In a time where ease of access and efficiency are a vital aspect of many lives, online shopping has become an ideal form of distribution. The internet has emerged as one of the most popular distribution channels available, with Australians spending 37.8 billion over the internet during the 2014-15 financial year. Physical products which would normally be purchased at stores or local shopping centres have been dumped in favour of the simplicity which the internet provides.
Advantages of the Internet as a Distribution Channel
The benefits of the internet have far outweighed the negatives, leading to a steep increase of people who are utilising this form of distribution. Have you ever moved back and forth between shops looking for a certain price or product, only to find out none of the stores have what you’re looking for? Gone are those days, online shopping allows for easy price comparison, better time management and 24/7 availability. Much like using self-service checkouts at your local store, online shopping also allows the consumer to avoid the awkward small talk, cut long queues and move at their own pace. It is no surprise that eBay have dominated the online shopping scene since being instated, highlighted by their gigantic revenue which is increasing yearly.
Source: Business Wire, 2016.
Many other businesses are starting to follow suit; Clothing retailers such as Boohoo and Missguided have chosen to forego a physical store, instead using the internet as their sole distribution channel. Using the internet as a primary form of distribution is not limited to clothing retailers; It is clear that books, music and movies have all made the transition from physical copies to digital copies. The number of Blockbuster stores has dropped from 60 to 14 since 2006, whilst streaming companies such as Netflix boast 83 million subscribers spanning 190 countries.
From a business standpoint, setting up an online store allows a company to reach a wider audience which they would otherwise not reach. It also allows the company to communicate much more easily with consumers, using mediums such as email to relay promotions and events. Online websites such as Kogan have been known to sell products to Australians cheaper than those that could be sourced from local stores, such as an Apple iPhone. This is because they source products from the manufacturer directly, bypassing the normal retail process which they would have to go through if they set up a physical store in Australia.
Disadvantages of the Internet as a Distribution Channel
The disadvantages of using the Internet as a distribution channel largely revolve around the post-purchase customer experience.
Source: Youtube, 2016.
As demonstrated in this video, there are MANY things that can go wrong when online shopping, which means the consumer must pay more attention when reading the fine print. Firstly, the consumer is unable to physically come into contact or look at the product in question. Websites such as eBay require the seller to adhere to a set of instructions aimed at giving the consumer as much detail as possible about the product. There is always a chance that a private seller or company may ship a damaged or different item, causing a dispute that could ultimately see a few extra weeks added onto the arrival of your item.
Secondly, and arguably the largest issue for many of us online shoppers, is the time you must wait for your item to be shipped and consequently arrive. The biggest downfall of online shopping as a distribution channel is that it diminishes the customers “instant gratification“, a feeling which is achieved through impulse buying. Instant gratification purchases attempt to satisfy the pleasure principle, which is the seeking of pleasure to satisfy biological and psychological needs. There are many other minor disadvantages associated with online purchases, such as: the lack of a shop assistant to help out, shipping costs, damage during the shipping process, not being able to haggle prices and the lack of a physical store in some instances.
So… Is online shopping is the only way to go?
The emergence of the internet as a distribution channel has allowed countless companies to cash in on the many advantages that come with online shopping. Although online shopping is extremely popular, it is clear that physical stores still have their place. Online companies such as eBay and Kogan have made it cheaper and easier to buy products from the comfort of your own home. However, they will never solely be able to provide the customer with the instant satisfaction that comes with purchasing and taking home a product.
Written by James Mier – 216177105 (jmier94)