People have predicted that the internet would kill slowly retail business. Does it happen? Yes, if the store does not keep up with technology. But if following the technological developments, retail businesses will survive.
Running a conventional retail store requires a very expensive cost. Conventional retail store requires room so spending money to rent or buy, taxes and equipment for store security. In addition, the owner must employ some shop floor staff to greet customers and handle transactions. The total cost can easily run into the hundreds of thousands of dollars for a single store. The high costs associated with running a physical store means there is limited maneuvering for business owners when it comes to price cuts, which puts retailers at a competitive disadvantage physically strong compared to their online counterparts.
A retail store is designed to serve only the local community. People rarely travel long distances to do their shopping. This means that despite the high running costs, retailers also have to make do with the limited market size of their local communities. It is therefore necessary moral and monetary commitments seriously to get into the retail industry.
How does this compare with the virtual retailer?
Running a virtual store is significantly less expensive. Make a stylish website does not cost more than few thousand dollars. There are no such things as rent, taxes or utilities, maintenance costs only a web server, which should be no more than a hundred dollars for even a fairly busy online store. There is no need for shop floor workers to greet customers and handle transactions. Customers will browse through their own web sites and completing their purchases through automated online payment system. This aspect alone could save tens of thousands of dollar store owners every year. Money that can be invested in the webmaster, customer service and marketing. Low cost base creates a very low barrier to entry where anyone can set up an online retail business and allow them to cut their prices to lure customers away from traditional physical stores. Now common knowledge that the best deals can be found online. This is indeed a trend we have seen over the last few years and what's killing people like the game.
While retail stores can be limited to the local community, a virtual store has no geographic boundaries. Businessesx can serve customers anywhere in the world. Market size is literally unlimited.
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