E-commerce and the changing use of ICT

1. Changing use of ICT: faster broadband, smartphones and secure online payment have made it normal for a customer to buy from a business without ever entering its premises.
   1. A shopper can compare televisions, read reviews and order one from Currys for next-day delivery without leaving the sofa.
2. Where the business activity happens changes. Sales move from a till on a shop floor to a website, so the firm spends its money on a warehouse, packing and delivery rather than on prime retail space.

Using e-commerce to reach a wider market

1. A national and international market: a website is not limited by how far a customer will travel, so a firm based in one town can sell to buyers across the UK and overseas.
2. Open all hours: an online shop takes orders at 2am and on bank holidays, so it picks up sales a closed high street would lose, without paying anyone to stand behind a counter.
3. Lower fixed costs than a shop: rent on a town centre unit, shop fittings and counter staff are costs the online seller avoids, which leaves more of each £1 of sales available as profit.
4. Small firms gain buyers they could never serve. Selling through an established platform gives a one-person business a nationwide audience on its first day of trading.

What a business needs to sell online

1. A website or app that works: pages must load quickly, show accurate stock and take payment in a few taps, because a confusing checkout loses the order to a rival one click away.
2. Delivery and logistics: someone has to pick, pack and post every order, so the firm pays for warehouse space, packaging and a courier such as Royal Mail or Evri.
   1. Free delivery is never free to the business: the cost is either built into the price or taken out of profit.
3. Secure payment: customers hand over card and address details, so the firm needs an encrypted payment system, and a data breach costs it money and customer trust at the same time.
4. A returns process: buyers cannot handle goods before they arrive, so an online seller must accept returns, and each one costs postage, checking and repackaging.

The pressures e-commerce creates

1. Price comparison: comparison sites line up every seller's price side by side, so a firm charging £3 more than the cheapest can lose the sale even when its service is better.
2. High return rates: clothing shoppers often order two or three sizes intending to send some back, so the seller pays postage twice and may not resell the item at full price.
3. Delivery expectations set by the biggest sellers: Amazon has trained customers to expect next-day arrival, so a smaller seller either pays for faster couriers or loses impatient buyers.
4. Less personal contact: staff cannot notice a hesitant customer and suggest an alternative, so it is harder to build the loyalty a good shop assistant creates.
5. Dependence on technology: a site crash during a sale stops all trading at once, whereas a broken till affects one branch for an afternoon.

Adding e-commerce to a high street business

1. Click and collect: the customer orders online and picks the item up in store, so the firm avoids courier charges and gains a visitor who may buy something else while there.
2. Existing branches become useful again. Currys uses its stores as collection and returns points, which turns the cost of holding property into an advantage over an online-only rival.
3. Trading both ways spreads the risk. When shoppers stay at home the website takes the orders, and when town centres are busy the shops still trade, so a fall in one channel need not sink the business.