Who benefits from e-commerce?

Date posted: September 17, 2010

What’s called e-commerce — or online shopping — has grown by leaps and bounds. N.C. State University economist Mike Walden talks about the kind of businesses that benefit the most from e-commerce.

“We have a new study, just published, that looked at the impact of e-commerce of three industries: bookshops, travel agencies and new car dealerships. And there were two major findings from this study.

“First of all, the study found that in all these industries the presence of e-commerce reduced price dispersion. That is to say that people who were shopping on the Internet were able to compare prices, and that made those prices actually move closer together, because one business couldn’t, for example, get away with charging a high price because people could easily find out, ‘Hey, that’s a high price.’ So that was one major finding.

“The other finding was that, at least initially, in this study they found that e-commerce seems to benefit larger firms at the expense of smaller firms. But there was one exception, and the exception was for the very tiniest of firms — firms that perhaps were selling to a very limited number of people. They found that these so called niche firms with a limited number of customers actually benefited greatly from e-commerce.”

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