Impact of E-Commerce on different stakeholder groups

Alex Charnell
Mind Map by Alex Charnell, updated more than 1 year ago
Alex Charnell
Created by Alex Charnell over 5 years ago
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A Level Business (JW Unit 4) Mind Map on Impact of E-Commerce on different stakeholder groups, created by Alex Charnell on 03/08/2016.

Resource summary

Impact of E-Commerce on different stakeholder groups
  1. Task 1 - The impact on Customers & Consumers
    1. The use of the online market has enabled customers to access a wider range of products from around the globe. This means that customers can now access products that are avaliable in other countries that might ne be avalibale through their home market.
      1. Customers can now order the products directly from the manufacture as well as accessing markets across the world meaning customers can access the lowest price. It could also take into account the exchange rate meaning producdts might be cheaper in other countries.
        1. This allows for a greater availability of products as they can now be sourced from around the globe by the customer themselves. As well as this if the order system is linked to the stockists product supplies can be replenished before the of the stock is completely diminished.
      2. Customers can now quickly access the information they need such as price and and the specific product delatils from the comfort of their home. This is important as it will reduce the cost of reaserch as the cutomers dont have to visit physical stores to access the information.
        1. This is beneficial to the customer and consumers as it allows for price comparrisons to be made between different websites such as Amazon and Currys online store. Thus saving the customer money and time as they havent got to physically visit stores.
          1. Customers can also use price comparison websites, which takes even more of the hassle out of the process as prices will be compared from a range of different websites ensuring the cheapest price is displayed.
          2. The use of E-Commerce has also given the customers a greater flexibility and made shopping more convenient as people can now shop in their free time or late at night when traditional retail stores arent open.
            1. The cost to the customer is also reduced as they dont have to travel to the physical retailers to buy the product so the cost of transport and inconvenience is reduced.
            2. Deliveries are quicker as E-Commerce has sped up the process as products are processed and sent out via next day delivery services. Companies such as amazon offer these serves if you spend over £20 you get next day delivery for free.
              1. People can now have personalised products as e-Commerce has allowed direct contact between the customer and the manufacture an example would be ordering specific parts in a computer.
                1. Limitations
                  1. Basic technology skills are required to benefit from the online E-commerce market. So people have to be able to navigate computers and the internet in order to take advantage of this.
                    1. The cost of the equiptment such as getting internet access and a computer.
                      1. Concerns over the privacy of peoples information such as online banking details.
                    2. Task 2 - The impact on Employees
                      1. The process of automation in many businesses has lead to staff redundancy's as less staff are needed to run the day to day operations.
                        1. As companies have heavily focused on the online market there is less need for sales assistants and floor staff as online shopping is becoming a more popular alternative.
                          1. More people shop online meaning advice is often via call centres or emails meaning the traditional sales assistant is probably seeing a reduction in the amount of working hours as more people shop online than visit the traditional bricks and motor business.
                            1. As systems have been automated there is less need for the skilled workforce, meaning people aren't required to have as many specific skills.
                              1. This is a problem as staff could be laid off for cheaper alternatives as most of the jobs have become automated meaning the skillset that is required is a lot less compared to before the automation was installed.
                                1. There could also be lower pay rates as fewer skills are required.
                        2. One of the main sectors that e-commerce has had a negative impact would be on Book Shops.
                          1. An example is Borders as they went into administration in 2009 with a loss of 1,500 jobs.
                            1. Supermarkets and online retailers such as Amazon have taken hold of the competition causing problems for the traditional book shop.
                          2. Redeployment & Retraining
                            1. People working in existing retail stores might take jobs offered by online retailers.
                              1. These jobs include working within the warehouse, deliveries, customer support.
                                1. Staff would have to learn new skills to be able to operate the new systems and staff could find this difficult depending on their age.
                                2. Employee performance could be reduced as they might have to take jobs in areas they don't enjoy working.
                                  1. This could include working in a distribution centre for Amazon as they might miss interacting with customers.
                                    1. This could reduce employee morale and reduce their efficiency.
                                3. Task 3 - The impact on Owners & Shareholders
                                  1. Positive Impacts
                                    1. The introduction of E-Commerce technology has enabled profits to increase and the initial startup cost to reduce.
                                      1. The online business has access to a wider audience and in some cases global audience and this would enable business to gain a greater market share thus increase there overall profit.
                                        1. The amount of dividends would increase over time as it would take a certain amount of time before the online business became recognised meaning the sales figures would increase over time.
                                          1. The initial setup cost is substantially lower as the business often doesn't have to set up any physical stores and often the goods are bought directly from the manufacture.
                                            1. Also the amount of staff that have to be employed is alot less as there are no physical stores meaning the distribution centre is the main area for staff employment.
                                          2. Negative Impacts
                                            1. Existing retailers and shops are affected by the online stores as they can offer products at lower prices than a traditional bricks and mortar business.
                                              1. The online market can also causes other traditional businesses to follow suit and also lower their prices causing a pricing war.
                                                1. The problem with this is that bricks and mortar businesses profit margins will be reduced as the online compertitors can often offer the product at a lower prices as they sell direct to the customer eliminating the middle man.
                                                2. Lower dividends to shareholders as the online market is increasing in popularity.
                                                  1. The barriers to entry are a lot lower as the initial capital to set up is a lot less due to the simplicity of the system.
                                                    1. This means that more online retailers are entering the market, resulting in traditional businesses closing such as Borders Ltd as the online retailers over to the business causing it close.
                                                3. Task 4 - The impact on Landlords
                                                  1. As there are more online entrants they often work out of warehouses on the outskirts of town to reduce their costs.
                                                    1. Landlords will also see a reduction in the amount of businesses renting retail property as the online market is causing many businesses to fall into administration due to the competition online rivals such as Amazon.
                                                      1. Traditional bricks and mortar businesses may also seek a reduction in their rent which would lead to a reduced income for the landlord.
                                                        1. The decline of the high-street could also lead to a fall in the rental prices as there are few businesses looking to rent. This will cause landlords to suffer as if the building is still on a mortgage they could struggle to pay it.
                                                          1. Only small numbers of businesses would be looking to rent property as the increasing popularity of online shopping means that many new retailers entering the market Will just operate online meaning the need for physical retail stores is reduced.
                                                        2. Task 5 - The impact on Suppliers
                                                          1. As companies can compare prices easily it means that if one supplier is too expensive the customer will often move.
                                                            1. Switching costs would be lower as often online sellers deliver to the customer directly from the manufacture.
                                                            2. But if a company has had EDI systems installed to work with one supplier the switching costs would be much higher.
                                                              1. This would allow the supplier to charge higher prices as the company is less likely to leave the current supplier due to the initial investment of the EDI systems.
                                                              2. Suppliers selling specific items such as shop furniture would be the worst affected as the need for these items will continue to diminish as the online shopping market continues to grow.
                                                              3. Task 6 - The impact on the Local Community & Wider Society
                                                                1. The main impact that would arise is the loss of local jobs due to the closure of high street shops.
                                                                  1. This would have a negative impact on the local people as it would mean the high street would fall into decline as well as the locals having to source jobs elsewhere.
                                                                    1. The problem with this is that money is then going to be spent outside of the town, which could lead to more problems such as people moving out closer to new jobs.
                                                                  2. More people would start to work from home as the online industry allows for companies to be managed from the home environment.
                                                                    1. People could have to move out of rural towns to cities to find new jobs.
                                                                    2. Personal and social skills would be reduced as many people would have less contact with the real world as most of the new jobs require online access and not talking to a physical person.
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