of failed and late deliveries as of explosive growth. And unluckily, a string of hackers’ attacks have temporarily closed some of the renowned Internet retailing websites or a certain period. Perhaps Internet Retailers in the physical world need not lose much sleep over the Internet, or at least not yet?

Long term Effects on UK Retailing of Internet Shopping

If it is hypothesized that Internet retailing would directly estimate the conditions necessary for perfect competition by increasing product information and price transparency, the concentration of Internet retail firms and the pricing patterns observed therefore it provide understanding that an oligopoly is a more probable market structure for understanding the current online retail industry. High endogenous sunk costs create a barrier to entry into the industry, but those online retailers that manage themselves to survive will be able to exploit the outcomes of retailing through the Internet, such as the low cost of handling a wealth of information, this can improved the opportunities for price discrimination, and savings in operating costs.

Retailing characteristics such as neighborhood shopping centers should remain comparatively well isolated from online competition, as much of their importance develop from geographical expediency for consumers to make instant responses, for instance small-ticket purchases. Power centers, which normally coalesce a discount department store with numerous well-defined categorized retailers, may be at greater or higher risk, since clients tend to frequent these centers offer better prices and products, not because they offer superior service or an unexpectedly enjoyable shopping incidence.
Thus successful online retailers just not depend on their capacity to use Internet technology to their advantage but also on their capability to assess customer preferences by giving quality service and website features that will tackle the major issues to online shopping that may arise in particular situation. As Internet retailers develops more skills to tackle these challenges, the evolution of the online retail industry is expected to have a greater impact in long-term on the traditional retailing in particular to United Kingdom environment, so these traditional retailers must either implement strategies to compete with the likely threat of online competition or choose to expand their retailing onto the Internet.

1. The Business-to-Consumer Retail Industry
It is estimated that Internet retail sales of goods and services would be increasing rapidly. With the prospective growth that is forecasted for Internet shopping, it is important to study characteristics of this industry in order to understand the long-term impact that it will have on UK traditional retail trade as a whole. Thus, analysis will begin with a description of the conditions of the general retail industry and then will focus on aspects that are unique to online retail.
The business-to-consumer retail industry encompasses all of those products that are produced by firms and subsequently purchased by consumers, excluding transactions, which are between from one business to another business. Most firms from similar industries all produce one extensive type of good and then focus on differentiating their individual product attributes through a large number of varying characteristics.

2. Internet Economics for the B-to-C Retail Industry
Basically, Internet is a tool that facilitates and dramatically decreases the cost of the flow of information. This would be likely effect to have on the market for retail goods are the lowering of search costs for buyers and sellers to obtain information and an increase in competitive pressure on traditional or offline retailing. In the Internet’s emerging years it was assumed that E-Commerce would very nearly meet the assumptions of a perfectly competitive market, particularly perfect information, no transaction costs, free entry and exit, and price taking by consumers and producers.
 

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3. Search Costs
Being saving costs associated to searching will also affect the traditional retailing. Because online retailing for businesses and consumers provides competitive edge, as both parties are no longer confined by the geogra1phical constraints that limit their options in traditional retailing. Retailers are limited to those customers that wish to expend the resources necessary to visit their physical location. Whereas Internet retailers reach any individual that has access to the Internet, and because the costs of providing information on a website do not differ with the geographical location of customers.

4. Competitive Advantages of Online Operations
As a fact has already been develop that online retailing needs large amount to be budgeted for sunk costs that is for promotional activities and website development. Internet retailers may realize significant cost benefits available in back-end operations by developing an online business, as compared to starting and escalating conventional retailing operations. Firms that are online are not forced by the limited shelf and inventory space that normally retailers need to maintain for each their inventory; instead, online retailer may maintain their products inventory in a space-maximizing warehouse, since they are not directly displayed consumers.

Traditional retailers typically have high costs of maintaining inventories for a number of products in locations that are geographically spread out. This, one benefit for Internet retailer firms are the economies of scale realized in maintaining centralized inventories will have significant impact over UK retailing in long-term. Moreover, Online Retailers enjoy significant increasing returns from “the infrastructure that is required- sophisticated fulfillment technology, efficient call centers, websites that offer accurate in-stock information, order tracking, comparison engines and product configurators” (Borenstein and Saloner, p. 11).  One Major long-term effect on UK Retailing is as the Internet market matures or develops; the online retailing or shopping industry may develop to more directly reflect their potential competencies. One key to profitable modern retailing has been the constellation of a variety of stores under a single entity, this might guide to the development of virtual malls on the Internet.

The B&M retailers that have planed to establish an online selling capacity (effectively transforming themselves into C&M retailers) have generally been successful comparative to pure play Internet firms, mainly through exploiting the advantages inherent in running physical and online operations. One of the most apparent advantages is the value of an established brand name and reputation in attracting customers to a C&M website (Sanderson and Zook). One the major point is also considered in Internet Retailing that, customers are very much concerned about transaction security and privacy and are more likely to frequent visitor of the website of a retailer whom they have develop the feeling of trust.

Future Considerations
If the failure to physically examine goods and business deal security concerns are two of the main deterrents to the success of online retail, advancement in technology might develop solution for these or other issues or problems.

Conclusion
The long-term effects of Internet shopping on traditional retailing will also be felt in pricing, which develop the likely hood to become much more competitive to traditional retailer, in the arena of retail industry. While existing intermediaries, from retailers to stockbrokers to banks, may find their role has been eradicated or eliminated in the field of Online Retailing. The emerging of new intermediaries such as shopping robots will add further complexity and complication to the implementation of Internet Retailing. In general, connected consumers are usually take benefit at the expense of producers or retailer and, especially, of middlemen who add little value to transactions. It is vital to understand that Internet retailing or shopping is a very young industry, and thus, these observations or findings regarding market structure and online pricing are build on just a few years of data. This makes it problematic to drive certain definitive conclusions regarding the Internet Retail industry. Additionally, many of Internet new firms engaged in “penetrative pricing” strategies, where these internet retail firms charge their prices at par or below cost, having hope that will be helping them building a good customer base which would compensate in future transactions for the losses they incurred. This pricing strategy proved to be invalid and one of the main factors in the failure of a large number of Internet based firms. Hence, in deducing market structure and pricing patterns for the long-term future of the Internet industry, it is important to understand the relationship between pricing and firm success.


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