UNITEC Institute of Technology
Course ISCG801: The Impact of Information Technology on Society
The Impact of E-commerce on the Bookselling Industry
Due Date: 30/08/2001
Table of Contents
1 Introduction 11.1 Electronic Commerce, a Topic of current Interest 1
1.2 Procedure and Analysis Objectives 1
2 E-commerce 22.1 What is E-commerce? 2
2.2 The History of E-commerce 3
3 The Impact of E-commerce on Booksellers 63.1 Positive Impacts of E-commerce on Booksellers in General 6
3.2 The Impact of E-commerce on Entrepreneurs 7
3.2.1 E-commerce, a Good Opportunity for Bookseller Start-Ups? 7
3.2.2 Why can Internet Bookselling be Successful? 8
3.2.3 Negative Impacts of E-commerce on Entrepreneurs 9
3.3 The Impact of E-commerce on Existing Booksellers 10
3.3.1 The Impact of E-commerce on Large Bookselling Chains 10
3.3.2 The Impact of E-commerce on Small Independent Booksellers 12
4 The Impact of E-commerce on Customers 13
5 Conclusion 145.1 Summary 14
5.2 Outlook 15
6 References 16
7 Bibliography 19
1.1 Electronic Commerce, a Topic of current Interest
Electronic commerce (e-commerce) is becoming more and more important in our world. In the beginning, only start-up companies tried doing online business, but today even the old economy has realized that e-commerce can be profitable and can make a company operate more efficiently. Despite the fall of many unprofitable Internet companies in the last months, many businesses still see ecommerce as an opportunity. Therefore, lots of companies have already taken or want to take part in e-commerce. If it is not because of making profits out of the online business immediately, it is due to the fear of missing the train and being left behind, when all other companies have successfully started selling their products or services over the Internet. Moreover, technology is changing very fast and not starting early can lead to a lack of experience, that is desperately needed later on, provided that the technology proofs to be a success. Of course, this strategy bears also a high risk. If the technology turns out to be a failure, it would have been better not to have rushed into it. However, the reasons for or against going into e-commerce should not be discussed in this report. Fact is, that many companies have started e-commerce and still today many others try to start online business successfully. As a result, e-commerce has quite a big impact on companies and their customers.
1.2 Procedure and Analysis Objectives
From the author’s point of view, this impact can be examined best by regarding the bookselling industry, because books are still the most frequently sold items on the Internet, followed by CDs and computer equipment. Almost three out of five European online shoppers purchase books. (Ernst & Young, 2001, p. 7) Furthermore, Amazon.com, which is an outstanding example of doing ecommerce in a successful way, is also in the bookselling business together with many other Internet companies, that are selling books over the web in order to imitate Amazon’s success story (Online Bookstores (n.d.). On the other hand there are many small independent booksellers, challenged by the new online competitors as well as some really big companies like Barnes & Noble or Bertelsmann. Many of these companies have realized the new competition through online booksellers and have already responded to that new threat by launching their own online stores.
This report is going to take a closer look at the impact of e-commerce on the bookselling industry. Before doing so, it is essential to explain e-commerce in general and illustrate its history. To examine its impact on the bookselling business, it is necessary to look at three different groups that are impacted in this business area, i.e. customers, entrepreneurs and existing bookselling companies, which can be very different in size. Since the impact of e-commerce is very dependent on the size of the company, it is appropriate to examine small and big businesses separately. This report will focus very much on the US bookselling industry because the USA are the cradle of most online booksellers. Furthermore, world’s largest bookselling chains are also US based.
2.1 What is E-commerce?
Most people think of online shopping when they hear the term e-commerce. But e-commerce is not only selling products on the Internet. In fact it is a very broad term that Phillips defines as “the use of information technology to support the conduct of any business activity” (1998, p. 9). Since e-commerce and traditional commerce differ only in the way, how information is transferred, e-commerce is every commercial transaction, where information is transmitted electronically (Minoli, D. & Minoli, E., 1998, p. 7). As Kalakota outlines, this leads to improvements, that “may result in more effective performance, greater economic efficiency and more rapid exchange” (1997, p. 4). What most people today mean when they talk about e-commerce is Internet e-commerce, i.e. conducting business with the information transferred over the Internet. This report will focus on Internet e-commerce.
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